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Published by Global Legal Group, in association with Freshfields Bruckhaus Deringer LLP, with contributions from:

ICLGThe International Comparative Legal Guide to:

A practical cross-border insight into environment and climate change law15th Edition

Environment & Climate Change Law 2018

AKDAugust DebouzyBär & Karrer Ltd.Beatty LegalBorenius Attorneys LtdCliffe Dekker Hofmeyr Inc.Del Pozo & De la CuadraFreshfields Bruckhaus Deringer LLPGANADO AdvocatesGonzalez Calvillo, S.C.Guevara & Gutiérrez S.C. Servicios LegalesGuyer & Regules

Kanagawa International Law OfficeLinklaters LLPMachado Meyer AdvogadosMacías Gómez & Asociados Abogados S.A.S. Makarim & Taira S.McCann FitzGeraldPinsent Masons Germany LLPPSARomulo Mabanta Buenaventura Sayoc & de los AngelesSnell & Wilmer L.L.P.Willms & Shier Environmental Lawyers LLPWistrand Law Firm

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DisclaimerThis publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

General Chapter:

Country Question and Answer Chapters: 2 Australia Beatty Legal: Andrew Beatty & Ana Coculescu 4

3 Belgium Linklaters LLP: Lieve Swartenbroux 11

4 Bolivia Guevara & Gutiérrez S.C. Servicios Legales: Jorge Luis Inchauste & Zoya Galarza 19

5 Brazil Machado Meyer Advogados: Roberta Danelon Leonhardt & Daniela Stump 25

6 Canada Willms & Shier Environmental Lawyers LLP: Richard Butler & Joanna Vince 32

7 Colombia Macías Gómez & Asociados Abogados S.A.S.: Luis Fernando Macías Gómez 39

8 England Freshfields Bruckhaus Deringer LLP: Daniel Lawrence & John Blain 46

9 Finland Borenius Attorneys Ltd: Casper Herler & Henna Lusenius 64

10 France August Debouzy: Emmanuelle Mignon & Vincent Brenot 70

11 Germany Pinsent Masons Germany LLP: Dr. Thomas Wölfl 77

12 India PSA: Priti Suri & Arya Tripathy 84

13 Indonesia Makarim & Taira S.: Alexandra Gerungan & Hendrik Alfian Pasaribu 91

14 Ireland McCann FitzGerald: Rachel Dolan & Sinéad Martyn 97

15 Japan Kanagawa International Law Office: Hajime Kanagawa 104

16 Malta GANADO Advocates: Dr. Jotham Scerri-Diacono & Dr. Lara Pace 112

17 Mexico Gonzalez Calvillo, S.C.: Leopoldo Burguete Stanek 124

18 Netherlands AKD: Eveline Sillevis Smitt & Gerrit van der Veen 130

19 Philippines Romulo Mabanta Buenaventura Sayoc & de los Angeles: Benjamin Z. Lerma & Claudia R. Squillantini 137

20 South Africa Cliffe Dekker Hofmeyr Inc.: Terry Winstanley & Valencia Govender 144

21 Spain Del Pozo & De la Cuadra: Covadonga del Pozo 151

22 Sweden Wistrand Law Firm: Rudolf Laurin 158

23 Switzerland Bär & Karrer Ltd.: Markus Schott 164

24 USA Snell & Wilmer L.L.P.: Denise Dragoo 171

25 Uruguay Guyer & Regules: Anabela Aldaz & Betania Silvera Perdomo 177

1 The ‘Brexatom’ Conundrum – Paul Bowden, Freshfields Bruckhaus Deringer LLP 1

Contributing EditorsDaniel Lawrence and John Blain, Freshfields Bruckhaus Deringer LLP

Sales DirectorFlorjan Osmani

Account DirectorOliver Smith

Sales Support ManagerToni Hayward

Senior EditorsSuzie Levy, Caroline Collingwood

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Group Consulting EditorAlan Falach

PublisherRory Smith

Published byGlobal Legal Group Ltd.59 Tanner StreetLondon SE1 3PL, UKTel: +44 20 7367 0720Fax: +44 20 7407 5255Email: [email protected]: www.glgroup.co.uk

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ISBN 978-1-911367-92-5ISSN 2045-9661

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EDITORIAL

Welcome to the fifteenth edition of The International Comparative Legal Guide to: Environment & Climate Change Law.

This guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of environment and climate change laws and regulations.

It is divided into two main sections:

One general chapter. This chapter is entitled: “The ‘Brexatom’ Conundrum”.

Country question and answer chapters. These provide a broad overview of common issues in environment and climate change laws and regulations in 24 jurisdictions.

All chapters are written by leading environment and climate change lawyers and industry specialists, and we are extremely grateful for their excellent contributions.

Special thanks are reserved for the contributing editors Daniel Lawrence and John Blain of Freshfields Bruckhaus Deringer LLP for their invaluable assistance.

Global Legal Group hopes that you find this guide practical and interesting.

The International Comparative Legal Guide series is also available online at www.iclg.com.

Alan Falach LL.M. Group Consulting Editor Global Legal Group [email protected]

ICLG TO: ENVIRONMENT & CLIMATE CHANGE LAW 2018 1WWW.ICLG.COM© Published and reproduced with kind permission by Global Legal Group Ltd, London

Chapter 1

Freshfields Bruckhaus Deringer LLP Paul Bowden

The ‘Brexatom’ Conundrum

protection this statement both reveals the present uncertainties as to the eventual outcome of the negotiations and also importantly recognises that, in any event, the UK will need to have in place a robust regulatory regime for ensuring the maintenance of public confidence in the sector, including also protection of human health and the environment, for it to continue to discharge its international obligations in relation to nuclear Safety. ‘Safety’ (as distinct from the principles of ‘Security’ and ‘Safeguards’) is a key aspect of nuclear controls as they relate to environmental protection and human health and safety. According to the IAEA definition, nuclear Safety is concerned with the achievement of proper operating conditions, prevention of accidents or mitigation of accident consequences, resulting in protection of workers, the public and the environment from undue radiation hazards. It also embraces the general principles of radiation protection of ‘justification’, ‘optimisation’ and ‘limitation’ of radiation doses found in the IAEA International Basic Safety Standards for protecting people and the environment (IAEA General Safety Requirements No. GSR Part 3, 2014) and in national laws and regulations including those of the UK.The potential implication for nuclear Safety related controls arising from the UK’s leaving Euratom were discussed in a paper that was published recently by the United Kingdom Environmental Law Association (UKELA).1 The issues discussed in the paper include the following:■ Upon leaving Euratom, the UK will cease to be subject to the

Framework Directive on the Safety of Nuclear Installations, unless other arrangements are agreed as part of the Brexit negotiations. Nevertheless, given the vital importance of nuclear Safety, the expectation is that the UK will put in place arrangements to ensure that it continues to comply with these basic requirements. The UK would remain a party to the 1994 Convention on Nuclear Safety (CNS), which imposes equivalent obligations, although the duties under the CNS are of a different character and work through peer review rather than legal sanctions.

■ Once the UK leaves Euratom it would also cease to be subject to the Euratom Basic Safety Standards (BSS) Directive and related measures such as the High-Activity Sealed Sources Directive. Notwithstanding that this would seem unlikely to result in a weakening of current standards as IAEA Standards on radiological protection state widely-accepted international norms and standards, it still would need to be considered how BSSs, as they continue to be developed by Euratom over time, would be recognised/applied in the UK.

■ It is questionable whether the UK could continue as a member of European Nuclear Safety Regulators’ Group (ENSREG) and the current post-Fukishima risk and safety assessment and peer review programme. The ENSREG

Among the many uncertainties surrounding the UK’s exit from the EU are the precise arrangements for, and the implications arising from, the UK at the same time leaving the European Atomic Energy Community – better known as the ‘Euratom Treaty’ or ‘Euratom’. The Euratom Community and the EU are distinct legal entities, governed by different Treaties, notwithstanding that they share common institutions in the Commission, European Parliament, Council and European Court of Justice. Euratom membership comprises EU Member States although it has cooperation agreements with Switzerland and also with eight ‘Third Countries’ (namely, Australia, Canada, Japan, Kazakhstan, South Africa, Ukraine, the United States, and Uzbekistan). When, in March 2017, the UK initiated the Article 50 notification process to leave the EU, the UK Government also gave notice of its intention to leave Euratom (although not explicitly foreshadowed in the referendum process which preceded the notice of withdrawal). The Euratom Treaty currently provides the basis EU-wide for the regulation of civilian nuclear materials, the control of the supply of fissile materials within EU Member States and also funds international research. Understandably, concerns have been expressed about the potential adverse impacts that leaving Euratom could have on the UK’s current nuclear site permitting and routine operations, including fuel supply, waste management, cooperation with other nuclear states and nuclear research – all of which engage nuclear safety, public dose limitation and environmental consequences. More recently, on 11 October 2017, the UK Government introduced the Nuclear Safeguards Bill 2017–19 which is designed to make provision for nuclear safeguards after the UK leaves Euratom. According to the background briefing that was produced for the Queen’s Speech 2017, the Nuclear Safeguards Bill is designed to establish a nuclear safeguards regime (i.e. reporting and verification arrangements to ensure that civil nuclear material is not diverted from its intended use) as the UK leaves the European Union and Euaratom. The measures are needed to ensure that the UK continues to meet its international obligations for nuclear safeguards as they apply to civil nuclear material through the International Atomic Energy Agency (IAEA), to support international nuclear non-proliferation. The Nuclear Safeguards Bill would give the Office for Nuclear Regulation powers to take on the role and responsibilities required to meet the UK’s international safeguards, and nuclear non-proliferation obligations. During the Second reading of the Nuclear Safeguards Bill in the House of Commons, on 16 October 2017, the UK Secretary of State for Business, Energy and Industrial Strategy (BEIS) also confirmed that the Bill is intended to put in place a civil nuclear safeguards regime for the UK so that the UK will be fully prepared whatever the outcome of the negotiations with Euratom. While not directly relevant to nuclear safety and environmental

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Freshfields Bruckhaus Deringer LLP The ‘Brexatom’ Conundrum

Rules state that it shall facilitate consultation, coordination and cooperation of national regulatory authorities in the EU, and that membership is for appointed representatives of EU Member States. ‘Observer status’ for experts from EEA states at certain high level meetings is permissible under the ENSREG Rules of Procedure, but it is doubtful whether the UK’s participation at this level would be adequate. New arrangements would need to be devised in order to ensure essential collaboration on safety issues. There are similar questions as to the UK’s future ability to deliver Safety were it no longer to be a member of the European Radiological Data Exchange Platform (EURDEP). Here too new arrangements for continued (voluntary) membership would be required.

■ Emergency preparedness is another important area that involves a need for co-operation. Euratom requirements are currently incorporated into UK law in the Radiation (Emergency Preparedness and Public Information) Regulations 2001, but international co-operation would remain vital when it comes to information sharing and co-ordination of responses. Different co-operation arrangements between Euratom countries and the UK as a third country would need to be devised under Article 99 of the BSS Directive. Operationally, the UK could consider non-member engagement with European Community Urgent Radiological Information Exchange (ECURIE), as Switzerland and Croatia do. There are, however, questions as to whether the ECURIE Agreement as now constituted could allow appropriate UK participation.

■ The UK, while still a party (together with the EU) to the Joint Convention on the Safety of Spent Fuel Management and the Safety of Radioactive Waste Management, would cease to be bound by Euratom Directive 2011/70 on a framework for the responsible and safe management of spent fuel and radioactive waste. However, as with the Nuclear Safety Directive it seems unlikely that, at least in the short term, there would be any significant change in the UK’s approach, given the broad framework nature of the Directive.

■ Careful thought will need to be given to the arrangements for the supervision and control of shipments of radioactive waste and spent fuel, currently governed by Directive 2006/117/Euratom. Chapter 3 on Extra-Community Shipments will come into play when the UK, as a third country, consigns waste to enter Euratom by way of import or transit, or where waste is exported from the Community to the UK. These need not pose insuperable problems, but time and care will be needed to ensure the necessary arrangements are in place.

■ In the case of shipments of radioactive substances, including sealed sources, Council Regulations on the shipments of radioactive substances between Member States will require further consideration, in light of the provisions in the European Union (Withdrawal) Bill, specifically in relation to future reciprocity and the provisions of clause 7(2) of the Bill. These include a wide range of items with commercial and industrial uses as well as for medical diagnosis and therapy. It is not clear, absent these Regulations (and the UK’s future approach to the co-operative policies and systems established under EU law regulating the Inland Transport of Dangerous Goods), how such shipments will be dealt with.

■ There are a number of Nuclear Co-operation Agreements (NCAs) entered into under Article 101 of Euratom between Euratom and Non-Member States, wholly or in part, relating to Nuclear Safety, under which the UK both has commitments and also derives benefits, in particular in the area of international trade in nuclear services and technology and R&D. These will have to be replaced as quickly as possible.

According to a Study published in November 2017 by the EU Directorate-General for Internal Policies Policy, entitled ‘The Impact of Brexit on the EU Energy System’, it appears from the respective

EU and UK position papers on ‘Brexiting’ Euratom that were provided in the summer of 2017 that the EU and the UK agree on certain issues and are likely to disagree on others. The Study points out that the EU and UK appear to agree that from the withdrawal date, the UK will have sole responsibility for ensuring its compliance with international treaties and conventions, and that from the date of the withdrawal the UK will also have to have in place safeguards agreements with the IAEA. Similarly, the Study points out that both the EU and the UK recognise the need for setting out in the withdrawal agreement clear arrangements on issues such as special fissile materials, safeguards equipment and radioactive waste. For example, the two parties seem to agree that Euratom should transfer ownership to the UK of equipment and other property related to the provision of safeguards located on UK territory (notwithstanding that they may disagree on the value of such equipment/property). On the issue of spent fuel and radioactive waste, the two parties also appear to agree on the principle that responsibility should go to the state in which the spent fuel or the radioactive waste was generated (recognising, however, the potential for disagreements to emerge during the negotiations: e.g., in relation to the UK’s Sellafield nuclear reprocessing site, the world’s largest civilian stockpile of nuclear waste). Moreover, the Study points out that, notwithstanding calls by some for the UK to remain a member of Euratom, the fact that the functioning of Euratom is based on EU institutions means that the UK’s relationship with Euratom cannot be considered separately from the wider Brexit negotiations.The European Union (Withdrawal) Bill seeks to provide that both ‘EU-derived domestic legislation’ (based on EU Directives which are not directly applicable in the UK) and ‘direct EU legislation’ (based on EU Regulations which are directly applicable), will continue to have effect in UK domestic law after the date the UK exits the EU. The mere incorporation, however, into UK law of the substance of relevant EU legislation is not of itself sufficient given that the UK will need to negotiate new/equivalent arrangements with Euratom and with nuclear states which are not members of Euratom. Some EU instruments, in particular in the field of the transport of radioactive substances, are not susceptible to a process of simple transposition under the European Union (Withdrawal) Bill as their content and the regimes they provide for pre-suppose, in terms, that the UK is a Euratom Member State. They will likely require entirely fresh legislation following specific negotiations, yet to take place, with the EU Commission and the Member States. When considering these issues it is important to bear in mind that any lacuna in the UK’s ability to deliver on its international commitments or national law/regulatory changes required by EU/Euratom withdrawal, might potentially impact conditions in current commercial nuclear sector investment arrangements, supply and other commercial contracts and default provisions in financing arrangements.In the longer term, maintaining close regulatory equivalence between UK and Euratom Nuclear Safety laws and regulations seems a realistic and also necessary aim. Establishing principles, or at least parameters, on equivalence in a future Euratom withdrawal agreement is, alongside replacing as many as possible of the current Nuclear Co-operation Agreements (NCAs) entered into under Article 101 of Euratom between Euratom and Non-Member States, perhaps the greatest priority for the “Brexatom” negotiating process.

Endnote

1. ‘Exit From Euratom Treaty & Its Environmental Implications’, dated 14 July 2017, written by Tromans and Bowden.


Freshfields Bruckhaus Deringer LLP The ‘Brexatom’ Conundrum

Freshfields Bruckhaus Deringer is a worldwide law firm – in the last year we have helped clients do business in over 200 legal jurisdictions, including the world’s most challenging legal environments.

Our environment, planning and regulatory group has more than 80 lawyers around the world ready to advise you on how EU and international legislation, global conventions and national laws could affect your business.

We can help you deliver infrastructure projects, and manage your industrial risk from regulatory intervention across the world. We can also help you resolve disputes with other parties, and manage your environmental, planning and regulatory risk in corporate and finance deals.

Paul Bowden is a partner in the Freshfields Bruckhaus Deringer environment, planning and regulatory (EPR) group. He specialises in environmental litigation and administrative law. Paul is a former Board member of the World Nuclear Association and is programme leader of the Nuclear Energy Agency’s International School of Nuclear Law at the University of Montpellier. He is past Chair of the Nottingham Law School.

Paul BowdenFreshfields Bruckhaus Deringer LLP65 Fleet StreetLondon, EC4Y 1HSUnited Kingdom

Tel: +44 20 7832 7273Fax: +44 20 7108 7273Email: [email protected]: www.freshfields.com


Chapter 2

Beatty Legal

Andrew Beatty

Ana Coculescu

Australia

1.3 To what extent are public authorities required to provide environment-related information to interested persons (including members of the public)?

As a general rule, information held by government agencies is available to the public, either online or on request under freedom of information legislation. The most widely available environmental information relates to land use and development and it is usually available online, at the relevant local council and at the development site. Government data on other environmental matters, such as pollution, contaminated land, climate, regional systems and water is sometimes required to be published by government agencies. More broadly, since the middle of the 1990s, legislation (including acts, regulations and policies) and case law are available online, with older reports available at public libraries. Documents do not have to be released if they fall within categories where the public interest is best served by maintaining secrecy (for example, cabinet deliberations, commercial terms of government contracts or private information).

2 Environmental Permits

2.1 When is an environmental permit required, and may environmental permits be transferred from one person to another?

Environmental permits allow the holder to undertake an activity that would otherwise breach the law; in effect a ‘licence to pollute’. Activities requiring permits are prescribed by legislation and include polluting activities or clearing of vegetation. Permits are issued subject to conditions and generally attract annual administrative fees. Permits can be varied or revoked or the permit-holder may be requested to surrender them. Permits can also be transferred to a new owner or occupier of land or operator of an activity which take over the obligations imposed by the permit.

2.2 What rights are there to appeal against the decision of an environmental regulator not to grant an environmental permit or in respect of the conditions contained in an environmental permit?

Generally, an applicant dissatisfied with the decision regarding a permit may make representations to the authority to reconsider. A

1 Environmental Policy and its Enforcement

1.1 What is the basis of environmental policy in your jurisdiction and which agencies/bodies administer and enforce environmental law?

Australia is a federation, with specialist environmental laws and enforcement agencies set up within each tier of government (Federal, State or Territory and local). Environmental policy is generally guided by the principles of ecologically sustainable development. Its aim is to achieve the proper management of resources, the effective conservation of both natural and man-made environments, and increased public involvement in environmental matters.States and Territories are responsible for most environmental matters, with some powers given also to local governments for local issues. Each State and Territory has a department of environment setting out environmental policies, and an Environment Protection Authority (EPA) to enforce them. The Federal tier of government is responsible for those environmental matters that fall within its powers under the Constitution and for environmental regulation applicable to Commonwealth lands. There is a Federal department of environment, currently known as the Department of the Environment and Energy.

1.2 What approach do such agencies/bodies take to the enforcement of environmental law?

Enforcement agencies generally ask the offender to minimise the harm caused to the environment, rectify it and ensure compliance moving forward. Offences attract penalties ranging from fines to imprisonment, as well as other orders such as requiring the offender to attend training programs or to publicise the environmental offence committed, requiring them to carry out environmental audits or to refund any financial gains resulting from the offence or to monitor and report on certain activities.The choice of enforcement action is usually determined by the seriousness of the offence and the ability for the enforcement agency to prove it to the required standard in a Court.


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Beatty Legal Australia

dissatisfied applicant may also be able to appeal, either to a specialist court or a tribunal, within a limited time frame after a decision is made or notified. There are, however, exceptions to this, where no appeal is available.

2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly polluting industries or other installations/projects?

Proponents of activities likely to have an impact on the environment may be required to submit an environmental impact assessment in support of their project. The information is made available to the public who can make submissions in support of, or opposition to, the project. Environmental audits are sometimes required, for instance for land that is or may be contaminated, so as to ensure that the land can be remediated to allow the proposed use.

2.4 What enforcement powers do environmental regulators have in connection with the violation of permits?

Breach of a permit can result in the regulator imposing further and more onerous conditions, or revoking the permit, for example. In cases of serious breach, the regulator can itself impose civil penalties (usually a monetary penalty) or it can prosecute offenders in court for criminal conduct (potentially resulting in fines or imprisonment).Other orders can be made as outlined above in question 1.2.

3 Waste

3.1 Howiswastedefinedanddocertaincategoriesofwaste involve additional duties or controls?

Waste is defined differently in each Australian jurisdiction. It generally refers to any substance discarded, rejected, unwanted, surplus or abandoned. This includes waste that will be recycled, and then used, among other things, as fuel or land cover.A number of classifications apply, in particular with respect to obligations to track and dispose of waste. In NSW, waste is classified based on the level of risk it poses to the environment and human health, into: special waste; liquid waste; hazardous waste; restricted solid waste; general solid waste (putrescible); and general solid waste (non-putrescible).Some waste categories are subject to further regulation, such as some chemicals which are subject to chemical control orders, or waste tracking requirements for some classes of hazardous waste.

3.2 To what extent is a producer of waste allowed to store and/or dispose of it on the site where it was produced?

Ordinarily, the environmental authorisation for an activity will regulate the storage and disposal of waste produced on site through a waste management plan. Waste may be stored on site before it is transported to an appropriate storage or waste disposal facility for a length of time determined by the kind of waste produced, the risk it poses to human health and the environment, and the kind of facilities in place on site.Waste would ordinarily be disposed of at an approved waste facility, unless the producer of waste holds an authorisation for a waste facility on site or is allowed to use certain types of waste on site.

An environmental permit is usually required to store larger amounts of waste. Such a permit may impose conditions, depending on the type of waste that is proposed to be stored. For example, certain types of waste (such as those deemed to negatively impact human health or the environment) may be required to be stored in specialist waste storage facilities.

3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/disappears)?

Producers of waste retain liability for the disposal or off-site treatment of waste to the extent that they have possession of the waste or they are its owners. Such persons are responsible for the legal storage, tracking, transportation and disposal of the waste. If the waste is disposed of illegally or is not legally transported by third parties to whom the waste was given, then the producer of the waste sometimes maintains liability to the extent that no statutory defence is otherwise available to them. Defences include having no control over the cause leading to the commission of the offence, and having taken reasonable precautions and exercised due diligence to prevent the commission of the offence.

3.4 To what extent do waste producers have obligations regarding the take-back and recovery of their waste?

Regulatory authorities have generally devised incentives for take-back or recovery of waste, but there is no legal obligation to do so. For example, some jurisdictions have introduced a per tonne waste levy for waste that is disposed of at a landfill or exemptions for certain types of waste that can be used without further permits being required if they meet the regulatory requirements. Some jurisdictions have implemented specialist schemes to assist in the recovery of particular types of waste such as the container deposit scheme applicable in South Australia and the Northern Territory, with schemes rolling out in New South Wales, Queensland and the Australian Capital Territory. There are also a number of voluntary stewardship schemes organised and operated by particular industries, which recover and recycle certain products, such as mobile phones.

4 Liabilities

4.1 What types of liabilities can arise where there is a breach of environmental laws and/or permits, and what defences are typically available?

Breaches of environmental laws or of environmental permits can give rise to:■ civil liability in the form of financial penalties or orders (for

instance, to undertake certain work or to stop an activity deemed to cause environmental harm); or

■ criminal liability in various forms, including fines, the payment of the regulator’s costs in investigating and prosecuting the offence, and imprisonment.

Defences for criminal liability include having no control over the cause leading to the commission of the offence, having taken reasonable precautions and exercised due diligence to prevent the commission of the offence. Some environmental crimes are strict


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liability offences, whereby there is no need to prove the mens rea of the offenders. In such cases, the only defence available is that of an honest and reasonable mistake of fact.

4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is operated within permit limits?

An operator would not be liable for environmental damage to a further extent than is required by the permit, provided that the activity is undertaken in accordance with the permit. An environmental permit may (and usually does) impose obligations on the operator during the life of the project or activity or facility, such as pollution monitoring and reporting at regular intervals or site remediation on cessation of activity. These obligations would have been known to the operator when the permit was granted.If, while the activity is undertaken, other breaches occur, the operator may be held liable for any environmental damage resulting from those breaches as well.

4.3 Candirectorsandofficersofcorporationsattractpersonal liabilities for environmental wrongdoing, and to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities?

Directors or managers can be held liable if a corporation contravenes certain environmental provisions, in which case they are taken to have contravened the same provision. Proceedings may be commenced against them even if no proceedings were commenced against the corporation. A Court may hold them liable unless they can prove that they were not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or that they used all due diligence to prevent the contravention by the corporation.Insurance and/or indemnities may be available to limit the civil liability of directors or managers (including their legal costs), but they are not available to limit their criminal liability.

4.4 What are the different implications from an environmental liability perspective of a share sale on the one hand and an asset purchase on the other?

For a share sale of a non-controlling interest in the corporation, the owner or operator of the asset retains all liability, including for any breaches of environmental law. Shareholders are not held personally liable, except in the limited circumstances where they are directors and executive liability is triggered by the breach. Shareholders will, however, see the impact of any breaches on the returns on their investment. The purchase of an asset will result in the transfer of ownership of the asset to the purchaser. The purchaser could then be held liable for environmental breaches which attract owner liability (this will depend on each jurisdiction). The owner may also be required to hold environmental permits for the asset to operate lawfully, in which case they would have all the obligations imposed on permit-holders.

4.5 To what extent may lenders be liable for environmental wrongdoing and/or remediation costs?

Lenders will not ordinarily be held liable for environmental wrongdoing or remediation costs, unless there are specific statutory

provisions to this effect. Such an exception exists in NSW, where a management order may have as a subject a mortgagee in possession of the land or who has a vested interest with respect to the land that carries an entitlement to have a freehold interest in the land or that enables the person to deal with a freehold interest in the land. Such a person may be held responsible for implementing the management plan.

5 Contaminated Land

5.1 What is the approach to liability for contamination (including historic contamination) of soil or groundwater?

The regulatory regime for contaminated land focuses generally on ensuring that contaminated land is used for appropriate activities given the level of contamination or is remediated to an appropriate level. For contamination incidents, the aim is to allow regulators to identify a person that has sufficient power and control over the contaminated land or the contaminating activity to stop the incident, limit contamination, and possibly remediate the contamination to a suitable standard. If no such person can be identified and land contamination may have significant impacts on human health or the environment, the regulatory authority can undertake remediation work itself.

5.2 How is liability allocated where more than one person is responsible for the contamination?

In NSW, for example, contaminated land legislation allows the regulators to pursue either:■ the person who caused the contamination; or ■ the owner or occupier of the contaminated land; or ■ the operator of the activity undertaken on the contaminated

land. The person pursued by the regulator may have the right to seek redress from the person who caused the contamination, if the latter can be identified. Liability may also be apportioned by way of contracts between parties, although such apportionment does not bind the regulator.

5.3 If a programme of environmental remediation is ‘agreed’ with an environmental regulator, can the regulator come back and require additional works or can a third party challenge the agreement?

A remediation programme agreed with the environmental regulator may focus on a specific outcome being achieved (for instance, all asbestos to be removed from the site) or it may prescribe the manner in which the outcome is to be achieved (for instance, capping or soil replacement). If the desired outcome is not achieved using the agreed methodology, the regulator may require a different methodology to be used.Ordinarily, third parties cannot challenge such agreements unless they form part of a development approval process that can be challenged by third parties. If no formal challenge is available, third parties can make representations to regulators about changes to these programmes, which the regulators can take into account.


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5.4 Does a person have a private right of action to seek contribution from a previous owner or occupier of contaminated land when that owner caused, in whole or in part, contamination; and to what extent is it possible for a polluter to transfer the risk of contaminated land liability to a purchaser?

In some jurisdictions, the legislative regime allows a person who remediates the land but who is not responsible or is only partly responsible for the contamination, to recover the cost of carrying out those works proportionately from each person who is found to be responsible. A polluter can contractually transfer liability for contamination, for instance through special conditions in a contract for sale of land; however, the regulator can still pursue the polluter for remediation work or to pay fines. The polluter would be able to enforce the contractual provision against the purchaser to recover its costs provided its conduct in causing the pollution was not criminal in nature.

5.5 Does the government have authority to obtain from a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers?

Governments can obtain such damages indirectly, for example, in jurisdictions where pollution is a strict liability offence. Enforcement agencies may recover the costs of dealing with pollution (such as clean-up costs) even if the pollution incident caused minimal environmental harm but had aesthetic impacts.

6 Powers of Regulators

6.1 What powers do environmental regulators have to require production of documents, take samples, conduct site inspections, interview employees, etc.?

Environmental regulators, have broad powers of investigation. For example, the NSW EPA has the power to: ■ enter premises where it is reasonably suspected industrial,

agricultural or commercial activities are being carried out, or pollution has been, is being, or is likely to be caused;

■ inspect any works, plant, vehicle or aircraft; ■ take and remove samples; ■ take photographs, video or audio recordings;■ request the production of documents; ■ inspect and copy any records;■ interview employees; and■ carry out monitoring and assessment.

7 Reporting / Disclosure Obligations

7.1 If pollution is found on a site, or discovered to be migrating off-site, must it be disclosed to an environmental regulator or potentially affected third parties?

In some cases, such pollution must be notified to the regulator, subject to severe penalties. In NSW, the EPA must be notified of land contamination above a prescribed level or if it may migrate off-site. The notification is

made either by the person whose activities have contaminated the land or the owner of that land and must occur as soon as they become aware. If the level of contamination warrants it, the EPA may require action to be taken with respect to the contamination.

7.2 When and under what circumstances does a person haveanaffirmativeobligationtoinvestigatelandforcontamination?

In circumstances where an inspection of a site or the site history indicate that there is contamination or a risk of contamination to groundwater or surface water, an owner or manager of a site may be required to undertake investigations to determine whether contamination is present for the purposes of reporting to the regulator. A person must conduct investigations, site audits and provide contamination reports to the EPA if they are ordered to do so.

7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover transactions?

Many Australian jurisdictions impose an obligation on persons to report environmental matters to regulators, for instance as part of annual reporting obligations for permits or if serious incidents occur. Following a number of cases under Federal consumer legislation concerning misleading and deceptive conduct as part of a land sale, sellers should generally disclose to prospective purchasers environmental information that they have available, including, for example, any environmental reports with respect to the land.

8 General

8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment-related liabilities, and does making a payment to another person under an indemnity in respect of a matter(e.g.remediation)dischargetheindemnifier’spotential liability for that matter?

For civil liability arising from breaches of environmental regulation it is possible to have contractual indemnities limiting the exposure of the indemnified party. Such contractual indemnities do not bind the regulators, so the indemnified party will remain liable for the breaches, but will be able to recover their costs from the other party, once incurred.Indemnities cannot cover criminal liability for environmental offences.

8.2 Is it possible to shelter environmental liabilities off balance sheet, and can a company be dissolved in order to escape environmental liabilities?

Environmental liabilities must be disclosed in the balance sheet if required by the Australian Accounting Standards Board’s standards of financial accounting and reporting. For example, penalties or clean up costs may be required to be listed as ‘provisions’ on the balance sheet. There are a number of provisions in place to stop companies voluntarily deregistering or being wound up or liquidated to avoid environmental liability. A company cannot voluntarily deregister


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unless, among other things, it has no outstanding liabilities. If it fails to meet this requirement, the company must be wound up or liquidated prior to deregistration. A number of jurisdictions have extended to directors and holding companies the liabilities of a company that has been wound up as part of a scheme to avoid environmental liabilities.

8.3 Can a person who holds shares in a company be held liable for breaches of environmental law and/or pollution caused by the company, and can a parent company be sued in its national court for pollution causedbyaforeignsubsidiary/affiliate?

Under Australian law, a company is a separate legal entity from its owners, with its own rights and obligations, with their relationship determined by the company’s constitution and the shareholder agreements. Generally, shareholder liability is limited to the payment of amounts outstanding on shares held and does not extend to the activities of the company. Shareholders who are also directors have wider liability, including under Federal corporations law and State environmental laws.A parent company will be liable for the actions of a foreign subsidiary in the following circumstances:■ Where the parent company is recognised as a “shadow

director” of the subsidiary company, thereby attracting directors’ liabilities.

■ Where the parent company has substantial control over the actions of the subsidiary. The more control the parent company exercises the more likely the parent company will attract liability.

8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters?

Most EPAs allow persons to report environmental incidents while keeping the identity of the person so reporting confidential, therefore protecting them from possible repercussions. Federal corporations law contains the primary whistleblower protections for individuals working in private companies. Under this regime, whistleblowers are protected from both civil and criminal litigation and from victimisation by allowing the victim to recover damages from an offender. The operation of these protections is limited to breaches of corporations legislation. They may have a limited impact, as environmental obligations under Federal corporations laws are limited to disclosure of compliance with environmental laws in the annual director’s report.More extensive protection exists for workers in the public sector. Most jurisdictions have enacted their own public interest disclosure legislation, providing protection for public officials to encourage them to report misdemeanour.

8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary damages available?

Class actions are available in Federal, NSW and Victorian courts, subject to a number of requirements being met. Open standing provisions, applicable in some jurisdictions, allow anyone to commence legal action for breach of environmental laws, making it easier for groups to bring proceedings. Exemplary or punitive environmental damages may be awarded in tortious claims of private nuisance or negligence causing loss or harm. However, there is little scope for damages to be awarded beyond such interests for example in cases of collective environmental harm.

South Australian legislation allows individuals and the regulator to apply for exemplary damages. In cases where the range of penalties vary, the courts may take into account intent, aggravating or mitigating factors in deciding the amount of the penalty applicable, which may have a similar practical effect to punitive or exemplary damages.

8.6 Doindividualsorpublicinterestgroupsbenefitfrom any exemption from liability to pay costs when pursuing environmental litigation?

The general rule is that costs follow the event, so a successful party’s legal costs are usually paid by the unsuccessful party. The Courts have a certain discretion in awarding costs, and the High Court has provided guidance on how this discretion is to be applied in public interest litigation matters where the ordinary rule may not apply. Federal Court legislation allows consideration of public interest factors in reaching a decision on costs. However, existing principles are limited and uncertain, and any benefit derived from the public interest nature of the litigation is not guaranteed.

9 Emissions Trading and Climate Change

9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading market developing there?

In 2011, Australia enacted a Carbon Pollution Reduction Scheme, a cap-and-trade system to reduce the greenhouse gas emissions of Australian businesses. The scheme was repealed in 2014 with the election of a new Government and replaced with the ‘Direct Action Plan’. This includes an ‘Emissions Reduction Fund’ to help finance low carbon emission developments on a ‘reverse auction’ basis. The Fund does not create a tradeable commodity, such as the tradeable permits system created under an emissions trading scheme.Australia has maintained a renewable energy target since 2001. Since 2015, the policy has operated in two parts, providing incentives for the creation of renewable energy generation (large-scale energy target) and for homes and businesses to install small-scale renewable energy systems such as solar panels (small-scale renewable energy scheme). Both these elements are incentivised through the use of certificates which can be traded with the Clean Energy Regulator (CER).

9.2 Aside from the emissions trading schemes mentioned in question 9.1 above, is there any other requirement to monitor and report greenhouse gas emissions?

The National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER) introduced the Emissions and Energy Reporting System (EERS). The CER manages the scheme. Businesses which meet a threshold under the scheme must apply for registration. The thresholds for facilities and for corporations is 25kt and 50kt of greenhouse gas emissions respectively, and consumption of 100TJ and 200TJ of energy respectively.Registered companies are then encouraged to meet reporting, record-keeping and registration requirements set out in the NGER, or otherwise face significant penalties. The primary obligation involves submitting an annual energy and emissions report through the EERS. These reports are then assessed by the CER for compliance with NGER obligations. The NGER includes both civil and criminal penalties for breaches.


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11 Environmental Insurance Liabilities

11.1 What types of environmental insurance are available in the market, and how big a role does environmental risks insurance play in your jurisdiction?

Australian environmental protection laws are becoming increasingly pervasive and stringent, and are attracting a wider range of higher penalties. This has led to an increase in demand from at-risk companies seeking to obtain adequate insurance coverage, and as a result there is a growing environmental insurance market in Australia. Standard products are usually limited to third-party coverage for pollution incidents.

11.2 What is the environmental insurance claims experience in your jurisdiction?

Environmental insurance, while available, is not widely purchased by businesses, therefore the number of claims against insurance companies has been limited. However, the insurance industry noted that the size of these claims is generally significant as the cost of compliance with environmental regulations (in particular with respect to contamination) is high.

12 Updates

12.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in Environment Law in your jurisdiction.

The Court of Appeal, the highest appellate Court in NSW, recently determined the following case with wide-ranging consequences.In 4nature Incorporated v Centennial Springvale Pty Ltd [2017] NSWCA 191, the NSW Court of Appeal determined that the statutory precondition requiring a consent authority to be satisfied that ‘the carrying out of the proposed development would have a neutral or beneficial effect on water quality’ before granting consent was a jurisdictional fact subject to judicial review and to be formed on a correct understanding of the law. The Court agreed with 4nature Inc. that the consent authority had not satisfied the precondition because it had relied on an incorrect baseline for water quality, which included discharges from current mining operations. The NSW Government has since passed legislative amendments to negate the practical effect of this decision although the classification of the precondition as a jurisdictional fact remains a relevant precedent.


9.3 What is the overall policy approach to climate change regulation in your jurisdiction?

Australia has ratified both the Doha Amendment to the Kyoto Protocol and the Paris Agreement, and the Government intends to achieve a 5% reduction in emissions on 2000 levels by 2020 and a 28% reduction on 2005 levels by 2030. Recently there has also been an increased focus on maintaining energy security and affordability during the transition to renewables as a result of domestic energy price surges and large-scale blackouts.In 2015, the Australian Government introduced the National Climate Resilience and Adaption Strategy which aims to oversee a range of climate change adaption and resilience building activities Australian cities, agriculture, infrastructure and natural ecosystems.Australia also implemented the National Carbon Offset Standard which provides guidance to businesses on successfully managing emissions reduction, and allows businesses to obtain carbon neutral certification.State and Territory governments are also pursuing their own policies. For example, the NSW government published in 2016 the NSW Climate Change Policy Framework focused on emissions reduction, and planning for climate risks, including the provision of support for risk areas. The NSW government aims to achieve net-zero emissions by 2050.

10 Asbestos

10.1 What is the experience of asbestos litigation in your jurisdiction?

Asbestos has been an issue in Australia for the past 40 years due to its extensive use in a wide variety of domestic and industrial buildings. Some jurisdictions allow victims of a dust disease to bring an action in a specialist tribunal which can award a broad range of damages at common law in addition to workers’ compensation benefits for victims who are no longer able to work.

10.2 What are the duties of owners/occupiers of premises in relation to asbestos on site?

When refurbishing or demolishing premises where asbestos is present, the owners and occupiers must retain a licensed asbestos assessor to inspect the site and prepare a removal plan. The removal of asbestos materials from the site must be undertaken by a licensed asbestos remover. All contaminated material and equipment must be sealed, labelled and disposed of at an authorised waste facility due to its hazardous nature. An independent asbestos assessor must conduct an inspection to ensure all the asbestos was removed in accordance with the removal plan. An asbestos register must be kept in each workplace detailing any asbestos that has been identified or is assumed to be present at the workplace along with the date, location and type of asbestos. This record must be maintained and should be provided to subsequent owners or managers of that workplace.


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Beatty Legal is one of Australia’s leading environment, valuation and planning law firms.

From climate change, natural resources management and infrastructure development to planning policy and decisions energy development, sustainability strategies, and environmental assessment, our team’s specialist legal and governmental experience complements and supports our expertise in environment, planning and valuation law.

Admitted in 1985, Andrew has been consistently ranked as a leading environmental and planning lawyer in various Australian, regional and global directories.

Before establishing Beatty Legal in 2012, Andrew had been a senior partner of three large law firms:

■ Allen Allen & Hemsley (Sydney) 1993–1999.

■ Mallesons Stephen Jacques (Melbourne & Sydney) 1999–2006.

■ Baker & McKenzie (Sydney) 2006–2012.

Andrew’s practice has focused on dispute resolution and advisory work for clients in the property, resources, energy and finance sectors.

Andrew is admitted in New South Wales, Victoria, South Australia and Western Australia.

Andrew BeattyBeatty LegalLevel 4, 235 Macquarie Street Sydney NSW 2000Australia

Tel: +61 2 8203 2381Email: [email protected]: www.beattylegal.com

Ana is passionate about environmental law having specialised in this area of law since 2005. Prior to being admitted to practise, she worked for two years as the researcher to the Chief Judge in the NSW Land and Environment Court. Her experience in practice includes advising private and government clients with respect to compulsory acquisition, planning and development matters, waste and contaminated land.

In addition to holding a Bachelor of Law and Master of Laws from the University of Sydney, Ana has a Master of European Community law from Université Aix-Marseille III in France and undergraduate degrees in Romanian and French law. She is fluent in French and Romanian.

Ana has been recognised by Doyle’s Guide as a rising star in Australian environment & planning law, having been identified by clients and peers for her expertise in the field.

Ana CoculescuBeatty LegalLevel 4, 235 Macquarie Street Sydney NSW 2000Australia

Tel: +61 2 8203 2381Email: [email protected]: www.beattylegal.com


Chapter 3

Linklaters LLP Lieve Swartenbroux

Belgium

and administrative sanctions (fines, and in the Flemish region also deprivation of benefits) can be imposed in case of environmental infringement. In principle, imprisonment could range from a few days to 15 years for the most serious offences, and criminal fines could amount to currently EUR 160 million for the most serious offences committed by legal entities. In addition, criminal courts can impose repair measures or order the site to be closed. Currently, administrative fines can amount to EUR 2 million. As a rule, any non-compliance with environmental legislation, regulations or permits will first be referred to the public attorney and will only give rise to administrative fines in case no criminal prosecution is initiated. In the Flemish region, certain infringements deemed less serious are exclusively subject to administrative sanctions. Criminal prosecution of environmental offences will depend on the seriousness of the offence committed. Criminal courts mostly impose fines and rarely effective prison sentences.


Access to public information in general is a fundamental right enshrined in the Belgian Constitution. In addition, the European directives on public access to environmental information have been transposed into national law, resulting in legislation on both the federal and regional levels imposing upon a wide range of authorities an obligation of active and passive disclosure of environmental information. Exceptions to the passive disclosure obligations are to be construed restrictively. The public also has a right to participate in public consultations on plans and programmes as well as on environmental permit applications.



In the three regions, specifically listed activities that are likely to have an impact on human health and the environment are subject to an environmental permit. In the Flemish region, the environmental permit is replaced by a single integrated permit covering the former environmental, building permit and allotment permit, and that will fully integrate the permit for retail activities and the nature conservation permit in 2018. In the Walloon region, certain projects require a single permit, covering both the environmental and building permit.



Belgium is organised as a federal state. Most of the environmental law is a matter for the Flemish, Walloon and Brussels Capital regions. The federal state retained only a relatively small field of competences, i.e., product standards, protection against ionising radiation and permits for offshore activities. The protection of the environment (such as soil, air, water, noise), the granting of permits, waste management, climate change, nature conservation, etc. have been devolved to the regions. Each of the regions therefore adopts its own environmental legislation. Although there is a tendency to codify the environmental legislation into one single environmental code in the three regions (e.g., the Flemish Decree on general environmental policy provisions, the Walloon Environmental Code or the Brussels Code on the inspection, prevention, determination and sanctioning of environmental offences, and environmental liability), most of the regional environmental legislation is still scattered over various distinct pieces of legislation. For certain matters, cooperation agreements are entered into between the federal state and the regions, such as relating to the so-called Seveso installations or the management of soil contamination generated by underground fuel tanks. An increasing part of the environmental legislation is sourced in European Union environmental law through directly applicable regulations (such as REACH or the waste shipment regulation) or national implementation of directives (such as the Industrial Emissions Directive or the EU Emissions Trading System Directive).The administrative organisation of the implementation and enforcement of environmental law consists of either an environmental regional department (the Walloon environmental department), environmental agencies (the Brussels Environmental Management Institute) or a combination of both (the Flemish environmental department together with agencies such as the Flemish Public Waste Agency). Local authorities also have certain specific powers relating to environmental matters (permits and enforcement).


The environmental authorities have supervisory powers and can impose administrative measures (such as warnings, but also closing of activities). Both criminal (imprisonment and/or fines)


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In the three regions, the environmental or single permit can be transferred from the current operator to a new operator, upon notification of the environmental authorities. In the Walloon region, the current operator will be jointly liable with the new operator for damage due to non-compliance with the environmental operating conditions as long as the environmental authorities have not been notified of the transfer of the environmental permit.


In case of refusal of an environmental permit or of burdensome environmental conditions, the person applying for the permit can file an administrative appeal with the higher environmental authority, except in cases where the initial permit decision has been issued by the regional authorities (which is the case for large projects in the Flemish Region). Strict time limits are provided for initiating such appeal. Permit decisions on administrative appeal can be challenged within strict time limits by an appeal (including summary proceedings) before a judicial review instance, i.e., the (federal) Council of State for permit decisions in the Walloon and Brussels Capital region, and the (regional) Council for Permit Disputes in the Flemish region.Third parties, including not-for-profit organisations for the protection of the environment can, under certain conditions, also file administrative and judicial appeal against permit decisions.


The European directives on environmental impact assessment for plans, programmes and projects have been transposed in the three regions. For listed activities that are particularly polluting a prior environmental impact assessment must be carried out that will also imply a public consultation before the environmental permit can be applied for.


Environmental authorities can issue notice letters, followed by administrative measures (such as an order to cease the operation) in case of unsatisfactory action by the operator. Furthermore, non-compliance with the permit conditions is an environmental offence that can be subject to criminal sanctions (prison sentence or fine) or alternatively to administrative sanctions consisting of a fine and, in the Flemish Region, deprivation of benefits. With respect to legal entities, a prison sentence is converted into a fine.

3 Waste


As in the European Waste Framework Directive, waste is defined in the three regions as any substance or object which the holder discards or intends or is required to discard. The three regions have also implemented the European provisions relating to by products and end-of-waste status.

Additional obligations apply to specific categories of waste, such as industrial waste in general and hazardous waste. For certain categories of waste, such as electronic (“WEEE”) or packaging waste, sector organisations (Recupel; FostPlus) are created by the persons legally responsible for the collection and processing of such waste, to collectively organise such collection and processing.


In general, the producer of waste has the obligation either to treat its waste itself or to hand it over to a person that has the required permit, notification or accreditation for receiving such waste. The definitive storage or disposal of waste is subject to a prior environmental permit, even if the waste will be treated on the site where it was generated. However, short-term temporary on-site storage of waste awaiting collection by an accredited party is allowed without a specific permit, provided the operator takes all measures reasonably required to prevent harm to human health and the environment.


Waste legislation in the three regions explicitly provides that the costs for waste management are to be borne by the initial producer of the waste or by the current or previous waste holders.


Waste producers have the obligation to either treat their own waste themselves or hand it over to duly authorised, registered or accredited persons that can receive this waste. Waste producers do not have an obligation to take back the waste they have generated. Producers of specific products may have the legal obligation to collect and process waste generated by these products at the end of their economic life (the extended producer responsibility for, e.g., tyres, electronic waste, batteries, etc.). The same applies to persons responsible for introducing packaging into the market as regards the collection and management of the packaging waste.

4 Liabilities


First, third parties having suffered a loss due to a breach of environmental laws or permits, can invoke the civil law tort liability of the person having caused the loss if that third party can establish the existence of a faulty behaviour, its loss and a causal link between both. Faulty behaviour can consist of non-compliance with both specific rules and conditions and with the general duty of care. The burden of proof rests on the victim, who might have difficulties in proving the faulty behaviour (in particular when the loss was not recently caused or when the permit was complied with) or the causal link between such behaviour and its loss.


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Civil law liability can also be based on a strict liability regime provided for in specific laws which do not require the proof of faulty behaviour, such as the liability of the operator of a nuclear plant, the producer of toxic waste or the operator of a facility subject to an environmental permit for recent soil pollution caused by emissions from its facility. Also, the person causing nuisance that exceeds the so-called “normal neighbourhood nuisance” will be liable without the need for proof of faulty behaviour. Losses caused by defective goods (such as polluted land) can also be recovered from the guardian of such defective good, without the need to establish that the defect is due to faulty behaviour. Breaches of environmental law can also give rise to administrative measures imposed by the environmental authorities, such as an injunction to cease operations or the removal of illegal waste. Environmental offences can entail criminal or administrative fines imposed upon the operator. Finally, under specific conditions operators of certain listed activities will be responsible vis-à-vis the authorities to prevent or remedy damage caused to the water, the soil or the protected species and natural habitats, based on the national implementation of the European Environmental Liability Directive.Depending on the legal basis of any claim or action, as well as on the nature of the liability involved, the operator should verify whether all conditions for the liability are present to defend itself against such claim or action.


Operators of activities subject to an environmental permit must comply with the general obligation to avoid, reduce or mitigate any risks, dangers or losses caused by the activity, in addition to mere compliance with the environmental permit conditions. They can therefore be liable for not having complied with this environmental duty of care, even if no environmental limit value was exceeded.


In principle, a director or officer of corporations can be liable vis-à-vis third parties for any faulty behaviour consisting of non-compliance with specific legal or regulatory provisions or with the general duty of care. When the director or officer acts in the performance of their function, the company will be jointly liable vis-à-vis third parties for losses caused by this behaviour. If the director or officer is an employee of the corporation, their civil law liability will only be triggered in case of fraud, gross negligence, or of minor fault when such fault occurs in a usual way. The director or officer can also be held criminally liable for environmental offences, either alone if they committed the most serious fault or, if the director or officer wilfully and knowingly committed the offence, together with the company.Civil law liability of directors and officers can be insured by the corporation; however, fraud will not be covered. Gross negligence can in principle be covered, but specific cases of gross negligence can be excluded from cover. Criminal sanctions, such as fines, cannot be covered by insurance.


In a share sale, the purchaser buys the company with all its liabilities, including those relating to previous sites. In an asset purchase, the past liabilities remain in principle with the previous operator. However, it may prove difficult to distinguish between the previous and the new operator with respect to certain impacts on the environment (such as soil contamination) if the previous activities are not discontinued. In an asset deal relating to activities subject to an environmental permit, the new and previous operators must notify the permit granting authorities of the transfer of the permit. Moreover, an asset sale triggers transfer obligations under the soil legislation in the Flemish and Brussels Capital region, imposing on the transferor the obligation to hand over a soil certificate issued by the environmental agency and to at least perform a soil survey prior to closing if specific listed activities, likely to cause soil contamination, are or have been carried out on site. If further surveys or soil remediation are required, the closing must be postponed and may require that the transferor provide the agency with an undertaking to clean up the contamination, covered by a financial guarantee. These obligations can also be assumed by the transferee.


Lenders are in principle not liable for environmental damage caused by the borrower. However, lenders could incur civil law liability for losses caused by the borrower if they behave as de facto director or officer of the borrower. The mere fact of informing the lender of decisions made by the borrower, or the right for the borrower to present a candidate for a directorship or to assist the meetings of the board of director as an observer, does not entail such extended liability. As regards criminal liability for environmental offences, lenders could be deemed co-offenders or accomplices if they participate willingly and knowingly in these offences in an indispensable or useful manner.

5 Contaminated Land


A distinction is made between the regulatory framework (i.e., the legal obligation to perform soil surveys and remedial activities), and the civil liability for the costs and losses caused by soil contamination. On the one hand, the legal survey and clean-up obligations are contained in the specific legislations on soil contamination that identify, among others, the persons that must perform the surveys and remediation, even if they did not cause the contamination. Environmental agencies will only turn to these identified persons in order to impose surveys and remediation. On the other hand, civil law liability for soil contamination is dealt with either in the specific soil contamination legislation or in the general liability rules.The three regions have adopted specific soil contamination legislation, applying to any contamination, independent from the time it was generated. These specific legislations deal with the legal responsibility for performing soil surveys and soil remediation.


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In the Flemish region, the responsibility for performing soil surveys and soil remediation is cascaded down starting from the operator of a listed activity to the user and ultimately to the owner of the land. Historic soil contamination (predating 29 October 1995) will only have to be cleaned up if it poses a serious threat, based on risk assessment. New contamination must be cleaned up as soon as specific standards are exceeded. In the Brussels Capital region, a distinction is made between single, mixed or orphan contamination. Depending on the nature of the contamination, the person having the legal responsibility for survey and treatment (the current operator or the person having caused the contamination; the person holding rights in rem) as well as the remediation method (risk management or clean-up) may vary. In the Walloon region, the legal obligations to perform soil surveys and remediation rest in descending order upon the person that voluntarily performs these obligations, the person that caused the contamination, the operator, or the holders of rights in rem on the land. Historic contamination (caused prior to 30 April 2007) will need to be cleaned up when it exceeds certain standards and poses a threat, whereas new contamination must be cleaned up as soon as these standards are exceeded.The soil legislation provides for various triggering factors for the performance of soil surveys that are different in the three regions. The legislation also provides for specific exemptions from the legal responsibility to perform surveys and remediation.In the three regions, the person having performed the surveys and carried out the remedial activities can turn to the person that is liable under general civil liability law to recover the costs thereof. In addition, the soil contamination legislations contain specific strict liability rules that may apply under certain conditions, rendering the polluter liable for the costs caused by the contamination. Third parties having suffered a loss can also claim compensation based on the general civil liability rules or on the specific liability rules contained in the soil legislation.


Two situations can occur: contamination was caused by distinct persons, and either only one person has the legal clean-up obligation, or more than one person has the legal clean-up obligation for that contamination. In the latter situation, the environmental authorities in the Walloon and Brussels Capital regions can impose a joint clean-up upon all persons concerned. The Flemish legislation does not deal with this situation. Based on case law, more than one person might bear the legal responsibility for cleaning up contamination caused by distinct sources, whereby each person can only be required to clean up the part of the contamination that it would have to clean up if the other source had not contributed to this contamination.As regards the civil liability regime for losses caused by contamination for which more than one person is liable, this liability will either be in solidum or joint and several, depending on whether distinct faults concurred or whether there was only one common faulty behaviour that caused the contamination.


In each of the three regions, the remediation plan must be approved by the environmental agency or administration in charge. Such decisions can be challenged by the person filing the plan as well

as by third parties with an administrative or judicial review appeal (although third parties cannot file an administrative appeal in the Walloon region). The relevant environmental agency can modify the remediation plan upon request of the person carrying out the remediation or upon its own initiative.


A person can, in principle, claim compensation from a previous owner or occupier for costs associated with contamination caused by the latter, provided the conditions for civil liability are established and the claim is not time-barred. Such compensation can be based on an extra-contractual or a contractual basis (specific representations and warranties, indemnification or hold harmless clause in a sale agreement). The legal obligations to clean up the contamination will, depending on the region, in most cases not lie with the previous owner/occupier. However, in general the legal obligation can under certain circumstances be shifted to a third party (such as a purchaser of the land), provided the latter provides a financial guarantee to the authorities.Civil law liability vis-à-vis third parties cannot be shifted, but depending on the economics of a sale, a polluter might obtain contractual protection from its purchaser against claims of third parties.


The public authorities can claim monetary compensation from the polluter for any damage to a public asset, provided the conditions for civil liability are met; this implies among others that the authorities can prove that the polluter caused the specific pollution. In addition, under the national implementation of the Environmental Liability Directive, the authorities can, under certain conditions, recover costs of measures they undertook to prevent or repair damage to protected species, water bodies and land from the operator.



The environmental inspection services have broad investigation powers, such as access to the premises, access to information, right to interview site personnel and to investigate objects. They can also require the assistance of the police force and use audio-visual means.



In the Walloon and Brussels Capital regions, any person discovering contamination must inform the environmental authorities and affected


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third parties, also in case of off-site migration. In the Flemish region, such notification is only mandatory in case of an incident. However, the operator has a general notification duty in case of (threatening) environmental damage under the environmental liability rules.


The soil legislation in the three regions provides for a series of events triggering an obligation to investigate the land, such as when transferring land, starting or ceasing the operation of a listed risk activity, or during the operation of certain activities, when there are indications of significant soil contamination, or prior to certain applications for building and environmental permits.


In the Flemish and Brussels Capital regions, the transfer of land triggers the obligation to hand over a soil certificate to the transferee and, for land on which risk activities have taken place, the obligation to perform soil surveys and, if treatment is required, to provide an undertaking to treat the contamination backed by a financial guarantee in favour of the environmental authorities. Also, under general civil law, the seller has an obligation to provide the purchaser with sufficient information for the latter to be able to accurately assess the value of the target.

8 General


Contractual indemnities relating to environmental liabilities can limit the claims of the purchaser. They are, however, only valid between parties to the contract and cannot be invoked against the environmental authorities or third parties claiming compensation. Any payment made by the indemnifier to the indemnified person will therefore not release the indemnifier from any liability, should the authorities or third parties claim compensation directly from the indemnifier.


According to accounting rules, a company must register provisions in its accounts for any environmental liability that entails a realistic risk of exposure in the future.Dissolving a company merely with the aim of avoiding any environmental liability, is not so easy. Prior to deciding to dissolve and liquidate the company, the latter must establish a statement of assets and liabilities including provisions that must be made at that time for any off-balance sheet liabilities, such as environmental liabilities that are not yet covered by such provision. The auditor must issue a report on the statement of assets and liabilities,

indicating whether this statement reflects the situation of the company in a complete, faithful and accurate manner. If not all debts vis-à-vis third parties are yet paid, the board should explain how these will be paid prior to the dissolution and liquidation (or sufficient funds will be consigned). The liquidator could be held liable for any liability that has not been settled or for which no consignment was made. Also, the transfer of a plot of polluted land will be subject, in the Flemish and Brussels Capital regions, to the prior performing of soil surveys and if required, to a prior explicit undertaking by the transferor or transferee vis-à-vis the environmental authorities to clean up that pollution, backed up by a financial guarantee such as a first-demand bank guarantee.


Under general Belgian company law, the separate legal personality of the subsidiary and the shareholders entails that the shareholders are not liable for the acts or omissions of the subsidiary. However, certain case law has accepted that in exceptional circumstances shareholders could be liable for their subsidiaries provided the shareholders behaved as the “master” of the subsidiary, i.e., when the shareholders totally disregarded the own legal personality (and decision powers) of the subsidiary. This case law has been applied only in extreme circumstances. In addition, the Walloon Environment Code provides that after liquidation, judicial reorganisation or bankruptcy of an operator, its controlling shareholders shall be bound to pay the fines and to carry out certain measures that were imposed by the administration or the court on the operator, and that were not paid or implemented by the latter. The shareholder may also be held directly liable under civil or criminal law for acts committed by its subsidiary, provided it can be established that the shareholder itself adopted faulty behaviour or committed an offence as (co-)offender or as accomplice of the subsidiary.In principle, Belgian shareholders can be sued in a Belgian court for offences they themselves committed outside Belgium, and this both in civil law matters and, under certain conditions, for criminal offences. No precedent is known where Belgian shareholders of a foreign subsidiary have been fined or ordered to pay compensation by a Belgian court for breaches of environmental law committed or pollution generated by this foreign subsidiary.


There is no general law that offers protection to whistle-blowers against their employers in case of reporting of environmental issues committed within the legal entity in which they are employed.


The Economic Law Code provides for a class action in case of harm suffered by consumers in case of breach of specific legislations. No class action can be initiated in case of breaches of environmental law.


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Not-for-profit organisations can initiate cease-and-desist proceedings with the court in case of (threat of) serious environmental breaches, provided they meet certain conditions relating to their activities relating to environmental protection. Belgian law does not know the concept of exemplary or punitive damages. A victim that suffered damages from non-compliance with environmental laws by the operator or from soil pollution can obtain compensation of its entire (direct and indirect) loss, in kind or by equivalent (in money), in civil liability proceedings. However, in the framework of such proceedings, the court can impose/prohibit certain actions on the defendant and can impose an “astreinte”, i.e. a lump sum penalty payment (e.g., per day of default or per non-compliance) that the defendant must pay the victim if he does not comply with the court order.


Individuals or public interest groups are not exempted from paying the costs of legal proceedings. As any other party, they should pay these costs, including the procedural costs indemnity, when their claim is dismissed.



Only one emissions trading scheme is operational in Belgium, the EU Emissions Trading System (EU ETS), which is a “cap and trade” system applicable to emitters of greenhouse gases from the energy-intensive industry and energy generation sector, as well as to the aviation sector. Initially, the emission allowances were granted based on national allocation plans that were subject to approval by the Commission and that covered a specific trading period. As of 2013, the EU ETS has been harmonised at EU level. Operators subject to EU ETS will either be granted allowances for free, covering part of their emissions and/or must obtain these allowances through auctions. The total cap of allowances available at EU level decreases each year. Since the market was not functioning properly due to too many allowances being available, several measures were taken at EU level to decrease the surplus (backloading; the future Market Stability Reserve).


Apart from the monitoring and reporting obligations imposed by environmental regulations applicable to greenhouse gas installations within the EU ETS, there are no specific monitoring or reporting requirements.


The national climate change policy consists of actions and programmes at both the federal and the regional levels. A political agreement has been concluded on the burden sharing between the

federal and regional levels of the national targets for 2020 (reduction in greenhouse gases in non-EU ETS sectors, renewable energy, energy efficiency, allocation of proceeds of auction of allowances). The regions have drawn up regional plans relating to mitigation (e.g., greenhouse gas emissions from transport and buildings) and adaptation (e.g., in case of flooding).

10 Asbestos


There is limited case law available on various aspects related to asbestos. A recent court decision in appeal ordered a former asbestos producer to pay compensation for the illness and death of a person that had been exposed to asbestos dust brought home by her spouse as a former staff member of the asbestos production facility and by environmental exposure due to their living near the production facility. The court held that the claim was not time-barred, and that the producer failed in its duty of care by not taking sufficient safety measures to prevent the asbestos exposure, notwithstanding the knowledge the producer should have had of the link between asbestos and mesothelioma. Contractors in charge of asbestos removal have been held criminally liable because of removal works performed in breach of the safety standards, as well as ordered to pay damages to third parties in such situation. Some courts also had to decide on the question whether the presence of asbestos in a property can entail the dissolution of a sale or lease agreement. Mesothelioma and asbestosis contracted due to exposure at work are occupational diseases. A governmental social security fund can, under certain conditions, compensate persons suffering from these diseases or their heirs. One of these conditions is that the beneficiaries waive their right to claim compensation from the person liable; i.e., in most cases, the employer.


The use and putting on the market of asbestos-containing applications was banned in 1998 and 2001. However, many buildings still contain asbestos-containing materials. Therefore, the presence and condition of these materials must be monitored, and a plan for managing these materials must be established. The duties in relation to asbestos on site are as a rule imposed upon the employer, based upon the health and safety legislation, regardless of whether the employer owns the building. Employers must establish an asbestos inventory and, if asbestos is present, an asbestos management plan aiming at limiting to the extent possible the exposure of employees to the asbestos-containing materials. This plan requires regular inspections and contains prevention measures as well as measures to be taken when the asbestos is in a bad condition. The inventory and management plan must be shared with contractors carrying out works in the building. Removal works of asbestos can only be performed by accredited contractors. Prior to any works entailing a risk of exposure to asbestos, the employer must perform a risk assessment and must notify the relevant administration in charge of occupational health and safety. The employer must also keep a register of employees that are exposed to asbestos. Such employees must also be medically examined prior to and at regular intervals during such exposure. The employer must provide accurate information to these employees relating to the risks, safety and prevention measures. They must also receive adequate training.


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12 Updates


In 2018, the new single integrated environmental permit will become fully operational in the Flemish region, covering the former environmental, building, allotment and a specific nature conservation permit, as well as, at a date still to be determined, the permit for large retail sites. This permit is granted for an indefinite time, whereas the existing environmental permit has a limited validity period. The permit application rules are also significantly modified, including the granting of the permit for large projects by the Flemish Minister of Environment and a judicial review procedure with the (regional) Council for Permit Disputes. The rules on environmental enforcement will also be adapted to this new integrated permit. The Flemish government also submitted a draft bill modifying the soil legislation and introducing a new triggering factor for mandatory soil surveys, to step up the efforts to clean up all historic soil contamination by 2036. The Flemish parliament also adopted various substantial new rules on land planning.In the Walloon region, the government is preparing new legislation on soil contamination; however, it is not clear yet whether the draft legislation will be adopted in 2018. Also in the Walloon region, a new land planning code was adopted that entered into force in 2017.In the Brussels Capital region, a new land planning code will enter into force on 1 January 2018.In 2016, the European Court of Justice of 2016 held that sector conditions for wind farms issued by the Walloon region should be considered to be a programme or plan that is subject to prior environmental assessment. This decision could have a significant impact on a series of sector conditions adopted without any prior environmental assessment.



Several types of activities are subject to mandatory insurance coverage, such as the operation of nuclear installations, waste treatment installations, service stations, or maritime oil transport. In addition, operators of activities likely to cause pollution can cover such risk by a voluntary environmental insurance contract. Such environmental risk insurance will be tailor-made, depending on the specific activities and risks posed by the operator, based on detailed information and sometimes on an environmental audit. Environmental insurance can cover sudden accidental or gradual environmental damage, direct or immaterial loss, and biodiversity damage. Coverage can extend to mitigation costs, on-site and off-site clean-up costs, third-party bodily injury and third-party property damage, defence and assessment costs. Coverage can also be provided for the exceeding of a soil remediation budget in case of large clean-up projects.In the Belgian market, environmental insurance coverage is still low compared to the risks from operations. From time to time, environmental insurance is used in an acquisition context.


Published case law relating to environmental insurance claims is rare. One court decision relates among others to the question of whether soil contamination caused by the operation of a petrol service station was covered by the ordinary civil liability insurance (which was not a tailor-made environmental risk insurance) of the operator. The court decided that since the pollution was not caused by a sudden incident, no claim could be made against the insurer.



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Linklaters is a leading global law firm, supporting clients in achieving their strategies wherever they do business. We use our expertise and resources to help clients pursue opportunities and manage risk across emerging and developed markets around the world. Our global approach and commitment to excellence ensure the highest standards of quality and service across all our relationships. We bring discipline, teamwork and agility to help our clients navigate important business challenges successfully.

Lieve has been a partner since 1991 and specialises in environmental law, including land planning. Under her leadership, the environmental and public law team continuously advises on major corporate and real estate transactions. Her practice, however, deals to a large extent with various regulatory and liability issues related to permits, soil contamination, emissions trading, waste management and land planning. Lieve also specialises in energy law, covering general regulatory and permit issues, energy from renewable sources (onshore wind turbines and offshore wind farms), and nuclear safety control.

Lieve SwartenbrouxLinklaters LLPBrederodestraat 13 1000 Brussels Belgium

Tel: +32 2 501 94 11Email: [email protected]: www.linklaters.com


Chapter 4

Guevara & Gutiérrez S.C. Servicios Legales

Jorge Luis Inchauste

Zoya Galarza

Bolivia

that all of the activities performed by companies established in the country are adjusted to the requirements set forth in the law, local regulations and the environmental licence granted to each company. In addition to the current structure, the new Constitution provides that legal actions pursuing the protection of the environment can also be carried out by individuals or social organisations through popular action. This action is regulated by Constitutional Tribunal Law No. 027.New projects’ eco-friendly fit with the environment is subject to “social control”, and social organisations are enabled to exercise “popular action” to protect the environment and the sustainability of natural resources.


Law No. 1333 requires local authorities to establish a National Information System for Environmental Information. Therefore, access to environment-related information is viewed as a right that can be exercised by members of the public. However, for access to case-sensitive information, requestors may be required to demonstrate ‘legal interest’.



Environmental permits are required prior to the initiation of any works activities or projects in the country. Although some preliminary studies can be carried out, the core activities can be started only when the environmental licence has been granted.The Constitution sets forth that all entities which wish to implement a new project need to carry out a ‘consultation process’ with affected parties and local communities, prior to being given authorisation for the commencement of a project. Environmental permits are granted to the facility (works activities or projects). Therefore, environmental permits can be transferred from one operator to a different operator prior to authorisation and registration with the competent environmental authority.



The current basis for environmental policy is the Constitution, the Economic and Social Development Plan “Plan de Desarrollo Económico y Social 2016–2020” (the Plan), prepared by the current Government of Bolivia, and the Environmental Law. The Constitution sets forth that one of the essential responsibilities of the State is to assure the responsible and planned management of Bolivia’s natural resources in order to preserve said richness for the benefit of future generations. The Constitution aims to protect and ensure the sustainability of Bolivian natural resources and biodiversity, both by the government and the population itself. The Bolivian Constitution sets forth the “Mother Earth Rights”, which recognise the environment as like an entity with rights. Furthermore, the “Mother Earth Framework Law” sets the vision and basis of an integral development in harmony with the environment. The Plan aims to protect the environment and the traditional ways of life of indigenous communities.The Environmental Law No. 1333 and its regulations comprise the legal framework for industrial activities in the country. The Ministry of Environment and Water is the central government agency, and is in charge of the enforcement of the provision set forth in the Constitution, the Environmental Law and its regulations, and the Plan. This entity acts in close coordination with Local Government Environment Agencies and Municipal Environment Agencies, in the supervision and control of environmental issues.


The enforcement of Environmental Law consists of two aspects: i) the follow-up and verification of compliance with an environmental impact assessment (EIA); and ii) Environmental Quality Control (EQC). An EIA is a requisite of an environmental licence, and consists of a preliminary evaluation of the environmental impacts of all works, activities or projects carried out by the licensee. EQC includes monitoring, inspections and environmental audits to verify


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Guevara & Gutiérrez S.C. Servicios Legales Bolivia


Environmental permits are granted in the form of an administrative resolution. Therefore, should an applicant not agree with the decision issued by the competent environmental authority, the applicant could use a reversal appeal, hierarchical appeal, and finally, file an administrative claim before the Supreme Tribunal of Justice.


In order to obtain the environmental permit, companies are required to present an environmental impact assessment (EIA). The depth and extent of said studies depend on the kind of activity to be carried out. Activities deemed to adversely affect the environment are required to assess the impact of the project on all components of the environment. Other projects, whose impacts on the ecosystem are considered smaller, may conduct abbreviated studies.Environmental audits are particularly recommended for companies that are taking over an ongoing project formerly run by the government or a private company. Not doing so would result in the new company being responsible for all environmental contingencies. It is noteworthy to mention that the current Constitution declared the “historical responsibility for environmental damage”. While the meaning and extent of this provision has not been fully interpreted and understood, we understand that the intention of the government is to pursue the reparation of environmental damage caused in the past by projects which have ended activities or those which continue operating.Environmental audits are also carried out when flagrant violations of the Environmental Law are spotted by the authorities or when individuals or organisations file a claim or protest against a certain project.


Environmental regulators have many enforcement powers at hand. They can go from issuing a compulsory recommendation to requesting the participation of District Attorneys and the support of the public force, or simply stopping the activities of a certain company, until their requirements are met.Legal representatives of companies can be criminally prosecuted if found responsible for the commission of flagrant violations of environmental regulations.

3 Waste


Waste is defined as residual products that result from industrial processes or social activities. Bolivian legislation requires proper management of waste in order to recuperate useful components and avoid damage to the environment.

There are two categories of waste: hazardous waste; and non-hazardous waste. Hazardous waste has to comply with additional duties established in the hazardous substances regulations.


Specific guidelines on the storage and/or the disposal of waste are provided on a case-by-case basis in the environmental permit issued for every activity/project. According to Law No. 755, the storage of waste must be carried out within the premises of the generator or in authorised areas, depending on the characteristics and requirements of waste.The generator must separate its waste at source, at least in the following groups: a) organic; b) recyclable; c) not usable; and d) special and hazardous (when this is generated).The final disposal of waste must be carried out in landfills, which must have the infrastructure and equipment according to the type of waste, quantity and volume, complying with all technical, environmental and safety conditions set forth by the competent authority.


Environmental authorities have approved a shortlist of companies which are authorised to manage a third party’s waste. The delivery of waste (especially if hazardous) to an authorised operator must be certified by means of appropriate contracts, registers and transport manifests, in order to ensure the safe management thereof. In case of non-compliance, the generator will be held jointly and severally liable for damages caused by the operator.


Law No. 755 provides that all waste producers must contribute to the implementation of waste recovery programmes. In addition, all waste producers must comply with all the provisions relating to separation, storage, and delivery of waste.

4 Liabilities


Depending on the impact/seriousness of the violations, non-compliance with Environmental Laws, regulations or permits can result in admonishments, fines, stoppage of operations (all administrative sanctions), damages (civil liability), and even imprisonment of the legal representatives of companies.Due process will be a requisite that both administrative and criminal procedures must comply with. In administrative-imposed sanctions, reverse and hierarchical appeals are typical recourses. In the case of criminal sanctions, an adverse ruling could be appealed at the District Court of Appeals and the Supreme Tribunal of Justice.


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The new Constitution established that crimes in connection with damages to the environment are not subject to a statute of limitations.


The specific purpose of an environmental licence is to determine the limits for the safe operation for a certain project. Once the limits have been set, both the environmental authorities and the project are required to comply with them. The compliance of the environmental licence does not, however, reduce the operators’ liability for clean-up and project closure.


As we pointed out before, directors and officers can be declared to be personally liable for decisions and omissions resulting in damages to the environment.Insurance and indemnity protection can only cover the civil restoration of the damages inflicted on the environment. Criminal responsibilities are intuito personae, and cannot be covered by those means.


The purchase of shares implies the purchase of all of the environmental liabilities of the company that is being sold; whereas the purchase of one or more assets is not necessarily linked with environmental responsibilities. Furthermore, in the transfer of assets, the purchaser may request that a baseline environmental audit be performed before assuming operations, so as to clearly delineate the scope of its environmental liability, as compared to the prior operator.


Typically, lenders would not be held responsible for damages to the environment. However, “reputational risk” for lenders is always a possibility. Therefore, lenders impose very high environmental standards in order to avoid the responsibility for funding projects which are not environmentally friendly.

5 Contaminated Land


Bolivian legislation provides that any party that has caused unjust damage to another is required to repair or compensate said damage. Currently, in order to assign responsibility for contamination of soil or groundwater, the authorities are required to prove that there is a cause-effect relation between the activities of a certain company or project and the contamination caused to soil or groundwater. Once this is done, environmental authorities will pursue the full compensation and repair of the damage caused. Bolivian legislation only provides the compensation of direct damage and loss of profit; therefore, no

punitive damages would be applied for soil contamination. In the case of contaminated groundwater that has an industrial/agricultural use or is for public consumption, there may be criminal sanctions.Historical contamination of groundwater may be attributed to the owners of the company. That is why environmental audits are required at the time of purchasing ownership over a company that has ongoing operations, in order to determine the status of compliance with Environmental Laws and regulations and the possible contingencies the new owners may be acquiring.


Unless there is a baseline environmental audit that can show which environmental liability corresponds to each person involved, the State will prosecute the person or persons that seem most responsible. Persons who allege that they are not culpable for the contamination will have to show that their responsibility is reduced. All intervening parties are declared to be jointly responsible for repair of the environmental damage.


The aim of an environmental remediation plan is to restore the affected area/element to its original condition. Therefore, regardless of the obligations and rights of the parties to the remediation agreement, the environmental authorities will not issue a Certificate of Full Remediation if the affected components (land and water) are not restored to their original condition.Under the Constitution, all activities related to the protection of the environment are now subject to ‘social control’. For example, a Federation of Workers could intervene and object to the validity of the agreement or the judgment of environmental regulators.


Yes, a person could activate a private action to seek contribution from a previous owner or occupier of contaminated land when that owner caused, in whole or in part, said contamination. However, the right to exercise said action would depend on the content of the purchase agreement. Again, it would be beneficial to carry out a baseline environmental audit or study so as to identify the possible environmental liabilities that are attributable to the previous owner.In principle, the party causing the contamination would be identified as being directly responsible for the contamination, and that responsibility cannot be validly transferred to a third party.


The government may absolutely obtain monetary damages for aesthetic harms. The responsibility of the polluter would not be lifted until the government obtains the full restoration of the harm caused to public assets.


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Bolivian authorities have full powers of investigation, and are entitled to use the public force – District Attorneys and police officers – in order to enforce compliance with environmental regulations.



All environmental permits impose an obligation upon legal representatives to report any potential or actual harm to the environment.Not doing so would only increase the responsibilities of the owners of the relevant project.


Individuals and companies are not required, as a general matter, to investigate land for contamination as a citizen’s obligation. However, individuals and companies are required to report any material information related to contamination in a timely manner.If a person/company suspects that there is underlying contamination on land that they have recently acquired, they must perform a baseline environmental study prior to initiating their own operations, or they face the possibility of answering for any prior contamination.The Constitution has established that the protection of the environment is one of the essential responsibilities/obligations of Bolivians vis-à-vis the Bolivian State.


Sellers are not statutorily required to disclose environmental problems. However, the buyer could file a lawsuit for hidden damages if the environmental problems are not properly disclosed.In the purchase of companies and projects known to be environmentally sensitive, audits and baseline environmental studies are very common requirements.

8 General


While it is possible to enter into indemnity agreements, those types

of agreements are considered private, and do not result in discharging or limiting any actual exposure for potential environment-related liabilities in respect to the State. As a result, the Vice-Ministry of Environment and public prosecutors may follow the current owner/operator, notwithstanding such an indemnity agreement.


Until the environmental liability has actually been determined, or a procedure has been initiated, it may be possible to avoid including such liabilities on the balance sheet. However, the dissolution process is widely notified and parties affected by contamination or harm to the environment are entitled to oppose the dissolution until proper warranties are provided by the company which is pursuing the dissolution.


In principle, shareholders and parent companies are protected by the “corporate veil” of limited liability established by a couple of company organisations, set forth in the Bolivian commercial legislation. However, as stated earlier, there is a possibility of initiating a criminal action as a result of a pollution claim. As a result, and especially if direct involvement of a parent company or its representatives in the board or management can be shown, claims could be extended to the administrators and the parent company.


There is no legislation in Bolivia with regard to the protection of persons who report corporate malfeasance in any aspect.


Under Bolivian procedural civil or administrative law, there is no possibility of bringing a class action.In addition, Bolivian legislation only provides for the compensation of direct damages and loss of profit.However, criminal charges may be brought against the representatives and executives of companies as a result of an environmental claim, and such a procedure may also result in damages.We note that any person accused of violating the constitution regarding natural resources may be tried for treason, which carries with it severe penalties.


Individuals or public interest groups do not benefit from any exemption from liability to pay costs when pursuing environmental litigation. However, we note that most environmental litigation is actually carried out by the Vice-Ministry of Environment Biodiversity,


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Law No. 1119 of November 1, 1989 approved the International Labour Organization Convention 162 and the Recommendation 172 concerning safety in the use of asbestos. However, authorities and companies have not yet addressed the matter and as a result, Bolivia continues to allow the extraction and sale of products containing asbestos in all its forms. Certain foreign companies with operations in the country have put in place asbestos-free policies in order to comply with higher standards set forth by corporate law or their lenders’ policies.



Environmental liability may be covered by third party liability insurance in Bolivia.Although the environmental risk insurance market has not yet developed in Bolivia, we expect more and more companies will seek said coverage as a result of the additional environmental regulation, inspection and supervision that is being put in place by the government.We note that Bolivian law requires all insurance to be provided by Bolivian companies, and, as a result, most large insurance contracts are provided by international agencies that reinsure the coverage provided by a local Bolivian insurance company.


In Bolivia, it is not an obligation to have environmental insurance. Further, there are no reported cases from the Bolivian Supreme Tribunal or the Constitutional Tribunal that would allow us to expand on the experience and law resulting from insurance claims because all insurance policies have mandatory arbitration clauses that are typically resolved without the participation of the courts.

12 Updates


The following are recent developments in Bolivian Environmental Law. ■ Supreme Decree 2954 of October 19, 2016 approves the

General Regulations of the Integral Waste Management (Regulations to Law No. 755).

■ Law No. 969 annuls the intangibility of the (Territorio Indígena y Parque Nacional Isiboro-Sécure) “TIPNIS”, which is a national park and an indigenous territory. This law only annuls the element of intangibility, but the territory remains a national park and an indigenous territory.

■ Supreme Decree 2452 of July 15, 2015. This Supreme Decree approves the regulations on the labeling of foods and products intended for human consumption which contain, are, or are derived from, genetically modified organisms. Although this rule is from 2015, it will be enforced from January 2018.


Climate Change, Management and Forestry Development through administrative sanctioning processes, and such an entity is exempt from paying any costs during the administrative procedure or third party costs from ensuing court litigation.



Bolivia was part of the Kyoto Protocol, and, as a result, important initiatives in the carbon market were implemented, particularly in the energy and sustainable forest sectors. For example, the Climate Action Project: Noel Kempff. However, the current government does not agree with trading market schemes, and has “condemned” such market mechanisms as “mercantilism of the environment”. Currently there are no clear regulations, procedures or requirements in this regard in Bolivia.


As described in question 1.2 above, in order to develop any activity in the country, applicants must have detailed the impact of the project(s) and proposed a plan for follow-up, control and mitigation, and as a result there is a requirement to monitor and report greenhouse gas emissions and to mitigate such emissions.Additionally, several companies have begun voluntarily, as part of their corporate environmental responsibility, to reduce their “carbon footprint”. These initiatives are certified by the Bolivian Standard ISO 14064-NB.


Within the Economic and Social Development Plan guidelines, there is a requirement to develop specific regulations regarding greenhouse gas emissions and, more broadly, regulate this area of environmental concern.In addition, the Mother Earth Framework Law is the main instrument of political regulation that is used to approach climate change. This law provides that the State will promote actions to prevent and reduce the risks of climate change, and creates the Plurinational Authority of Climate Change, which, according to the mentioned Law, is responsible for policy formulation, development and implementation of strategies, plans, programmes and projects related to climate change.

10 Asbestos


The Bolivian population is highly uninformed with regard to asbestos-contaminated materials and the effects on human health, thus there is no experience of asbestos litigation in Bolivia.


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Guevara & Gutiérrez S.C. is one of the preeminent law firms in providing a full range of legal services in Bolivia; it is consistently distinguished by many prestigious publications as one of the most highly recommended law firms in Bolivia. Many years of experience are combined in this law firm, which is dedicated and committed to offering highly efficient and professional services.

Guevara & Gutiérrez S.C. offers its services within Bolivia through its main offices located in La Paz and Santa Cruz and by means of its affiliates which are located throughout other important cities in this country.

Teamwork is the cornerstone of the services rendered to our clients. Teamwork allows our firm to carry out highly competitive projects in an efficient manner, assuring a constant information exchange with clients, who may have, at all times, access to the attorneys in charge of any particular subject to absolve any query.

Our mission is to grant the highest quality integral legal services.

Jorge Luis Inchauste has been a partner with Guevara & Gutiérrez since 2002 and has acquired substantial experience in international corporate transactions, structured finance and mergers and acquisitions.

Jorge was admitted to the La Paz Bar in 1997; and admitted to the New York Bar in 2004. He holds an LL.M. in International Legal Studies from Georgetown University in Washington D.C.; and a Master’s in Economic Law from the Andean University. He obtained his law degree from the Universidad Católica Boliviana in La Paz.

Prior experience: Foreign Associate at Piper Rudnick LLP, New York, 2001–2002; General Secretary, Mediation and Arbitration Centre; and Legal Counsel, Bolivian National Chamber of Commerce.

Practice areas: International Business Transactions; Structured Finance; Mergers and Acquisitions; Corporate; Alternate Dispute Resolution; Development of Natural Resources; and Regulated Industries.

Languages: Spanish and English.

Jorge Luis InchausteGuevara & Gutiérrez S.C. Servicios LegalesCalle 15 de Calacoto Torre Ketal Piso 4 Ofi. 2La Paz Bolivia

Tel: +591 2277 0808Email: [email protected]: www.gg-lex.com

Zoya Galarza has been a senior associate with Guevara & Gutiérrez since 2013. Her practice focuses on Administrative and Regulatory Compliance, Environmental and Natural Resources Law, Antitrust Law, and Constitutional Law.

Zoya was admitted to the La Paz Bar in 2009. She holds an LL.M. in Environmental Law, (2012) from New York University (NYU) School of Law. She has completed Postgraduate Studies in Corporate Law at the Andean University in La Paz. She obtained her law degree from the Universidad Católica Boliviana in Tarija, Bolivia.

Prior Experience: Research Assistant to Professor Richard B. Stewart, New York University, 2012; and Foreign Associate, Infante Zumpano Attorneys at Law, Miami Florida, 2013.

Teaching Experience: Lecturer on Environmental Law, and Natural Resources Law, Universidad Privada Boliviana.

Languages: Spanish and English.

Zoya GalarzaGuevara & Gutiérrez S.C. Servicios Legales Calle 15 de Calacoto Torre Ketal Piso 4 Ofi. 2 La Paz Bolivia

Tel: +591 2277 0808Email: [email protected]: www.gg-lex.com

(Law No. 1700). Several social organisations and indigenous peoples worked on the proposal; nevertheless, the competent environmental authority has not yet approved it, and the proposal is still under formulation.

■ The Law of the Integral Development of the Amazon Proposal (“Propuesta de Ley del Desarrollo Integral de la Amazonía”). The object of this law is to promote and regulate the integrated and sustainable development of the Macro-region, “Bolivian Amazon”. To date, the project has not been approved.

Currently the following environmental legislation proposals are being discussed and reviewed:■ The Water Law Proposal (“Propuesta de Ley Marco del

Agua”). The Congress is currently reviewing the proposal for the Water Law. This law establishes: i) the general regulations for the use of water; ii) standards for the sustainable management of water; and iii) the institutional framework for the management of this resource.

■ The Forest Law Proposal (“Propuesta de Ley Forestal”). This proposal is intended to replace the current Forest Law


Chapter 5

Machado Meyer Advogados

Roberta Danelon Leonhardt

Daniela Stump

Brazil


According to Federal Law No. 10,650/2003, the public authorities shall grant public access to any environment-related information, especially regarding: environmental quality; environmental policies; plans and programmes; accidents, risk and emergency situations; discharge of wastewater, atmospheric emissions and generation of waste; toxic and hazardous substances; biological diversity; and genetically modified organisms (GMO). Exceptions are made for confidential information.



Pursuant to the National Environmental Policy, the construction, installation, expansion and operation of any establishment or activity that uses environmental resources, deemed as polluting or potentially polluting, or that could possibly cause any kind of environmental damages, is subject to a prior licensing proceeding.The environmental licence may be transferred from one titleholder to another at anytime, providing the successor fulfils the licensing requirements.


All the administrative decisions – including the decision on the granting of an environmental licence – may be challenged by means of an Administrative Appeal. The environmental authorities may foresee different procedures for challenging the denying of an environmental licence.A Judicial Lawsuit may also be filed seeking the annulment of an illegal administrative decision.


In order to support the environmental licensing, the entrepreneurs



The purpose of the Environmental National Policy (Federal Law No. 6,938/1981) is the preservation, improvement and recovery of the environmental quality, in order to ensure the socio-economic development, the interests of national security and the protection of human rights. The Federal Constitution sets forth the duty to preserve the environment for future generations and sets out criminal and administrative sanctions, both for individual and legal entities, as well as the obligation to repair the environmental damages. The competent licensing authority enforces the environmental law and, in case of an omission, the other environmental authorities may step in. The federal environmental agency, the Brazilian Institute for Environment and Natural Renewable Resources (IBAMA), has jurisdiction for licensing depending on the locality and the characteristics of the enterprise (i.e. nuclear power plants, hydroelectric power plan, among others). The Municipal environmental agencies have jurisdiction to license enterprises and activities with local impacts, while the State environmental agencies have a general jurisdiction over the environmental licensing proceedings of enterprises and activities that are not covered by Federal or Municipal agencies. In addition, the public prosecutors monitor the compliance with the environmental legislation, as well as seek the recovery, repair and compensation of any environmental damage.


The licensing environmental agencies periodically perform site inspections of the potentially polluting enterprises and in case any environmental damage and/or non-compliance is identified, the agency may impose administrative sanctions, such as warnings, fines and embargoes, and also ensure the recovery of the environmental damages. In addition, such authorities may communicate any suspicion of environmental crime to the Police and Public Prosecutor’s Offices. In addition, the public prosecutors may investigate any complaints from the public regarding non-compliance.


Braz

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Machado Meyer Advogados Brazil

must prepare technical studies demonstrating the main characteristics of the intended activities and foreseen environmental impacts that may be caused by such activities, as well as the conditions of the location of installation. The comprehensiveness of the studies varies according to the potential environmental impacts, and, depending on that, entrepreneurs may be required to conduct simplified or complex evaluations contemplating multidisciplinary aspects.The projects capable of causing significant impact to the environment are subject to the preparation of a detailed technical study referred to as Environmental Impact Assessment and related Report of Environmental Impact (EIA/RIMA); a time-consuming task involving a multidisciplinary team and significant expenditure.


The environmental authorities can suspend or cancel the permit in case of a breach of environmental rules or any of the technical conditions set forth in the licences. In addition, the licence might be cancelled in case of supervening severe environmental or health risks or if false and/or missing information was provided during the environmental licensing.The absence of environmental licences for enterprises or activities considered as deemed polluting or potentially polluting is subject to criminal and administrative sanctions, besides the obligation to redress the damages caused.

3 Waste


Pursuant to the National Solid Waste Policy (Federal Law No. 12,305/2010), the definition of waste is very broad. In a nutshell, waste is a material or substance discarded as a result of human activities in society, whose final disposal is required.The hazardous waste is a category of waste subject to some additional controls. They are also defined as a waste involving substantial risks to public health or environmental quality due to some characteristics (such as inflammability, corrosivity, reactivity and toxicity). Some additional authorisations may be required for their transportation, storage and exportation.


To the extent that the storage or disposal of its waste is duly licensed by the environmental authority. In case the company carries out any activities beyond those which are permitted, it may be subject to the imposition of penalties.


According to the National Solid Waste Policy, the inadequate disposal of solid waste, as a potential source of contamination of soil

and groundwater, may lead to the imposition of penalties irrespective of liability for damages. Pursuant to the National Environmental Policy, the polluter is obliged, independently of fault, to indemnify or repair the damages caused to the environment and to third parties, affected by its activity (which is the strict liability). As the waste producer can be considered as an indirect polluter, it may be jointly and severally responsible for the environmental recovery.


The National Solid Waste Policy sets forth the shared responsibility for the life-cycle of products, which includes manufacturers, importers, distributors and retailers, consumers and the holders of public services. With regard to the shared responsibility, the law provides that some industrial sectors shall implement reverse logistics systems (take-back systems), actions, procedures and the means to enable the collection and recovery of solid residues, aimed at their reuse in the industrial cycle or other productive cycles, or other destinations. The reverse logistics systems may be implemented jointly or individually by the companies.

4 Liabilities


There are three types of liability that may arise due to breach of environmental laws and/or permits, as follows: Civil liability: The National Environmental Policy sets forth that environmental civil liability is of an objective nature (strict liability or liability irrespective of fault), meaning that demonstration of cause-effect relationship between the damage caused and the agent’s conduct suffices to trigger the obligation to redress the environmental damage. The entities authorised by law may file claims for the recovery of the environment, usually through a public civil action. In this case, the polluter shall defend him/herself in a judicial proceeding (appeal). Administrative liability: According to the Federal Decree No. 6,514/2008, any action or omission that infringes legal rules pertaining to the usage, enjoyment, support, protection and restoration of the environment is deemed to be an administrative violation or infraction. Perpetrators may face administrative penalties that are imposed by means of infraction notices. In this case, the violator has to present an administrative defence. Also, it is possible to file an action seeking annulment of the infraction notice. Criminal liability: Pursuant to the Federal Law No. 9,605/1998, environmental criminal liability applies to every person, whether individual or legal entity, which concurs with certain offences considered as crimes. The criminal liability depends on the verification of fault or intent. In this case, the plaintiff shall defend him/herself in a judicial proceeding (appeal).


If there is a cause-effect relationship between the damage and the activities of the operator, it may be held liable for the environmental damage, even when operating within permit limits.


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Upon occurrence of an environmental violation, a legal entity’s officer, administrator, director, manager or agent would also be subject to criminal sanctions. However, these individuals would only be prosecuted and convicted for having caused environmental damage if and only to the extent it can be proved that the crime is attributable to their conduct or omission. Individual transgressors are subject to the following criminal sanctions: (i) custodial sentence – imprisonment or confinement; (ii) temporary interdiction of rights; and (iii) fines. The sanctions imposed on legal entities, on the other hand, are: (a) temporary interdiction of rights; (b) fines; and (c) rendering of services to the community. There is no insurance or indemnity that could protect a person from the criminal liability. However, besides the common civil liability insurances, there are specific environmental insurance types in the market, which can assist/protect a company or person when subject to the payment of an amount regarding environmental liabilities.


From an environmental liability perspective, the difference between a share sale and an asset purchase is mainly associated with the successor’s liability. In the first case, the successor assumes the environmental liability arisen from the operation of the company as a whole. In the second case, the buyer assumes the liability only related to the acquired asset.


The question that is frequently raised due to the wide definition of “indirect polluter” is whether lenders may be considered as an indirect polluter if a given financed project causes environmental damage. In Brazil, there is still no deep analysis related to the definition of the indirect contribution for the activity that caused the environmental degradation. In other words, even though there is no questioning about the indispensable conditions for the responsibility on the environmental civil sphere (i.e., author – direct or indirect polluter – occurrence of an environmental damage and causality relation), there is no definition of the limits of the indirect contribution for the activity that caused the environmental degradation. However, the National Environmental Policy is silent in relation to private lenders and there is no precedent that could be singled out where a private lender has been held liable for any environmental damage.

5 Contaminated Land


The responsibility for environmental damages in the civil sphere is joint and several, including for damages caused by contamination of the ground and groundwater. Anyone who has contributed

or benefited from a specific area can be held responsible for its remediation. In case of purchase of a contaminated property, the buyer will assume responsibility for repairing the environmental damages, even if it did not cause it directly. The assumption by the buyer of a joint and several liability to remedy any existing contamination requires the adoption of contractual mechanisms in order to protect the interests of the new owner, which may exercise its right of recourse against the polluting agents.


Since liability is of a joint and several nature, the aggrieved party may choose one out of all polluting agents (that meets all legal requirements to be sued, or simply the one with the healthiest economic situation) to redress the damages caused. The sued polluting agent will have a right of recourse against the other actually having caused the environmental damage.


The regulator may require additional work for a remediation programme if there is a clear justification. Interested third parties, including the public prosecutors, may question the remediation process approved by the environmental agency if not in compliance with the applicable law.


Those who acquire a contaminated area may seek compensation for prior damages caused by the former owner or possessor. However, even though this is important for strengthening the right of recourse, contractual clauses are not enforceable against third parties, mainly public authorities.


Public authorities and especially the Public Prosecutor’s Office have the right to demand monetary compensation for aesthetic damages to public properties, as this kind of damage is also considered as environmental damage under current legislation. However, it is important to state that in any environmental damage, the priority is to repair it, returning it to its original state, and that monetary compensation may be required only when the damage is irreversible or the population suffered from collective moral damages.



Environmental agencies have the power to conduct site inspections,


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require technical assessments from the entrepreneurs or the collection of samples to verify the compliance of the environmental conditions to the legal standards. Additionally, the public prosecutors may also require information from entrepreneurs, environmental agencies and interview employees under a civil inquiry.



The legislation in force for some States requires the immediate communication upon discovery of contamination, even if suspected, so the competent environmental and health bodies monitor the confirmatory and remediation processes. In particular, the regulation enacted for the State of São Paulo has been recently modified, in order to increase protection and control over contaminated areas. In any case, disclosure of contamination and other environmental events is recommended to take place as soon as possible, in order to avoid liabilities and prevent pollution from spreading. Exceptions relating to specific activities may apply, notably in case of environmental accidents (e.g., mining, oil and gas, among others).


Pursuant to the Environmental National Policy, the monitoring of environmental quality and conditions is mandatory for both private and public individuals. As a consequence, licensing authorities generally require the conduction of environmental investigations aiming at evaluating the existence of pollution or suspected contamination. In case of confirmed contamination, however, the management of such liability, submission of periodic reports and conduction of monitoring campaigns, may also be required.


Although there is no legal provision on the mandatory disclosure of environmental liabilities among private contracting parties, the performance of due diligence in transactions is a common practice in Brazil, in order to identify potential liabilities and required mitigation measures. As a result of this procedure, the parties can contractually allocate the responsibility between themselves for any issues which have arisen, in attention to the regulation in force and respect of the parties’ right of recourse.

8 General


Brazilian civil environmental liability is based on strict, joint and several liability standards. Therefore, in case one’s activity or

enterprise is related to an environmental damage (irrespective of fault or intent), such person or legal entity may be held liable for repairing or compensating the damage. Joint and several liability standards, on the other hand, set forth that, in case more than one person or legal entity can be deemed liable, the whole reparation/compensation can be sought against any of them, individually. The aggrieved individual might seek the right of recourse against the others that caused the damage.As per contractual provisions, based on Brazilian law, environmental liability allocation clauses may only govern the relation between the contracting parties. Thus public authorities are not bound by such contractual provisions. Therefore, for example, in a contract involving A and B, despite the existence of a specific clause allocating the environmental liability to B, in case A is deemed by law as a liable party (e.g. for remediating a contaminated area), public authorities may seek the whole reparation/compensation from A. The referred contractual provision would not shield A from public authorities’ claims. Nonetheless, A could afterwards seek indemnification from B, since, between them, the contract provided that the liability ultimately incurred by A should be dealt with and paid by B.


In theory, considering that environmental issues may be deemed a liability of the corporation, it should be considered at least as a contingency in the balance sheet.As per the dissolution of a company, we must highlight that potentially pollutant enterprises must be subject to deactivation procedures in order to legally cease their activities. Legislation has been tightening in this direction. The State of São Paulo has recent laws and regulations describing how the deactivation of a company must be carried out. Therefore, the abrupt dissolution of a company without the proper decommissioning and resolution of existent environmental liabilities may have its legality questioned by the authorities.


Due to the application of the piercing of the corporate veil theory in Brazil, shareholders can be liable for breaches of environmental law. Such theory may apply whenever the existence of the company jeopardises the recovery of environmental damages or act as an obstacle (irrespective of fault or abuse of right) to the proper reimbursement or remediation of the former environmental conditions.Nonetheless, in relevant environmental cases it is usual for prosecutors to seek shareholders’ joint and several liability and not the piercing of the corporate veil. In this case, please note that the liability sought is not subsidiary, but directly attributed to the shareholder. Such liability, however, should only be applied in case the shareholder is directly involved with the management of the company and involved with the practices that caused the environmental damages. Regarding the parent company’s exposure in its national courts, it would depend vastly on the specificities of the law applicable in the parent company’s country.


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Public institutions that provide a whistle-blowing mechanism for anonymous tips in Brazil must protect the identity of the whistle-blower. The specific forms of identity protection varies according to the institutional regulations. In the State of São Paulo, for example, the state environmental agency provides for confidential procedures when dealing with an anonymous contribution.On the other hand, in cases of corporate “whistle-blowing” policies, employees that provide licit information shall not be subject to persecution from the employer due to the provided information.


The Public Civil Action is the most common type of action used in Brazil for pursuing environmental claims. Public Civil Actions may be filed by public prosecutors and defenders, the government (federal, state and municipal), civil associations, foundations, as well as fully or partially public companies. Popular Claims, which may be filed by any individual, may also be filed with such purpose. Such actions must be filed aimed at the recovery of the environment exclusively.Regarding damages to individuals or group of individuals, as a consequence of an environmental damage, Public Civil Actions and Popular Actions are not applicable. Individual actions must be used for such purpose.Punitive damages (penal or exemplary) are not applicable in Brazil.


For the filing of Public Civil Actions and Popular Actions, claimants do not need to pay for the costs upfront. Besides such rule, certain parties legitimated to file such actions are exempted by law from such costs, such as public prosecutors and public defenders.On the other hand, in individual private actions seeking indemnification as a consequence of an environmental damage, costs must be paid upfront by the claimant. However, in case the poor financial condition of the claimant is proven, the benefit of free judicial assistance may be granted and the costs may be waived.



In line with the policies set out by the United Nations Framework Convention on Climate Change (“UNFCCC”), as well as according to the goals established when the Kyoto Protocol was in force, Brazil has developed its own guidelines and objectives on the reduction of gas emissions, mainly by means of the National Policy on Climate Change (Federal Law No. 12,187/2009). Pursuant to such legislation, the Brazilian government has committed to a voluntary target on the reduction of gas emissions, which has been replicated at State and Municipal levels. Even though no emission trading scheme has been formally implemented so far by the public

authorities, Certified Emission Reductions (CER) can be traded by private parties in different ways, notably through the stock exchange.


The legislation in force provides for specific guidelines on air emissions, as well as on emission standards, but no cap for GHG emissions has been established so far. During the environmental licensing process, the competent authorities may require the adoption of control measures, improvement of existing equipment and periodic monitoring of gas emissions in general. Obligations vary from case to case and failure to comply subjects the offenders to both criminal and administrative penalties, irrespective of the liability for damages.


The provisions enacted by the National Policy on Climate Change are an important step, as Brazil made a national voluntary commitment for reducing local gas emissions, with the main objective of decreasing emission levels by 2020. There has been a lack of concrete actions to date, however; on the other hand, firm progress has been made in reducing emissions arisen from deforestation. Surveillance measures are constantly been improved, in an attempt to prevent forests from being converted mainly to new crop and livestock areas.

10 Asbestos


The liabilities involving asbestos products are divided into four main areas of concern: (a) environmental restrictions; (b) labour force exposure; (c) exposure of consumers to asbestos containing products; and (d) other people indirectly exposed to the asbestos. Most of the asbestos liabilities are resolved by monetary awards. Successful labour, consumer and civil claims result in decisions awarding compensation for damages suffered in connection with the asbestos exposure, including both (a) compensation for damages, and (b) compensation for pain and suffering in an amount that gives comfort to the inflicted person and punishes the offender (provided that such compensation for pain and suffering does not cause unreasonable enrichment).


Under an environmental perspective, the major aspects that the owners/occupiers shall focus on are: (a) management and disposal of the residues generated by the use of asbestos; and (b) eventual land contamination. The management and final disposal of residues containing asbestos must cause neither any damage to the environment, nor any inconvenience to the public health and welfare. Therefore, disposal and control measures for the correct management of such residues must be implemented by the company.


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12 Updates


At a Federal and State level, new rules have been published in relation to several areas, such as oil & gas, solid waste, environmental licensing, contaminated areas and specially protected areas. We will give an overview of the main ones.The Brazilian National Council for the Environment (CONAMA) published Resolution No. 479/2017 that provides for environmental licensing of rail projects with low potential of environmental impact and ensures the compliance of the enterprises in operation.CONAMA also published Resolution No. 482/2017 which aims to regulate the emergency response procedure of using controlled oil burning to deal with oil leakage incidents in the sea.Regarding solid waste, Resolution No. 11/2017 and Federal Decree No. 9,177/2017 regulated the reverse logistics systems (take-back systems), created by the Solid Residues National Policy, laid out by Federal Law No. 12,305/2010.In the State of São Paulo, several new rules have also been published, such as: (i) the Board of Officers Decision No. 0382017/C, from the State Environmental Agency (CETESB), which updates the procedures and guidelines for the management of contaminated areas within its competence; (ii) Resolution No. 82/2017, from the State Environmental Secretary (SMA), which regulates the permitted activities in sandbank vegetation (restinga) areas; and (iii) Resolution No. 74/2017, from SMA, which provides for the environmental licensing of electric power generation by solar photovoltaic sources.Finally, in 2017, we also followed the progress of two important matters: (i) the discussions regarding the Federal Bill on the environmental licensing – even though there has been great activity in the House of Representatives with the objective of concluding its final version, it has not yet been voted; and (ii) the judgment of four unconstitutionality actions (Ações Diretas de Inconstitucionalidade or “ADIs”) and a declaratory action of constitutionality (Ação Declaratória de Constitucionalidade or “ADC”) related to some provisions of the current Forest Code (Federal Law No. 12,651/2012) – the Federal Supreme Court heard the oral arguments and their judgment was indefinitely suspended.

The owner or occupier of a property which is contaminated by hazardous materials, such as asbestos, is subject to a notice of infraction to be issued by the environmental authority demanding the clean-up of the land, being or not the entity which has caused such contamination – a circumstance that may entail significant expenditures.



For a long period, the environmental insurance market in Brazil was restricted to common civil liability insurances. Currently, however, the development of the Brazilian Environmental Law and the enforcement thereof has triggered a surge of different and specific environmental insurance types in the market, such as insurances covering risks due to: (i) installation and operation of infrastructure assets; (ii) civil works and services; (iii) transportation of environmental interest materials; and (iv) liability derived from pollution damages, amongst others.So far, environmental risks insurance has played a small role in Brazil. This scenario, however, is currently changing in light of the law enforcement hardening, the international reckoning of the environmental insurance as a tool for the fostering of green financing and the discussions taking place in Brazil due to legislative proposals for the establishment of mandatory environmental risks insurances.


Due to the incipient role that environmental insurance has played so far in Brazil, there are not many claims relating therewith. Nevertheless, considering the strengthening of law enforcement and some relevant environmental accidents that happened in Brazil over the last decade, the stiffening of the scrutiny of insurance companies is clearly visible.


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We have been building our history for 45 years, inspired by sound ethical principles, the technical skills of our professionals, and a close relation with our clients. We are ranked as one of the major law firms in Brazil, with over 700 professionals.

Our focus: business. We provide innovative legal solutions that anticipate scenarios and make business possible. In other words, we work to offer intelligent legal solutions that contribute to the business growth of our clients and transform realities.

Our human capital qualifies and helps us to serve large Brazilian and multinational companies, including eight of the 10 largest Brazilian groups. We are always working to establish a partnership that is built with day-to-day interaction, empathy, and our commitment to our clients and employees.

Partner of the Environmental Law practice and Head of the Labour, Real Estate, Litigation and Competition Law practices, Roberta Danelon Leonhardt is a specialist in environmental law, having outstanding performance in the management of complex environmental crises due to her skills for the composition of multiple interests in negotiation processes. Leonhardt’s work embraces the coordination of working teams for the provision of environmental assistance in matters related to the implementation of potential polluting projects and the analysis of environmental liabilities, support to investors and financial institutions for the identification and management of environmental risks, as well as working with environmental agencies and the Department of Public Prosecution. Leonhardt is becoming renowned in the market of Environmental Disputes practice due to her persuasive ability and solid environmental practice background and has experience in assisting clients of a wide range of areas such as infrastructure, logistics, food and beverage, chemicals, real estate, agribusiness, steel, mining, automotive, banking, pharmaceutical and heavy industry in general.

Roberta Danelon LeonhardtMachado Meyer AdvogadosAvenida Brigadeiro Faria Lima nº 3144 – 13º floorSão PauloBrazil

Tel: +55 11 3150 7009Email: [email protected]: www.machadomeyer.com.br

Daniela Stump is a specialist in environmental litigation and consultancy with emphasis on the identification and management of environmental risks and liabilities in the structuring of infrastructure, sale of assets, mergers/acquisitions and concessions projects. A large part of Daniela Stump’s work concerns legal assistance for the management of contaminated areas, identification and allocation of environmental responsibilities among the contracting parties, support to environmental litigation and practice before environmental agencies and the Public Prosecutor’s Office, and drafting administrative defences. Daniela Stump has previous experience in providing legal assistance to clients of several business areas, such as infrastructure, logistics, food and beverage, chemical, real estate, agribusiness, and mining.

Daniela Stump Machado Meyer AdvogadosAvenida Brigadeiro Faria Lima nº 3144 – 13º floorSão PauloBrazil

Tel: +55 11 3150 7003Email:[email protected]: www.machadomeyer.com.br


Chapter 6

Willms & Shier Environmental Lawyers LLP

Richard Butler

Joanna Vince

Canada

natural resources. Environmental statutes generally focus on broad environmental goals including conservation, pollution prevention, environmental liability for contamination (“polluter pays”) and, more recently, innovations in waste reduction, contaminated land rejuvenation, and climate change/carbon reduction. In a case of failure to comply with laws or approvals, or in the event of spills or other environmental harm, both federal and provincial levels of government have broad discretion in enforcement. Environmental regulators generally employ a staged approach to environmental enforcement that is responsive to the potential adverse effect to the environment and/or threat to human and animal life. Initial communications may include recommendations and coordination of remediation efforts. If compliance is not voluntary, both levels of government have broad order-making powers to compel compliance. For more significant violations and/or repeated offences, regulators may employ prosecution with fines and/or prison sentences determined upon conviction. In some circumstances, if the regulator is required to spend funds to undertake investigation and/or remediation, those regulators may seek civil penalties to recover those funds.


Public registries provide information on contaminated sites, proposed legislative/regulatory amendments, proposed environmental approvals and permits, and the status of environmental assessments for major projects. Many of these sites provide updates on the status of these matters/approvals and provide a mechanism for public feedback. At the federal, provincial and municipal levels any person may initiate a request for information from those public authorities through Freedom of Information legislation. Records may be refused based on a number of enumerated protections including legal privilege, sensitive commercial information or personal information.



Environmental permits/approvals within each province and territory will be specific to the regime and contaminant (e.g. waste, carbon). Provincial approvals are required where there is a discharge of contaminants into the air or water, water taking, and in waste



Canada is a federal parliamentary democracy with a division of powers between a nationally elected federal government and locally elected provinces (10) and Northern Territories (three). The federal government generally retains jurisdiction over matters that cross provincial or international boundaries, including fisheries and nuclear energy. The provinces and Northern Territorial governments have jurisdiction over property and civil rights within their boundaries, including land resources, mines, minerals, forestry and most power generation. Despite that division of powers, Canadian courts have determined that the federal and provincial/territorial governments share jurisdiction to adopt and enforce environmental legislation. Municipal entities and conservation authorities may enact local by-laws to protect environmental spaces (e.g. storm-water, noise and odour); however, those by-laws may not conflict with federal or provincial legislation. Environment and Climate Change Canada is the federal environmental regulator for (among other matters) fisheries’ habitat, transportation of hazardous materials, and persistent toxic substances. The federal government implements regulations giving effect to environmental treaties that Canada has ratified, including climate change and hazardous materials.The various provincial and territorial ministries of the environment are responsible for environmental policy and enforcement at the provincial level, with characteristics of those policies relating primarily to geographical priorities for those provinces. Every company that emits contaminants into air or water, or disposes of waste, has to obtain permits from the relevant provincial or department or ministry of the environment. Provincial ministries of the environment generally hold significant powers to regulate environmental issues and other resource activities including, but not limited to: waste; contaminated properties and Brownfields redevelopment; environmental permitting; and discharge approvals.


Both federal and provincial governments have broad powers to enact laws to regulate the environment and those who work with


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Willms & Shier Environmental Lawyers LLP Canada

management (transportation and storage). Federal permits are required for destruction of fish habitat. Energy facilities may also require approvals from the local or federal Energy Boards. Some jurisdictions are moving towards online self-registration approval system for air discharge.The ability to transfer a permit to another party depends on the jurisdiction and type of permit. Transferring a permit for the same operation at the same property may only require notice to the relevant regulator, or consent of the regulator. Some permits (higher risk of environmental harm) are non-transferable.


The permit applicant may appeal a regulator’s decision (refusal or onerous conditions) to an administrative tribunal or board. These tribunals exist at both the federal and provincial/territorial level. Some decisions must be appealed to the government minister or cabinet, if so provided for in legislation. There may be a limited right for impacted third parties, such as neighbouring operators or property owners, to appeal a regulator’s permitting decisions. Judicial review can be initiated in federal or provincial courts where an appeal is not captured by the applicable legislative framework.


Environmental impact assessments may be required for major projects; i.e. those with significant anticipated environmental impacts, such as electricity generation, mines or marine terminals. Low impact projects may only require screening assessments, while higher impact projects are subject to comprehensive assessments, with public and Indigenous consultation as significant elements. Environmental impact assessments are common in the Northern Territories, and are required for most natural resource projects as part of their land and water licences applications. Environmental audits are not required by statute, but can be required in transactions or in the context of private financing or insurance.


In all jurisdictions, regulators have broad powers to enforce permits and approvals. Powers are divided between abatement powers (working with a company to move into compliance) and enforcement. Abatement powers include written instructions, directions to comply and orders. Enforcement powers include environmental penalties (tickets), stop-work orders, and prosecutions.

3 Waste


Waste is primarily defined and managed through provincial legislation based on the type of waste. Waste can be categorized based on its constituent elements (hazardous v. non-hazardous),

the industry or area in which the waste is generated (municipal or institutional), and more recently whether such waste may potentially be recovered and reused as part of a producer responsibility program.At the federal level, wastes are generally categorized with pollutants and are similarly managed, including prohibitions against the disposal of pollution wastes from various federally regulated industries, and the control of movement of hazardous wastes across provincial and national boundaries. Radioactive materials and radioactive wastes are solely the jurisdiction of the federal government.


Permissions to store waste will often be considered as part of an authorization to generate or transport. Additional duties or controls on generation and storage will be required for waste with greater potential for adverse impacts to the environment such as hazardous, pathological, and persistently toxic. Restrictions on disposal will depend on the type of waste and the capabilities and capacity of the approved waste disposal site.


The generator of waste does not generally retain ownership and liability for waste once the waste is transferred to and accepted by an approved third party waste receiver. The termination of liability for the waste is the quid pro quo for managing, shipping and disposing of waste according to the applicable provincial regulatory requirements.


Several provinces have recently adopted producer responsibility regimes which require manufacturers, distributors, and retailers of certain products (e.g. electronics) to establish or to fund recovery programs for their products. Costs are incorporated into the sale price. Producers may fulfil obligations individually, or by joining an association based on the recovery of similar products. “Blue Box” stewardship programs are organized at the municipal level for paper products, aluminium containers and glass.

4 Liabilities


Regulatory liability can result from a breach environmental legislation or permits (either federal or provincial). Such offences are quasi-criminal in nature, and do not require proof of intent to commit an offence (strict liability offences). These offences can proceed by way of tickets demanding a simple monetary penalty, or by way of detailed Indictment which may result in significant fines and the potential for imprisonment. The Crown elects whether to proceed by ticket or by indictment, which decision may include considerations of minimum statutory fines, the magnitude of environmental harm as well as the particular statute or permit that is breached.


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Once the Crown (prosecuting party) proves all elements of the offence beyond a reasonable doubt, the defendant may elect to lead evidence in defence. Defences include: procedural challenges and limitation periods; misconduct by a regulator (officially induced error or an abuse of process); and the due diligence defence. A due diligence defence must establish, on a balance of probabilities, that the defendant took all reasonable steps to prevent the commission of the offence by, for example, establishing a proper system to prevent the offence and by taking steps to ensure the effective operation of the system. Environmental regulators may also issue a warning, issue a demand/order to investigate, comply, halt and/or control various environmental processes or discharges. Those orders can be appealed or must be obeyed. Failure to comply with an order leads to a separate offence that can be prosecuted in the manner described above. In some circumstances, tortious liability for damages or other declaratory relief may arise from a breach of environmental law. The breach of law may be indicative of private nuisance or negligence by the breaching party.


Care must be taken to ensure that any environmental contaminating activity, even if conducted under an approval, is not in breach of environmental legislation at another level of government. Even when subject to a permit, operators may be liable for potential adverse effects on plants, animals and persons within the natural environment. Civil liability for nuisance or negligence may result from damage to person or property even if the polluting activity is operated within permit issued by a regulating entity. A party may be prosecuted for causing environmental damage over a substantial period of time notwithstanding that same party’s compliance with a permit or condition at the time of the discharge. Parties must also be aware that environmental standards change over time and what was previously considered a non-contaminating activity may several years later be seen as contaminating and actionable.


Environmental statutes in Canada impose personal liability on directors and officers of corporations separate and apart from the liability imposed on the corporation. The corporation need not be charged or convicted. A director/officer of the corporation who directed or authorized the commission of the offence may face liability. Some jurisdictions establish a positive obligation on officers and directors even if they did not authorize the environmental offence, but if they knew or ought to have known that the corporation was in contravention of environmental law. Directors and officers may be subject to the same administrative remediation or preventative orders to which the corporation can be similarly named. Indemnification from environmental liability is not generally found in the same insurance policies issued to directors and officers to cover corporate and commercial liability. Separate environmental and/or pollution policies are recommended and must address the specific environmental risks in the industry in which they work (e.g.

mining, real property holdings). Certain statutes relating to business corporations limit the indemnification of directors and officers in the case of criminal, quasi-criminal or administrative actions.


Environmental liability for acts and omissions of the corporation that pre-date the effective date of the transaction can carry forward and remain with the corporation in a share sale. The same is true for an amalgamation of corporations into a single entity, whereupon environmental liabilities will flow to the new amalgamated corporation. In contrast, liability does not generally flow to a new operating entity in the case of an asset deal. There may be an exception where real property is part of a transaction, and the new operating entity may be liable for historic contamination where there is a risk to human health and the environment onsite, or for continued offsite contamination onto neighbouring properties.


Provincial statutes generally contain protections against regulatory orders and prosecutions for lenders, receivers, trustees in bankruptcy, and in some circumstances the estates of those who own or owned contaminated property. These protections can be rendered moot if lenders direct or participate in actions that result in the commission of an environmental offence, or if they are found to have sufficient management and control of the land, waste, or pollutants at issue.

5 Contaminated Land


Regulatory liability includes prosecutions where the contamination is the result of a spill or discharge, may cause an adverse effect at the property or neighbouring properties, or is not promptly reported to the regulator. Regulatory liability can also include the costs of complying with regulatory orders to investigation, delineate and remediate contamination on and off-site. Those who can be ordered include current and former owners and tenants and those with management and control, including officers and directors. Owners and occupiers can be ordered even if they are not the source of the contamination. Contaminated sites legislation is generally absent or less developed in the Northern Territories.Civil liability can arise where a neighbouring land owner sues for damages associated with migrating contamination, a property owner sues a tenant for contaminating a leased property, or a new owner sues former owners.


Liability is typically joint and several. Any one responsible party can be ordered by a regulator, or sued in civil court, and be held responsible for the entire cost to remediate. That responsible party must subsequently obtain a civil remedy to recover contribution from other liable parties, which can be apportioned based on degree of fault.


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Subject to formal contract or Minutes of Settlement, regulators retain the power to order parties to conduct additional remediation work, as necessary. An exception is where a party remediates property under contaminated/Brownfields lands regulations and obtains a certification (Record of Site Condition) that the property meets the applicable standard based on intended use. These certificates can be reopened under limited circumstances.


A person may initiate a civil claim to recover costs to remediate property from any party that caused or contributed to the contamination. Common Law causes of action typically include nuisance, negligence, strict liability (doctrine of Rylands v. Fletcher) and trespass. There may also be a private right of action under environmental legislation to recover costs to remediate a spill of contaminants. In the province of Quebec, civil liability for environmental harms is governed by the Civilian Code, including the provisions for harms caused to another.Liability can be transferred or allocated through purchase and sale agreements. This typically functions through a contractual indemnity to save and hold the indemnitee harmless. The seller could still be named in a lawsuit or pursued by an environmental regulator.


An award of monetary damages for aesthetic harms to public assets has not occurred in Canada, although the potential for such a claim has been recognized.



Abatement officers have broad authority to inspect, issue compliance orders, and collect samples in the course of carrying out their statutory abatement mandate. Inspectors may also issue compliance orders to halt activities identified as contrary to environmental legislation or that require action to further investigate and/or mitigate environmental impacts. These actions cannot be used to collect evidence for use against a party in criminal or regulatory prosecutions.Enforcement officers at the federal and provincial level may apply to a court of appropriate jurisdiction for a warrant to execute search and seizure upon lands or buildings, collect samples, require the production of documents, or conduct tests and analyses. These powers are granted when there are reasonable and probable grounds that an offence is being or has been committed. Such information can be used as evidence against an accused party.



Environmental statutes and some general statutes with environmental considerations (e.g. fisheries legislation) require that the appropriate environmental regulator be notified forthwith of a discharge of a contaminant into the natural environment, that is out of the normal course of events (and beyond the scope of an exemption and/or threshold amount), and likely to cause an adverse environmental impact. Discharges can include dust, noise, heat, and light, as well as solids, liquids or gases that are more commonly associated with spills. The regulatory requirements for reporting the discovery of historical contamination, and/or contamination not caused by the reporting party, vary from province to province.


There can be an obligation to investigate for contamination in Brownfields and contaminated lands rejuvenation, when changing to a more sensitive use.There is currently no common law duty creating an affirmative obligation to investigate land for contamination. In practice, investigation for contamination is generally advisable when there is a known or potential risk of off-site migration giving rise to an adverse environmental impact or a risk to human health or safety.


A vendor of property with environmental problems is not generally required to disclose environmental problems, absent specific representations and warranties. The principle of caveat emptor applies and purchaser is responsible for undertaking environmental due diligence. Properties can and are commonly sold on a “as is, where is” or “without guarantee” basis as to quality and defects.Vendors may not make misrepresentations as to the condition of the property or fail to disclose known latent defects (being a fault in the property that could not have been discovered by a reasonably thorough inspection).

8 General


Parties can contract to allocate environmental liability using an indemnity; however, the indemnity is limited to the parties. An environmental indemnity will not prevent a regulator from pursuing one or both parties, nor does it prevent a neighbour or other third party from initiating a lawsuit against one or both parties.


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Typically, environmental liabilities must be disclosed by securities regulators and accounting principles. Dissolving a company will not necessarily eliminate environmental liability, and may put others involved in the company, such as employees and directors and officers, at risk. In some provinces, a dissolved company can be revived for civil litigation by the plaintiff, or litigation can continue against a corporation even if dissolved.


Shareholders of public companies are not liable for breaches of environmental law or pollution by a corporation. Shareholders of smaller private corporations can be liable if they have sufficient day-to-day management and control, or use the corporate veil for a fraudulent or illegal purpose.A Canadian corporation may be sued in Canada for the environmental actions of a foreign subsidiary. Similarly, parent companies may be subject to regulatory liability for subsidiaries. Environmental liability will depend on the strength of the parent’s management and control (determining funding and directing remediation or operating requirements) over the subsidiary, or the use of the corporate veil for a fraudulent or illegal purpose.


Environmental legislation federally, provincially and territorially includes protections for individuals who report environmental violations.


Class actions are available in Canada for environmental claims. The court must certify, based on sufficient evidence of an identifiable class and common issues amongst the class, that a class proceeding is preferable. An application for punitive damages may be included in any civil action (including class actions), but are only awarded in egregious circumstances involving high-handed or malicious conduct.


Costs are entirely discretionary. There are no exemptions for public interest groups from liability to pay costs in civil claims. Typically boards and tribunals do not order costs where individuals or public interest groups appeal approvals or permits.



Quebec and Ontario have implemented emissions trading systems. The systems are linked together and with California. Industry participants with greenhouse gas emissions exceeding 25,000 tonnes must report their emissions and purchase allowances. Allowances and exemptions are issued each year.


Federally, all facilities that emit more than 50,000 tonnes of greenhouse gases must report their emissions. Several provinces have requirements to report greenhouse gas emissions. The federal government has developed the Pan Canadian Framework on Clean Growth and Climate Change with the provinces and territories. The Framework sets a price per tonne of greenhouse gases that must be implemented by each of the provinces and territories, unless the province or territory has an emissions trading system.


The Federal government is working with the provinces and territories to create an approach that sets a minimum price for carbon across the country, while allowing each individual province and territory to regulate emissions and establish a price in the best manner for that jurisdiction.

10 Asbestos


Governmental oversight of workplace injury compensation and the Canadian propensity for lower civil damages in personal injury matters has reduced asbestos litigation. Employees who are impacted can seek recovery from compensation boards.


Federal and provincial Occupational Health and Safety legislation sets out the duties of owners and occupiers of a building with asbestos, or where asbestos is suspected, including obligations to investigate, manage or remove the asbestos. Notice must be given to tenants and to any contractors or workers.


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12 Updates


Federal and provincial governments have created programs to manage and reduce greenhouse gases, including cap and trade. These programs will continue to be developed and implemented.Civil litigation has shown a renewed interest in environmental torts, and increasing damage awards in contaminated land litigation. Courts have also been reinforcing aboriginal rights and consultation requirements for natural resource development projects, and recently reinforced the obligations and rights of tribunals created under land claims agreements in the Northern Territories.The Northwest Territories has gone through devolution from the federal government and is in the process of creating new environmental legislation.The Canadian Environmental Assessment Act is undergoing a full review and substantial amendments are expected.

NoteThe information and comments herein are for the general information of the reader only and do not constitute legal advice or opinion. The reader should seek specific legal advice for particular applications of the law to specific situations.



Environmental insurance liability coverage has become common in Canada. Claims-Made policies provide coverage that is triggered when a claim is made against the insured during the policy period, regardless of when the wrongful act that gave rise to the claim took place. An Occurrence-Based policy protects the insured from any covered incident (e.g. spill) that occurs during the policy period regardless of when a claim is filed. These policies can provide indemnification for clean-up costs, damages assessment, environmental impairment, liability for third party claims due to off-site migration, and indemnity against future pollution events on properties or for yet undiscovered contamination. Products may also be available to address site-specific concerns such as underground storage tanks, transportation of hazardous waste, or financial assurance for secured creditors.


Environmental claims coverage in Canada is generally separated into two elements: (a) expense costs (e.g. legal fees) associated with defending a regulatory and/or civil claim; and (b) indemnifying losses (e.g. remediation) associated with environmental harm. Products also began to expand based on the needs of corporate officers and directors, who may become subject to regulatory investigations.



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Willms & Shier Environmental Lawyers LLP is Canada’s recognized leading environmental law firm, delivering a full range of environmental, Indigenous and energy law services. For almost 40 years, our clients have benefitted from our innovative, practical solutions and extensive knowledge of environmental, Indigenous, and energy and natural resource issues. With 17 highly specialized lawyers, we are the largest private sector environmental law practice in Canada. Six of our lawyers are Environmental Law Specialists, certified by the Law Society of Upper Canada. Willms & Shier has offices in Toronto, Calgary and Ottawa. Our lawyers are called to the Bar in Ontario, Alberta, British Columbia, New Brunswick, Nunavut and the Northwest Territories.

Richard Butler is a Partner at Willms & Shier Environmental Lawyers LLP. Richard practices advocacy before all levels of court and tribunals, including civil litigation, administrative appeals and defence of environmental prosecutions. Richard provides advice and support to clients on all aspects of environmental law including: regulatory compliance and approvals, contaminated land investigations and remediation and spills response, wastewater discharges and waste management. Richard works with insurers and clients to clarify insurance coverage for environmental claims, including during governmental investigations and civil litigation concerning some of the largest environmental disasters in Canada. Richard assists clients to secure mining rights and approvals, develop mining infrastructure, and manage mine waste and waste water issues. Richard frequently works with clients in the construction, food processing, land development, mining and exploration, and municipal sectors. Richard is called to the Bar in Ontario.

Richard ButlerWillms & Shier Environmental Lawyers LLP 1 Toronto Street, Suite 900TorontoOntario, M5C 2V6Canada

Tel: +1 416 862 4837Email: [email protected]: www.willmsshier.com

Joanna Vince is a Senior Associate at Willms & Shier Environmental Lawyers LLP. She advises a diverse range of clients including conservation authorities, public agencies, boards and tribunals and small to large companies engaged in manufacturing, energy, mining, natural resource and infrastructure development. Joanna helps clients obtain approvals for air, noise, waste and sewage. Joanna engages with the regulators on behalf of clients where there are concerns about non-compliances or neighbour complaints about air emissions, noise, odours or contamination. She represents clients in environmental civil litigation, regulatory prosecutions and appeals of environmental regulatory orders before Courts and tribunals. Joanna provides advice about the environmental aspects of the purchase and sale of land and businesses. Joanna helps clients quantify and manage environmental risk, provides solutions for environmental due diligence and compliance and assists with negotiations with environmental regulators. Joanna is called to the Bar in Ontario, Nunavut and the Northwest Territories.

Joanna VinceWillms & Shier Environmental Lawyers LLP 1 Toronto Street, Suite 900TorontoOntario, M5C 2V6Canada

Tel: +1 416 862 4830Email: [email protected]: www.willmsshier.com


Chapter 7

Macías Gómez & Asociados Abogados S.A.S. Luis Fernando Macías Gómez

Colombia

Regional Authorities may also establish environmental policies at the regional level. Likewise, Law 99 of 1993 also attributes judicial functions to departmental, district and municipal authorities. The set of rules from Law 99 of 1993 regarding the imposition of sanctions and penalties for violation of environmental laws was later amended by means of Law 1333 of 2009, which established the environmental sanctions regime. Through this regime, environmental sanctions or preventive measures might be imposed by the competent environmental authorities for activities alleged to be in violation of environmental legal dispositions. These attributions are also granted to the National Army, and the departmental, district and municipal authorities.In September 2011, Congress issued Law 3573 of 2011, the National Authority for Environmental Licences (“ANLA” for its acronym in Spanish) which was created as an administrative and financially-autonomous entity in charge of evaluating, approving and issuing environmental licences, permits and other environmental procedures, as well as enforcing environmental law within such procedures.


The enforcement of Colombian environmental law follows the rules of administrative procedural law. The agencies in charge of enforcing these dispositions are the ANLA, the Autonomous Regional Authorities the Sustainable Development Authorities and the Large Urban Districts.Additionally, Law 1333 of 2009 establishes the environmental sanctions regime by which the environmental authorities may impose preventive measures and/or sanctions to the activities alleged to be in violation of the Colombian environmental regime. The investigations to impose sanctions may be initiated as a result of the management and control functions of environmental authorities or due to complaints from the community.The legal system also provides through judicial mechanisms, such as enforcement actions, class actions, actions for the protection of fundamental rights, criminal actions and civil actions.


The National Constitution not only grants the right to a healthy environment, but it establishes mechanisms to guarantee that its citizens are able to materialise this right. Bearing this in mind,



According to Law 23 of 1973, the Colombian Government issued Law-Decree 2811 of 1974 (the “Decree”), known as the Natural Renewable Resources and Protection of the Environment Code. This Decree sets forth the legal framework in Colombia for the protection of the environment and its natural resources, imposing a series of obligations to both the State and the Colombian population. Later, the issuance of Law 9 of 1979 provided a series of rules aimed at the protection of the environment in order to improve sanitary conditions and human wellbeing. In 1991, the Colombian National Constitution adopted a variety of principles that were to be further regulated. This Political Charter has been catalogued as the “Ecological Constitution”, given that it contains 34 articles from different perspectives related to the protection of the environment. The Constitution establishes (article 79) the right for its citizens as a whole to enjoy a healthy and safe environment. The environment is also determined as a main factor for development, which is limited to economic rights. Additionally, the Constitution sets forth the obligation of the National Congress to create and regulate what in Colombia is known as Autonomous Regional Authorities. Inspired by the international principles and directives included in the Rio Declaration of 1992, the Colombian National Congress issued Law 99 of 1993, which creates the institutional framework for the protection of the environment and the management of natural resources. The National Environmental System, created therein, is a hierarchical structure of the agencies in charge of the enforcement of environmental legal dispositions and the management of natural resources within the Colombian territory. The Ministry of Environment and Sustainable Development is the agency at the apex of the hierarchy, and it is in charge of creating environmental policies at a national level. There are other environmental authorities, such as the Regional Authorities, the Sustainable Development Authorities, the Large Urban Districts and the Special Caribbean Districts, formally created by this law to manage the protection of the environment and enforce environmental law within the regions of their competent jurisdictions. These Regional Authorities also evaluate, approve, control and issue environmental licences, permits and other environmental management and control instruments within their jurisdictions. Among their functions, the


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Macías Gómez & Asociados Abogados S.A.S. Colombia

the legislator is imposed with the duty to guarantee that citizens have participation mechanisms that enable them to participate in any decision-making process that may affect their right to enjoy a healthy environment. The following are some of the environmental participation mechanisms: public hearings; intervening third parties; and prior consultation to ethnic communities.Colombian citizens hold the right to access environmental information. Furthermore, Law 99 of 1993 establishes that any person, without the need to manifest any interest whatsoever, can intervene in the administrative actions initiated to issue, modify or cancel environmental permits or licences for activities that may affect the environment, as well as in the procedures towards imposing sanctions for the violation of environmental law.



The need to obtain an environmental permit is determined by the activities due to be carried out, and by the possible impact on a specific renewable resource. The National Code of Natural Renewable Resources, or Law-Decree 2811 of 1974, provides that anyone willing to use natural resources must obtain an environmental permit, according to the resource to be used. As a general rule, the assignment of environmental permits requires previous authorisation from the competent authority. Various environmental permits are enlisted as follows:

Environmental Permit ResourceWater Concession Permit WaterFlow Occupation Permit WaterWater Discharge Permit WaterEmissions Permit AirForestry Permit ForestBan Lifting over Protected Species BiodiversityResearch Permit Biodiversity

On the other hand, environmental licences are regulated in article 2.2.2.3.1.1 and subsequent of Decree 1076 of 2015, which is defined as the authorisation granted by the State to develop an activity that, according to the regulation, might cause the deterioration of natural renewable resources and the environment. Although it is called an environmental licence, it must cover social and economic aspects as well.An environmental licence comprises the terms and conditions to be attended in relation to the management and use of natural resources through the development of the activity. It also includes the obligations with regards to the prevention, mitigation and compensation of the effects that the activity may involve. According to the current regulation, an environmental licence is only required to develop the activities listed in articles 2.2.2.3.2.2 and 2.2.2.3.2.3 of Decree 1076 of 2015. The total or partial transference of an environmental licence is possible under Decree 1076 of 2015 but only when a prior authorisation has been granted by the environmental authority. In this event, the licensee must request the transference in writing, and the environmental authority should make a statement within the subsequent 30 days.


Taking into account that environmental law follows the rules of administrative procedures, environmental permits and licences are granted by the environmental authorities through decisions that are called administrative acts or “resolutions”. Therefore, the rights to appeal, or to use any of the other legally established resources, are the same as those applying to the administrative procedure. Hence, any person has the right to appeal before the same authority that issued the resolution, i.e. the Autonomous Environmental Authorities, or before a superior agency when applicable. An appeal can be initiated when the conditions of the licence or permit are different from what the petitioner asks for or appear to be restrictive to environmental rights. Therefore, the appeal can be proposed by the petitioner of the licence or permit, or by anyone involved in the project, which could be any person who would like to participate in the licence or permit process.


In Colombia, environmental audits are not mandatory but many companies do it voluntarily. On the other hand, the environmental regulations require analysis and characterisation of certain polluting activities, such as stationary and mobile sources of air pollutants, whether they require a permit or not, in order to establish if they are accomplishing the air-quality standards. For water-related activities, characterisations are also required in order to determine if there is an environmental infringement.Furthermore, there are specific activities, projects and installations implied in Law 99 of 1993, and regulated by Chapter 3rd of the Decree 1076 of 2015, which require an Environmental Impact Study (EIA by its meaning in Spanish). This study is defined as a technical document containing information on the project location, the biotic and abiotic elements, and the impact assessment. The Environmental Impact Study is the basis for the Environmental Licence, which turns out to be a mandatory requirement in order to put into operation the activities listed in articles 2.2.2.3.2.2 and 2.2.2.3.2.3 of Decree 1076 of 2015.On the other hand, as we have already said, the environmental audits are not mandatory, but a Company that seeks the issue of an environmental licence must support filing it with an environmental impact assessment.


The enforcement of the conditions of environmental permits and licences is held under Law 1333 of 2009, which establishes the environmental sanction regime through which the environmental authorities may impose injunctions (called “preventive measures”) and/or sanctions to the companies that violate environmental law. The sanctions may be imposed according to the seriousness of the infraction, and may contemplate the possibility of temporary or definite suspension of the activities.


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3 Waste


Title 2 of Decree 1077 of 2015 sets forth the general regime for the complete management of solid waste. This regulation equates waste and residue, and defines it as any object, material, substance or solid element resulting from domestic, industrial, commercial or service activities, rejected, abandoned or delivered by the generator, which is subject to be seized or transformed into a new asset, or to be finally disposed.In the same sense, this regulation establishes that the duties and control of ordinary waste are to be attributed in an individual manner to whoever is undertaking any of the activities related to waste management.On the other hand, article 2.2.6.1.1.3 of Decree 1076 of 2015 defines hazardous waste as that with corrosive, reactive, explosive, flammable, infectious and radioactive characteristics, which may involve risk or damage to human health and the environment. Furthermore, this regulation establishes that any conventional waste in contact with hazardous waste must be treated as hazardous.Hazardous waste handling involves additional duties or controls. These obligations are set forth in Decree 1076 of 2015 and are to be attributed jointly and severally to generators, producers and importers, who must assure the adequate disposal or treatment of the waste. The Decree also sets forth the rules for the handling, labelling and packaging of hazardous substances.Generators of hazardous waste must maintain updates on the characterisation of hazardous waste and prepare a Complete Hazardous Waste Management Plan, as well as register before the environmental authorities as a generator of this type of waste.


The storage and disposal rules regarding conventional waste are given by Decree Title 2 of Decree 1077 of 2015. The main duty relies on public utility companies in charge of collecting waste and transferring it to waste disposal venues. In terms of hazardous waste disposal and storage, Title 6 Section 3 of Decree 1076 of 2015 establishes the obligation for the generator to store the waste for a maximum of 12 months. Nonetheless, the generator may request to extend this term before the environmental authorities. Please note that, depending on the type of hazardous waste, the timeframe for the storage of the waste may vary. For example, used oils may only be stored for up to three months.


Although non-hazardous waste retains no residual liability for its producers, hazardous waste rules impose joint and several liabilities to those involved in the management chain of this type of waste; even if it involves outsourcing for its transportation and disposition.


Post-consumption and return plans are mandatory for the producer and distributor of specific types of hazardous wastes. The Ministry of Environment has issued in the last few years regulations to adequately collect and manage several types of waste, such as pesticides, acid lead batteries, medicines, batteries, tires and pneumatics, light bulbs and electrical and electronic waste.

4 Liabilities


Several types of liabilities may arise from a breach of environmental laws or permits. Administrative liability may arise as a result of the failure to comply with environmental regulation, as provided in Law 1333 of 2009. This regulation states that any violation of a law regarding the protection of the environment empowers the environmental authorities to impose sanctions. These sanctions may vary from economic penalties to the suspension of the licence or definite suspension of activities. It also enables the environmental authorities to impose preventive measures in order to avoid probable environmental damage occurring. Please note that the defence mechanisms correspond to the reconsideration petitions set forth by Colombian administrative law.On the other hand, civil liability may arise as the result of proving the occurrence of damage to the environment, in which case the person held liable could argue for negligence, force majeure or acts of third parties.A set of punishable conducts regarding the environment is provided in the Criminal Code; hence criminal liability may take place in the event the criminal conduct is proven.


Civil liability can arise in the event of environmental damage, despite operating within permit or licence limits. An operator can also be found criminally liable if the actions that led to the damage are included in the Criminal Code. A common way to hold an operator liable for environmental damage is through the filing of class actions or actions for the protection of collective rights.


When directors and officers undertake activities that lead to environmental damage, they may be subject to personal liability if negligence or wilful misconduct is proven. The personal liabilities in this case can only be imposed regarding criminal law, not in civil or administrative law, where the corporation is the one that will be held liable for the environmental wrong with its capital. In any case,


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if the environmental wrong was caused directly from the directors’ and officers’ wrongdoing, the company could sue them to recover the damages. On the other hand, the Colombian Commerce Code establishes that the directors or officers of corporations must be held responsible when they carry out activities that were not authorised by the statutes. They will also compensate the Company for the damages caused.Please be aware that although Colombian law contemplates the possibility of directors and officers obtaining policies to insure against personal liability from environmental wrongdoings, this possibility has not been completely developed in the country.


An environmental liability is transferred to the shareholder or partner in the event of acquiring shares from a company that does not have limited liability. Therefore, when purchasing assets, since the liability is limited to the asset itself, the purchaser may claim for non-disclosed liabilities.


The lender, when becoming the owner, inherits environmental liabilities. Nonetheless, if the lender is held liable and forced to assume remediation costs, an action to seek contribution may be invoked under a civil law perspective.From an administrative perspective, and regarding environmental wrongdoing, the current operator of the activity, regardless of ownership, holds the liability.

5 Contaminated Land


The approach to liability for contamination of soil and groundwater is conducted under the perspective of administrative, civil and criminal liabilities.We have to take into account that in 2014, the Ministry of Environment and Sustainable Development issued the Technical Guide for Soil Sampling, in which it established the minimum standards that Companies must follow with regards to discharges of fossil fuel to the soil. Particularly, the country has not yet developed regulations for historic contamination liabilities; therefore, it is treated under the liability regime that is applicable.


In this case, joint and several liabilities may be allocated under civil law. Thus, the involved parties may pursue an action to seek contribution to distribute the costs that must be paid.

Under a criminal law perspective, if more than one person commits a crime, then both individuals are held liable.


A programme of environmental remediation has to be proposed by the company and approved by the environmental authority, in order to start the remediation activities. The environmental authority may require additional works under the programme, or under the obligation of the authority to perform follow-up and control visits, if it is considered necessary.If a third party considers that the programme is not complete or sufficient to remedy the damage, this person may ask the environmental authority to require the company to adjust the programme.


The purchaser can pursue civil actions to seek contribution from the previous owner of contaminated land when it is proven that the seller knew, or should have known, about the condition of the land.When the contamination is disclosed, the owner and the purchaser may agree upon this fact, saving the seller from liability with the purchaser, but not towards third parties.


The Government is not only entitled to obtain monetary damages from whoever is proven to have caused pollution, but also to protect the environment.The authorities can also impose sanctions and fines within the sanctionatory regime from Law 1333 of 2009, which can be applicable to damages for aesthetic harms. Other mechanisms to obtain monetary damages from the polluter are class actions or any other judicial actions that seek the repair of the damage or the fulfilment of a specific environmental rule.



Environmental authorities are empowered to conduct site inspections when evaluating whether a licence or permit is granted. Technical experts from the authorities, who may take samples, interview employees and collect the necessary information in order to study the feasibility of the project, must conduct these inspections.After a visit, the experts must present a technical concept, which may be further adopted in the administrative act approving or denying the permit or licence.


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Environmental regulators are also able to require any documents, or the duty to obtain samples or conduct site inspections, at any time, especially when the authority deems it necessary to fulfil an investigation or to rule out a violation of environmental law. In administrative acts, authorities can require any person to file documents, or to take the samples needed.



Colombian legislation establishes the obligation to report pollution found on a site, or migrating off-site, to the competent authorities. In such case, the competent authorities are the environmental authorities. This information is regularly received from community complaints.Every citizen has the obligation to disclose this type of information. The omission to do so may result in liability for failure to report such a situation.In the case of environmental licences and permits, the procedures include a clause that contains this specific obligation.


When there is circumstantial evidence of contamination, any person, owner or occupier of a land has the obligation to act diligently and to investigate the land to determine if it is contaminated and, if so, the magnitude of the contamination.In this sense, the general obligation consists of informing the authorities about the contamination and reporting the damage. This information must be taken into account by the authorities to initiate the corresponding investigation in order to impose sanctions.


At any time prior to the execution of a sale and purchase agreement, it is necessary to disclose environmental situations to avoid imperfections in the purchaser’s consent that could turn the contract null, and result in the reversion of the liability back to the seller.If the environmental situation is not disclosed, the purchaser has the right to seek contribution from the seller through a redhibition, according to civil law procedures.

8 General


From a civil law point of view, the parties may agree upon indemnity; however, this is limited to the parties, and administrative

and criminal authorities will only bear in mind the liabilities related to the environment.In this sense, conducting a payment under a private agreement will not discharge the parties from environment-related liabilities, since this will only be enforceable within the agreement.Under Colombian regulations, there is a legal duty for the seller to disclose to the purchaser or buyer the possibility of contamination before a purchase agreement is made.


If a certain company has an obvious environmental liability, under accounting rules, its balance sheet has to reflect this special matter. On the other hand, if a company is dissolved in order to avoid, or with the idea of avoiding, any kind of environmental liability or other obligations regarding this matter, it is usual for its shareholders and administrative staff to still be found liable for any environmental obligations that the company or enterprise may have.There are some cases in which the company disappears and its shareholders and administrative staff cannot be found to be brought to justice. In this case, the Colombian State should remediate the environmental damages, and this is known as “orphan liabilities”.In other cases, when this happens and there is someone that bought the land where the pollution or damage was found, the environmental authorities can force the new owner (company or person) to pay for the environmental liabilities.


It is possible that diligence and knowledge of a specific environmentally adverse effect is likely to cause the rupture of the corporate veil in some cases; as a specific example, shareholders who knowingly refrained from taking clear environmental actions or did not show interest in taking effective actions to seek and reach environmental remediation.With regards to parent companies, these may also be held liable for environmental wrongdoings.


In administrative and civil law, there is no specific regulation intended to protect whistle-blowers, or people who inform the authorities of environmental violations. However, in criminal law, there are dispositions that prescribe that the witnesses should be protected, so it is only logical that the “whistle-blowers”, being some sort of witness, should be protected too. Nonetheless, it is necessary to specify that in Colombia the reports or complaints cannot be made anonymously.


Law 472 of 1998, which regulates actions for the protection of collective rights, establishes that this type of legal action can be filed to pursue environmental claims.


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In the same way, Law 472 of 1998 regulates group or “class actions” that pursue economic restitution as well as the protection of environmental claims.Regarding the penal or exemplary damages, it is important to take into account that the Colombian legislation does not allow these kinds of damages.


Law 472 of 1998 regulates class actions and the protection of collective rights by which any individual may file a claim to avoid contingent damages from collective rights, or a group may seek the recognition of damages from any adverse effect to the environment which can be individualised. Regarding criminal or exemplary damages please be aware that there is no such figure under Colombian regulation.



The emissions trading framework in Colombia is developed under the Kyoto Protocol schemes, mainly the Clean Development Mechanisms.This year, the Colombian Government submitted a bill which sets guidelines to manage climate change. This bill introduces an Emission Trading Scheme in order to develop a market to negotiate gas emissions allowances. Likewise, it establishes that offsets may be recognised under the ETS, if some requirements are fulfilled. Payment of the new carbon tax can also be discounted from allowances. The cap on the total emissions allowed within the scheme, the coverage or regulated entities, the auctions, and other issues will be set through further regulation.


First of all, it is important to mention that in Colombia there is no specific regulation that obliges companies to specifically monitor and report greenhouse gas emissions.However, under Resolution 1962 of 2017, the Ministry of Environment set a maximum standard of the coefficient indicator on greenhouse gas emissions for Denatured Fuel Anhydrous Ethanol. In order to fulfil this requirement, Plants that produce Anhydrous Ethanol Fuel to mix with gasoline must calculate and report their Inventory of Greenhouse Gases, based on the methodology defined in ISO 14064-1: 2006.


Through Law 164 of 1995, Colombia adopted the United Nations Framework Convention on Climate Change. Also, through Law 629 of 2000, Colombia approved the Kyoto Protocol.Under Law 1753 of 2015, by which means the National Development Plan 2014–2018 is adopted, the National Government, through

the Department of National Planning (DNP), will design a Green Growth Long Policy, which will cover objectives and goals of sustainable economic growth. Likewise, Law 1753 of 2015 sets up the National Registry of Greenhouse Gas Emission Reductions and establishes that any person who intends to opt for Payment by Results or offsets must obtain the previous registration. Based on this last provision, the National Government has issued several regulations regarding the Payment for Environmental Services and Payment by Results. On the other hand, the Colombian Congress passed Law 1819 of 2016 and created a tax on the carbon content of fossil fuel equivalent to US$5/tCO2e (carbon tax), payable by importers and producers of fuels. Likewise, through Decree 926 of 2017, the Government regulated the proceeding for using offsets greenhouse gas emissions instead of paying the carbon tax (carbon neutral).

10 Asbestos


In February 2015, a group of citizens filed a Constitutional Class Action against the Congress of the Republic and other private institutions that work with asbestos. Given that this is the first known case in our country of asbestos litigation, we are waiting to know what the court’s decision will be in this case, in order to have the first precedent on this matter.


In Colombia, under Law 436 of 1998, different aspects were defined regarding asbestos use. Article 17 establishes that qualified personnel enforcing qualified standards or practices should only perform the demolition of structures and edification sites containing asbestos materials, and any elimination of asbestos from buildings or constructions. On the other hand, until Law-Decree 2041 of 2014, the Companies that want to use in their projects asbestos must request an environmental licence by the competent authority. However, with this Decree, an environmental licence is only needed for the production of substances, materials or products subjected to control by an international treaty of environmental nature. As such, this means there is no specific regulation of the need to have an environmental licence for the production or manipulation of asbestos.Regulations for transporting and manipulating hazardous substances are also applicable to asbestos handling.



The term “ecological insurance” was created by means of Law 491 of 1999; however, the competent authorities have not yet developed its implementation. Nonetheless, civil liability may be covered by insurance policies.The cases in which ecological insurance may be taken are also established in this regulation, which is mainly directed towards guaranteeing the compliance of environmental regulations.


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There has been very little experience regarding insurance claims related to environmental risks in the country, since ecological insurance has not yet been implemented.

12 Updates


Throughout 2017, the Colombian Government issued regulations in order to further develop the management of natural resources in Colombia. Some of the regulatory changes to highlight are the following:On July 21st, 2017, the Congress approved Law 1884 of 2017 by which it approves the Paris Agreement on Climate Change of 2015. Colombia had assumed the commitment to reduce greenhouse gas emissions by 20 percent, by 2030. Under this Law, the country commits to moving towards adaptation to the effects of climate change and moving towards a low carbon economy.Additionally, at the end of 2016, the Government endorsed the Peace Agreement signed with the Armed Revolutionary Forces of Colombia – FARC. This agreement incorporates environmental issues and the parties establish obligations regarding the maintenance of the areas that the FARC controlled with illegal crops. Regarding any case that has an impact in Environmental Law in the Colombian Jurisdiction: on November 10th, 2016, the Constitutional Court of Colombia issues Judgment T-622-2016, by which the Court exposes an eco-centric stance under which policies, norms

For over 20 years, MacíasGómez&AsociadosAbogadosS.A.S. has earned and maintained an exceptional reputation for providing practical and actionable legal solutions for Colombia’s most complex environmental challenges, becoming one of the country’s leading environmental law firms.

The firm’s main objective is to provide the necessary legal support and strategies to allow the strengthening of the Corporations’ environmental management and to reduce the legal risks that may exist as a result of their activities. Recently, MacíasGómez&AsociadosS.A.S.included the Climate Change Law into the sustainability area of practice, in order to address this global issue in a specialised manner and its proper management in terms of mitigation, adaptation and resilience, as well as the development on non-conventional renewable energy projects. Likewise, the firm provides legal support to apply for environmental tax incentives.

MacíasGómez&AsociadosAbogadosS.A.S. has a wide experience providing environmental legal counsel to national and foreign companies in different economic sectors. In particular, the Firm has taken the lead providing legal advice in social issues and in scenarios for public participation as a result of a corporate environmental law approach. In addition, MacíasGómez&AsociadosAbogadosS.A.S. has been at the forefront with the interaction of environmental law with other legal areas of practice, such as, private law, infrastructure, tax law, public procurement, antitrust law, among others. Furthermore, the Firm has participated in national and international arbitration tribunals issuing expert opinions on controversies of different environmental issues.

MacíasGómez&AsociadosAbogadosS.A.S. is the exclusive representative for Colombia before the Inter-American Network of Environmental Law Specialists – RIELA, a network of independent law firms providing for the exchange of professional information about local and regional practice and the development of environmental law in the Americas.

Luis Fernando Macías Gómez is the founding Partner of Macías Gómez & Asociados Abogados. He holds Master’s Degrees in Environmental Law, Political Philosophy and Latin-American Societies, and has a Ph.D. in Political Sciences (France and Colombia). He is recognised as a leading environmental lawyer in Colombia, advising companies and public institutions on various environmental matters. He has worked as an expert in several arbitration tribunals giving his legal concept on different environmental topics. He was the former head of the Legal Department and General Secretariat of the Colombian Environmental Ministry, spokesman for the Government in the aboriginal takeover of the Episcopal Meeting in Bogotá and the deputy from the Colombian Government in the negotiations of the Cartagena Agreement Board. He is a teacher in several National and International Universities, such as Universidad Externado de Colombia and Colegio Mayor Nuestra Señora del Rosario. He is President of the Colombian Institute for Environmental Law, and counsel to the Ecuadorian Institute for Environmental Law – CEDA and the Organization of American States – OEA, Environmental Counselors, the Quinaxi Institute, the United Nations Development Programme for Colombia, the Colombian Environmental Ministry, the Urban Environment Management and the “Alexander Von Humboldt” Research Institute of Biological Resources.

Luis Fernando Macías GómezMacías Gómez & Asociados Abogados S.A.S.Carrera 11 A #97 A-19 Oficina 506BogotáColombia

Tel: +57 1 6114 444Email: [email protected]: www.maciasabogados.com

and interpretations on biodiversity conservation recognise the link and interrelation that exists between culture and nature. The ruling also recognises legal identity to the Atrato River, therefore it has the capacity to defend it rights through its representative and the Government must assign who will hold such representation.


Chapter 8

Freshfields Bruckhaus Deringer LLP

Daniel Lawrence

John Blain

England

of offenders, eliminate any financial gain or benefit from non-compliance, and deter future non-compliance, amongst other things.In August 2016, the Environment Agency published a list of civil sanctions (including enforcement undertakings) that it has imposed as an alternative to prosecution. The expansion of civil sanctioning powers in relation to the Environmental Permitting regime was made by the Environmental Permitting (England and Wales) (Amendment) (England) Regulations 2015, which have subsequently been consolidated in the Environmental Permitting (England and Wales) Regulations 2016, which came into force on 1 January 2017 (see question 2.4 below). In September 2017, Defra published guidance on how prosecution power of the regulator under the Environmental Permitting regime interact with local authorities’ powers to prosecute statutory nuisance. “Regulatory Delivery” (incorporating the Better Regulation Delivery Office and the National Measurement and Regulation Office as a single directorate) is responsible for the effective delivery of regulation and ensuring that local authorities deal with enforcement issues in a consistent and co-ordinated manner, with a view to easing the regulatory burden on business. The Sentencing Council of the Magistrates’ Association publishes sentencing guidelines, which encourage Magistrates to consider the means of companies and the seriousness of offences when they set financial penalties. A set of environmental sentencing guidelines have been in force since 1 July 2014, providing higher starting points for fines, promoting tougher punishment for repeat offenders and placing an increased focus on the proportionality of the fine in relation to the size of the company. Sentencing guidelines for health and safety offences, corporate manslaughter, food safety and hygiene offences came into force on 1 February 2016, which will result in similar approaches being adopted by the courts for such offences. Environmental regulation is supplemented by other regulatory controls to a greater or lesser extent, depending on the area of law being considered. In the context of energy regulation, the existence of mechanisms such as the climate change levy (essentially a tax on the use of energy from fossil fuel sources by industry and the public sector) and the Renewables Obligation (which requires all electricity suppliers licensed under the Electricity Act 1989 to produce evidence to the Office of Gas and Electricity Markets that they have supplied customers in England with specified amounts of electricity generated from “eligible renewable sources”) have been instrumental in influencing more sustainable energy use and reducing greenhouse gas emissions. The Renewables Obligation has been closed to new generation projects since 31 March 2017 (subject to grace periods) and the



In England, the Department of the Environment, Food and Rural Affairs (Defra) is the principal Government department responsible for developing environmental policy. The Department for Business, Energy and Industrial Strategy (BEIS) deals with climate change policy (see section 9 below). The Department for Transport is responsible for vehicle emissions (see section 9 below).The Environment Agency is mainly responsible for the enforcement and administration of environmental law. For example, it is the designated regulator for: Part A (1) installations under the Environmental Permitting (EP) regime (see question 2.1 below); waste management (including producer responsibility initiatives) (see question 3.1 below); special sites designated under the contaminated land regime in Part 2A of the Environmental Protection Act 1990 (EPA) (see question 5.1 below); flood defence; and emissions trading (see question 9.1 below). Local authorities are responsible for the regulation of Part A (2) and Part B activities; the administration and enforcement of the contaminated land regime; the statutory nuisance provisions contained in Part III of the EPA; and the hazardous substances regime contained in the Planning (Hazardous Substances) Act 1990 and subsidiary regulations.The civil and criminal courts and tribunals of England are also involved in the making and enforcement of environmental law (see question 4.1 below). There is also a tribunal procedure under which certain rights of appeal, usually against decisions of regulators, are heard.Other agencies, such as Natural England, the Health and Safety Executive, the Marine Management Organisation and the Food Standards Agency, have an important role to play in ensuring the protection of the environment.


The Environment Agency’s Enforcement and Sanctions Statement sets out five key principles of enforcement: proportionality; consistency; transparency; accountability; and a risk-based approach, with higher-risk sites and activities being prioritised. Criminal prosecutions and civil sanctions are an important part of the Agency’s enforcement policy, aiming to change the behaviour


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overall scheme is to close in 2037. The Government is replacing the Renewables Obligation with the Contracts for Difference (CfD) scheme, providing for contracts with the Low Carbon Contracts Company Ltd (LCCC), a Government-owned private company. The intention remains to incentivise the use of large low-carbon energy sources by providing greater security to qualifying generators. Under the scheme, the electricity generator is reimbursed the difference between the average market price for electricity, and the price that reflects the cost of investing in low-carbon technology. The costs of funding the CfD are recovered through a levy on suppliers, which is ultimately passed on to domestic and industrial consumers via their electricity bill. However, the Government recognised the significant burden this could place on energy intensive industries and so in March 2017, following a public consultation, the Government announced that they would amend the Regulations to introduce exemptions from the costs of the CfD for eligible businesses.


An access to environmental information regime has been in place in England since 1992. This regime is now set out in the Environmental Information Regulations 2004 (the EIRs), which came into force on 1 January 2005, at the same time as the Freedom of Information Act 2000 (the FOIA). Environmental information is effectively excluded from the ambit of the access to information regime established by the FOIA, which provides that requests for such information are dealt with under the EIRs.The EIRs implement EC Directive 2003/4/EC on public access to environmental information, and also aim to fulfil the UK’s obligations under the Aarhus Convention (the UNECE Convention on Access to Information, Public Participation in Decision-making, and Access to Justice in Environmental Matters). As such, the EIRs have a different legislative background and focus to the FOIA and, on the whole, provide for wider disclosure than is available under the FOIA.The EIRs require relevant public authorities (and/or third parties holding environmental information on behalf of a public authority) to do the following (among other things):■ proactively disseminate environmental information held by

the public authority;■ make environmental information held by or on behalf of

the public authority available to anyone (any person or any organisation from anywhere in the world) on request – in most cases within 20 working days (and only to refuse such requests in limited circumstances, for example, where non-disclosure is in the public interest); and

■ organise environmental information held by the public authority so as to enable it to perform the first two duties mentioned above.

The definition of what constitutes ‘environmental information’ in the EIRs is wide, covering not only information on environmental elements and substances, but also information on measures and activities likely to affect them. This can include any information (in written, visual, aural, electronic or any other material form, including information relating to ‘official business’ which is held in the personal email accounts of employees of public authorities) on, among other things, the state of the environment and factors that impact upon it, reports on the implementation of environmental legislation, and cost-benefit and other economic analyses used in environmental decision-making.In Department for Business, Energy and Industrial Strategy v Information Commissioner (C3/2016/0880), the Court of Appeal held that even information which does not directly concern the

environment in itself may be subject to disclosure under the Regulations, as long as it has a sufficient link to a measure that affects the environment. The definition of a ‘public authority’ for the purposes of the EIRs is also very broad (broader than the definition of ‘public authority’ under the FOIA). It includes any body or person that carries out functions of public administration, as well as any body or person under the ‘control’ of another relevant public authority and which (among other things) exercises functions of a public nature or provides public services in relation to the environment. Guidance issued by the Government indicates that ‘control’ in this context could include a relationship constituted by legislation, rights, licence or contract. Also, a public authority under the EIRs includes any other body or person “that carries out functions of public administration” (regardless of whether these functions relate to the environment). Accordingly, private companies or public-private partnerships with environmental functions, such as public utilities involved in the supply of public services, have been argued to be caught by the EIRs in certain circumstances. Following the decision of the Upper Tribunal in Smartsource Drainage & Water Reports Limited v The Information Commissioner (GI/2458/2010), where it was held that water and sewerage companies are not public authorities under the EIRs, in Fish Legal and Emily Shirley v The Information Commissioner and United Utilities, Yorkshire Water and Southern Water, the Upper Tribunal made a request for a preliminary ruling to the Court of Justice of the European Union (CJEU) for further guidance. In December 2013, the CJEU ruled that commercial bodies providing public services relating to the environment can be a public authority under the EIRs. The CJEU ruled that:■ the test for whether companies perform “public administrative

functions” and are therefore public authorities under the EIRs is whether they have special legal powers beyond private law powers; and

■ commercial entities are capable of being bodies that are under the control of a public authority (and therefore public authorities under the EIRs), if they do not genuinely autonomously determine how they provide their services and their controlling public authority “is in a position to exert decisive influence on their action in the environmental field”. However, a commercial service provider that is only a public authority because it is under the control of another public authority is not required to provide environmental information that does not relate to the provision of the relevant services.

The CJEU judgment was a preliminary ruling, only dealing with the questions referred to it by the Upper Tribunal. The main proceedings and application of the facts to the tests set out by the CJEU to determine if utility companies like Yorkshire Water are in fact public authorities were considered in the Upper Tribunal. It ultimately ruled that private water companies are public authorities for the purposes of the EIRs; basing its decision on the fact that water companies have special powers over and above those in private law. However, the decision did not go as far as laying down broad general principles on when a body was a public authority under the EIRs.



In England, environmental permits are required for a wide range of business and commercial activities, with emissions from domestic


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premises in the main exempt. Permits are generally granted either by the Environment Agency or the relevant local authority.The permit regime is based on the principle of an integrated permitting process to prevent or, where that is not practicable, reduce emissions in order to achieve a high level of protection of the environment taken as a whole. The high level of protection is achieved by employing so-called best available techniques, i.e. the most cost-effective way, or ways, for the industry to prevent or minimise emissions. The original Integrated Pollution Prevention and Control Directive, requiring Member States to establish a pollution prevention regime, has been recast, along with six other directives, in Directive 2010/75/EU on Industrial Emissions. The Industrial Emissions Directive was implemented in England by the adoption of the Environmental Permitting (England and Wales) (Amendment) Regulations (which are now consolidated in the Environmental Permitting (England and Wales) Regulations 2016).The EP Regulations (as amended) maintain the three distinct regimes established under the IPPC Regulations:■ Part A(1) installations, regarded as sites where potentially

more polluting activities are carried out, with emissions to air, land and water from these installations being regulated by the Environment Agency;

■ Part A(2) installations, which are sites where activities regarded as having a lesser potential to pollute are conducted, but which are still considered to have impacts on all environmental media, with regulation being the responsibility of the local authority in whose area the installation is, or will be, situated; and

■ Part B installations, which are sites with activities for which only emissions to air are regulated under the IPPC, such installations being the responsibility of the local authority.

An environmental permit is required for the keeping, treating or disposing of controlled waste on non-domestic premises. The EP regime also applies to discharges to controlled waters, groundwater authorisations and radioactive substances, and has been amended to implement Directive 2009/31/EC on the geological storage of carbon dioxide. The Environmental Permitting (England and Wales) (Amendment) (No.2) Regulations came into force on 6 April 2016 and replaced the existing flood defence consents with environmental permits for flood risk activities. At the same time, the EA published standard rules for applications for standard environmental permits. There are further plans to bring water abstraction and impoundment licences within the EP regime in the early 2020s. Operators of installations subject to the EU Emissions Trading Directive are required to hold a greenhouse gas emissions permit (see question 9.1 below). Discharges of trade effluent to public sewers are controlled by the grant of a trade effluent consent, granted by the relevant sewerage undertaker. The presence of a hazardous substance on land may also require obtaining a hazardous substances consent under the Planning (Hazardous Substances) Regulations 2015, which came into force on 1 June 2015. The system is operated by hazardous substances authorities (mostly local planning authorities). In all the above cases, the competent authority granting the licence has the discretion to attach such conditions as it thinks necessary and appropriate to ensure that no harm to human health or the environment occurs beyond accepted limits.Generally, the operator of the installation that is making the emission or discharge or undertaking the prescribed activity holds the permit authorising this. The definition of the term “operator” varies between the different environmental permitting regimes, but is usually the person (natural or legal) who is in control of the installation. Environmental permits can usually be transferred from

one person to another, provided the requirements of the particular legislation governing the grant of the permit are met. For example, the transfer of an environmental permit granted under the EP Regulations requires the current operator and the proposed recipient of the permit to make a joint application to the regulator containing certain specified details; the regulator is required to effect the transfer unless it considers that the proposed recipient will not have control over the installation after the transfer is effected, or it will not ensure compliance with the conditions of the transferred permit.


All of the above permitting regimes include provisions for appeal in certain circumstances. In general, the right of appeal is to the Secretary of State for the Environment, Food and Rural Affairs.Appeals can be conducted by way of written representations or by holding a hearing, and interested third parties have rights to be involved in such appeals, including rights to address the inspector at any public hearing. The Secretary of State may affirm or quash the regulator’s decision, quash all or any of the conditions imposed in the permit by the regulator, or direct the granting or variation of a permit where one has been refused subject to such conditions as he/she feels fit. The time limit for appeals varies depending on the nature of the permit.


Various measures are incorporated within the EP regime to prevent pollution during the design and operation of the installation and, subsequently, upon decommissioning, to ensure that the site is returned to a satisfactory state and poses no pollution risks. In submitting an application for an EP permit to operate a Part A activity, the operator is required to submit a site report identifying the condition of the site prior to the commencement of the regulated activity. Ongoing monitoring and reporting requirements are aimed at identifying significant pollution occurring during operation of the installation and ensuring that it is attended to immediately either by voluntary action by the operator or through the undertaking of an enforcement action by the regulator.Where the operator plans to leave or close the site, the EP Regulations require the operator to provide evidence, i.e. a site report, to the regulator on the condition of the site and give details of any contamination discovered. The regulator will only accept the surrender of the environmental permit when the site is put in a condition where it represents no pollution risk and is in a satisfactory state.The Environmental Impact Assessment (EIA) Directive 1985/337/EC, as amended, requires an environmental assessment to be made on the effect of certain public and private projects, e.g. construction of integrated chemical installations and other chemical plants, paper and board plants, plants manufacturing certain foodstuffs and certain infrastructure projects. Projects are defined according to whether they require an environmental statement to be provided in all cases (Schedule 1 development) or only where the development proposed is likely to have a significant effect on the environment (Schedule 2 development). The secondary legislation implementing the EIA Directive in England requires Schedule 2 projects to be subject to a formal screening process in order to determine whether they will have a significant effect before an application for planning permission


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is granted. The granting of planning permission is prevented where a development requires an environmental assessment until consideration of the relevant environmental information. The EIA Directive 2014/52/EU, which is intended to create a uniform and streamlined assessment process across Member States, was due to be implemented by 16 May 2017. Key parts of the Directive include the additional consideration of climate change, biodiversity, demolition impact and biodiversity in the assessment, and the mandatory introduction of penalties for non-compliance. It also aims to reduce the burden on developers by making fewer projects subject to assessment. Although the UK voted to leave the European Union in June 2016, until exit negotiations are concluded, the UK remains a full member of the European Union and so must continue to implement and apply EU legislation. The Government published its consultation on the implementation of the EIA regime in England in December 2016, in which it announced its intention to introduce the new regime with the fewest possible changes. The Directive was then transposed into English law by the Town and Country Planning (Environmental Impact) Regulations 2017 and the Infrastructure Planning (Environmental Impact Assessment) Regulations 2017. The implementation of the Environmental Liability Directive 2004/35/EC into English law pursuant to the Environmental Damage (Prevention and Remediation) Regulations 2009 may have caused some operators to undertake assessments of baseline condition in order to avoid liability for historic pollution. The Environmental Liability Directive establishes a framework of environmental liability requiring the prevention and, where that fails, remediation of various categories of environmental damage. It has no retrospective effect, so does not apply to damage caused by an emission, event or incident that took place before 30 April 2007. The UK regulations confer no retrospective effect before 1 March 2009, an anomaly caused by the late implementation of the Directive. In the absence of a baseline condition report, there may be evidential difficulties in proving that particular damage was caused by an emission, event or incident predating this date.


In general, legislation requiring the grant of a permit or authorisation for the carrying on of an activity or a discharge makes it a criminal offence to carry on the activity, or make the discharge, other than pursuant to a permit and in accordance with any conditions that may be attached to it. These are typically strict liability offences with no requirement to prove intention or negligence in the commission of the offence. In St. Regis Paper Company Ltd v R [2011] EWCA Crim Div 2527, the Court of Appeal confirmed that it is possible for criminal liability to be imposed on a company in circumstances where the actions of one of its employees infringe an environmental permit and the offence in question is one of strict liability; but that, in the case of criminal offences requiring mens rea, liability will only attach to the company where the employee in question can be said to be the “directing mind and will” of the company. In addition to their powers to pursue prosecution, regulators also have the power to issue notices to vary the terms and conditions of any permit granted or, in very serious cases of non-compliance, to revoke or suspend the operation of a permit.Pursuant to the Environmental Permitting (England and Wales) Regulations 2016, the Environment Agency is able to accept enforcement undertakings in relation to the main EP permitting offences.

Civil liability may also flow from a failure to hold a permit or to comply with a condition attached to it. For example, where a breach of a waste management licence occurs and a third party suffers damage as a result, that person is entitled to claim for the damage, subject to certain exceptions.

3 Waste


The definition of “waste” that currently applies in England is set out in the Waste Framework Directive 2008/98/EC (the WFD), implemented in the UK by the Waste (England and Wales) Regulations 2011 (Waste Regulations). “Waste” is essentially any substance or object which the holder discards or intends or is required to discard. This can prove to be a difficult definition to apply in practice, and to assist in such cases, Defra published guidance on the legal definition of waste in August 2012. Guidance has also been published by the European Commission.So-called “hazardous waste” is also defined in the WFD. Such waste will display one or more of the 15 hazardous properties detailed in the WFD, e.g.: it will be explosive; highly flammable; corrosive, etc. Due to the potentially harmful nature of hazardous waste, additional duties and controls are imposed by the WFD, for example, in relation to how such waste is stored, transported and handled. Additional controls also apply in the context of transboundary shipment of waste, and radioactive waste is subject to different legislative requirements than waste generally.(See question 3.4 below.)


Part II of the EPA introduced the concept of the waste “duty of care”, which requires producers of waste to ensure (among other things) that waste is managed so as to avoid its escape. If the intention is to undertake some treatment activity on the premises or to take in third parties’ waste for storage pending consignment for end disposal, then this requires an environmental permit under the EP Regulations. Activities involving the actual disposal of waste always require a permit under the EP Regulations and planning permission will also be required. Applications for disposal of waste under both the planning and environmental permitting systems require the disposer to demonstrate that operation of the disposal site poses no harm to human health or the environment, and that the person is qualified to operate the site and can offer appropriate financial guarantees relating to the adoption of appropriate environmental control measures both during and following closure of the site.


The waste duty of care requires the person subject to the duty: to take reasonable steps to prevent any other person committing a waste management offence; to prevent the escape of waste from his control or that of any other person; to ensure that upon the transfer


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of waste such transfer is only to an authorised person or to a person for authorised transport purposes, and when waste is transferred, to ensure that there is also transferred a written description of the waste sufficient to enable each person receiving it to avoid committing a waste offence; and to comply with the duty of care. Under the Waste Regulations, it is now a legal requirement that such transfer notes include a signed declaration that, to date, those handling the waste have applied the waste management hierarchy of options. It has been common practice for some time for the Environment Agency to insist that operators provide a financial guarantee or bond, in order to ensure that funds are available to undertake any clean-up works required during the operation of a landfill site or following its closure, and these provisions are carried over to the EP regime. In order to effectively pass on the burden of obligations with respect to the safe handling and disposal of waste after it leaves this site, the waste producer must ensure that the person receiving his waste (e.g. as a registered waste carrier) knowingly assumes responsibility for it under a contract.


As a separate category, packaging waste is subject to producer responsibility obligations for its re-use, recovery and recycling under the Producer Responsibility Obligations (Packaging Waste) Regulations 2007. Companies with a turnover of over £2 million, handling over 50 tonnes of packaging annually, are required to recover and recycle a proportion of their packaging waste. In practice, most obligated companies discharge these requirements by joining registered compliance schemes, although those choosing to follow the individual route will usually make arrangements to take back their waste. Defra consulted on new packaging recycling targets in November 2016 and postponed plans to publish a consolidated version of the Packaging Waste Regulations. Other categories of waste that are subject to take-back and recovery obligations include:■ Waste Electrical and Electronic Equipment (WEEE). EU

Directive 2002/96/EC makes producers of WEEE responsible for financing its collection, treatment, and recovery, and obligates distributors to allow consumers to return their waste equipment free of charge through collection systems. The Directive was implemented in England by the WEEE Regulations 2006. A Recast Directive 2012/19/EU on WEEE, extending the current regime, was passed in 2012 and implemented by the WEEE Regulations 2013, which came into force on 1 January 2014. Amongst other changes, the recast directive created an obligation for large electronic retailers to provide collection points in store to allow consumers to recycle small electronic goods. A number of the changes will not come into force in England until 1 January 2019.

■ End of Life Vehicles (ELV). The ELV Directive (2000/53/EC) aims to prevent waste from ELVs and promote the collection, re-use and recycling of their components to protect the environment. The ELV Directive requires Member States to ensure that ELVs are only scrapped (‘treated’) by authorised dismantlers or shredders, who must comply with specified environmental standards. Most of the requirements of the ELV Directive were implemented in England by the passing of the ELV Regulations 2003, and the producer responsibility requirements were implemented by the ELV (Producer Responsibility) Regulations 2005. In April 2015, responsibility for the ELV regime was transferred to the National Measurement Office.

■ Batteries. The Batteries Directive (Directive 2006/66/EC) includes producer responsibility provisions regarding the

setting up of battery collection and take-back systems to be paid for by producers and importers of batteries. These provisions were implemented in England by the passing of the Waste Batteries and Accumulators Regulations 2009. This is expanded by the Batteries Directive 2013/56/EU, which removes certain exceptions to the regime, and was implemented by the draft Batteries and Accumulators (Placing on the Market) (Amendment) Regulations 2015, which came into force on 1 July 2015.

The Commission’s Work Programme 2018 confirmed that the Commission will continue to work on its Circular Economy regime, which lists four new waste Directives as “priority pending proposals”. The proposed Directives will amend the WEEE Directive, the ELV Directive, the Batteries Directive, the Waste Framework Directive and the Packaging Directive.

4 Liabilities


Breach of environmental law can give rise to both criminal and civil liabilities. Criminal offences arise as a result of polluting an environmental medium which is the subject of protection without holding an environmental permit in relation to the activity undertaken or the discharge or emissions made, or failing to comply with notices that the regulator has served in respect of the activity or pollution. The available defences depend upon the particular environmental legislation regulating the conduct of potential polluters. Civil sanctions are available as an alternative to a criminal prosecution in some cases where the Environment Agency is the enforcing authority and the breach committed is one designated for the imposition of an administrative penalty. The Environment Agency can accept enforcement undertakings, but no other civil sanctions, in relation to the main Environmental Permitting offences (see questions 1.2 and 2.4 above).Civil liability may also arise for breach of tort law. The tort of particular relevance to environmental protection is that of nuisance, which gives rise to remedies of damages and/or an injunction where pollution results in an unlawful interference with a third party’s right of ownership or enjoyment of land. In Barr and others v Biffa Waste Services Ltd [2012] EWCA Civ 312, the Court of Appeal overturned the High Court’s decision and reaffirmed that defendants who operate under a detailed regulatory scheme and environmental permit can be liable in private nuisance, notwithstanding that they have not been negligent or breached the provisions of their permit. In Coventry and others v Lawrence and another [2014] UKSC 13, the Supreme Court held that the mere fact that an alleged nuisance has the benefit of a planning permission will not be enough to prevent liability for private nuisance, although it may carry some evidential weight.The rule in Rylands v Fletcher establishes the principle of strict liability for damage caused by a dangerous accumulation of a substance escaping from land, provided the damage is foreseeable.The tort of negligence may also be relevant. To succeed, a claimant must show that the defendant owes a duty of care to him, that there has been a breach of that duty and the damage of which he complains is a foreseeable consequence of the breach. Unlike nuisance, the claimant does not need to establish an interest in land in order to succeed. Difficulties in establishing duties of care may exist where environmental harm results, and it is common for negligence to be pleaded as an alternative to nuisance.


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The tort of trespass has also been pleaded in environmental cases, but to succeed, the claimant must show that the defendant’s unlawful act has caused a direct physical interference with the land. Proving direct interference has proved difficult as, for example, pollution caused by the discharge of polluting materials discharged into water and carried by the current before reaching the claimant’s property has been held not to amount to a direct interference.Officers and employees, as well as the undertaking concerned, can in certain circumstances incur personal civil liability if responsible for the event that gives rise to damage (see question 4.3 below).


An operator can be liable for environmental damage caused to a third party, notwithstanding that the polluting activity is operated within permit limits (see question 4.1 above).Furthermore, it is possible under the EP regime for operators to be found liable for any environmental harm caused, notwithstanding compliance with a permit. Some form of failure to properly manage staff and/or manage or maintain equipment usually forms the basis of such alleged breaches. These provisions are carried over from predecessor regimes. In the context of the Environmental Liability Directive, a permit defence is specifically provided for, and Defra adopted the defence in the Environmental Damage Regulations (see question 2.3 above). The availability of the defence means that operators will not be liable to bear the costs of any remedial action that may be required provided they are not at fault or negligent, but only insofar as additional liability arises under the Directive beyond that currently provided for in national legislation (see question 5.1 below).


Personal liability for directors and officers of companies can be imposed for breaches of environmental law if, as a result of their own acts or omissions, they can be said to have created the circumstances giving rise to the commissioning of the offence. Personal liability can also be imposed for breaches of environmental law where the offence committed by a company is proven to have been attributable to the consent or connivance of any director or officer or other person acting in a similar capacity, or is attributable to any act or neglect on the part of any such person. In such cases, both the company and the director may be prosecuted.Subject to the provisions of sections 232 to 234 of the Companies Act 2006, companies can purchase insurance to protect their directors and officers from personal liability for environmental wrongdoing or provide indemnities directly to them; however, as a matter of public policy, it would not be possible to obtain insurance to indemnify a director or officer for criminal fines or penalties imposed on him/her, and the courts might not enforce an indemnity by a company for these matters.


The fundamental distinction is that when one buys the shares of a company, one effectively inherits all environmental liabilities

associated with the corporate entity concerned, whether relating to the business/sites that the company currently operates, or those it has historically operated; whereas in an asset purchase, the purchaser does not automatically take on liability for any current and ongoing failure of another entity to comply with environmental law. A key risk for the purchaser in an asset purchase is that if the purchaser is aware of a breach of environmental law and/or an environmental condition in relation to the asset acquired and has the ability to prevent the breach continuing or otherwise to remedy the environmental condition, then the person concerned might be said to be a knowing permitter, if not a causer, of an ongoing environmental problem that can result in liability. In certain circumstances, the purchaser could also become liable merely as a result of being an owner or in occupation.In the case of a share sale, the seller should (in the absence of any agreement to the contrary) escape any liability that subsequently crystallises in terms of action pursued by the regulator against the company that is sold. The availability of a wide range of contractual and other mechanisms for transferring and otherwise allocating environmental risk means that, in many practical respects, the differences between a share and asset purchase are minimal.


Lenders under, for example, a mortgage deed are unlikely to incur liabilities for environmental wrongdoing, in the absence of knowledge of the wrongdoing or any real ability to control the application of the monies lent to the borrower to prevent pollution occurring. If, however, a lender enforces its security by taking possession of a property then it may, potentially, become liable for undertaking or paying for remediation of contamination of the property. It is conceivable, for example, that a lender could incur liability as a Class A person under the provisions of Part 2A of the EPA 1990, if it can be said to have caused or knowingly permitted the presence of contamination on the property. Also, in the absence of the regulator being able to establish an appropriate Class A person, a lender in possession could be liable as a Class B person on the basis that it is then deemed to be the owner of the site.Aside from a direct risk of liability, lenders may also face risks to reputation as a consequence of lending on what are perceived to be environmentally sensitive infrastructure projects and to companies undertaking controversial activities. As a consequence, many leading UK banks have signed up to the Equator Principles, a set of voluntary guidelines for financial institutions based on the safeguard policies and guidelines of the World Bank and the IFC (the private-sector investment arm of the World Bank). The Equator Principles are specifically designed to promote responsible environmental and social practices in project financing, and apply to all industry sectors and to loans for projects above a specified capital cost (in the case of project finance, US$10 million or more).

5 Contaminated Land


The approach of the regulator to liability for historic contamination depends upon the circumstances that apply. Where it is proposed to redevelop a contaminated site, the usual approach is for the planning permission to be subject to conditions


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requiring investigation and clean-up of the site to a standard where it becomes fit for its intended purpose. Often, the developer will pay for the cost of remediation, which will normally be factored into the costs of the project and be recoupable as a consequence of the sale or lease of the resulting development.Where it is not intended to redevelop historically contaminated land in the short-term, whether remedial action is required depends on the level of contamination. Part 2A of the EPA 1990 sets out a statutory regime for dealing with the most seriously contaminated land, including land contaminated by radioactivity from nuclear licensed sites and the situation where land contamination is causing pollution of controlled waters.Whether land is “contaminated” or is contaminating controlled waters depends on whether the damage is “significant” or there is a “significant possibility” of such harm. Statutory guidance issued by Defra in 2012 confirms the circumstances in which this is deemed to occur. Practitioners may also find the Law Society’s practice note on the contaminated land regime, published in December 2014, to be of help when applying the regime. This note replaces the Contaminated Land Warning Card, although the recommendations are broadly the same. Compliance with the note is not mandatory, but does reflect the Law Society’s interpretation of best practice in this area. Under the regime, local authorities are required to consider whether any land in their areas should be classified as contaminated land (which involves considering source-pathway-target relationships and conducting a risk assessment). There is no general requirement on an owner or occupier to notify the local authority of the existence of contamination (except in circumstances where development requiring planning permission is to be undertaken). If the land satisfies the definition of contaminated land, then a statutory requirement arises on the part of the local authority as regulator (or the Environment Agency, in the case of certain “special sites”) to consider whether there is a need for remediation, and exactly what form that remediation should take.The regime is based on a “suitable for use” approach, and cost and reasonableness considerations are relevant in determining the standard and extent of remediation. Liability to undertake or, in the event that it is not done voluntarily, pay for remediation, lies with the appropriate person (the person who caused or knowingly permitted the presence of the substance that caused the contamination) or, where such a person cannot be found, the owner or occupier for the time being. The regime is complex and includes detailed provisions on exclusion from liability and allocation of liability on various grounds between groups of polluters (see below), as well as the apportionment of the costs of remediation between such persons.Liability for historic contamination of soil or groundwater may also give rise to the ability of a third party to bring proceedings in order to claim remedies where pollution has migrated onto its land. This is a civil liability that arises under the law of torts, the most commonly pleaded being the tort of nuisance. Remedies include the grant of a prohibitory injunction and/or damages for the harm caused. Ultimately, clean-up may be required to avoid further claims arising, or for breach of any injunction ordered by the court.The Environmental Damage Regulations also have an impact on how new instances of the most serious cases of environmental damage are managed. They require operators not only to take preventative action to avoid environmental damage occurring in the first place, but also to own up to regulators to having caused environmental damage if it has occurred. Three categories of environmental damage are covered, namely:■ damage which has significant adverse effects on reaching or

maintaining favourable conservation status of species and natural habitats protected under EC legislation or the integrity

of a Site of Special Scientific Interest (SSSI) (biodiversity damage);

■ damage that significantly adversely affects the ecological, chemical and/or quantitative status and/or ecological potential of waters covered by the Water Framework Directive (Directive 2000/60/EC) (water damage); and

■ land contamination which creates a significant risk of human health being adversely affected.

For occupational activities listed in Schedule 2 of the Regulations, comprising a wide range of activities regulated by EC legislation which are potentially damaging to the environment, liability for all three categories of environmental damage is covered and strict liability applies. Operators of other occupational activities may be liable for biodiversity damage, but only if they are at fault or have been negligent. Where biodiversity or water damage occurs, it must be remedied by returning the environment to its baseline condition; in the case of damage to land, the risk to human health must be removed. If the harm to biodiversity or protected waters cannot be reversed, then ‘complementary remediation’ by improvement of a similar resource or service may be required to be undertaken to the extent the original resource cannot be fully restored. ‘Compensatory remediation’ may also be required to compensate society for the loss of the use or enjoyment of the resource or service. Both of these are new concepts for English Law.


Statutory guidance under the Part 2A EPA 1990 contaminated land regime sets out the rules that apply where more than one person is deemed to be responsible for contamination. The rules differ depending upon whether the liability group comprises so-called Class A persons, that is persons who have caused or knowingly permitted the presence of the pollutants; or Class B persons, being owners and/or occupiers for the time being where no Class A persons have been found after reasonable enquiry.The exclusion tests and subsequent apportionment tests are designed to ensure that it is fair for members of the liability group to bear responsibility for remediation. In relation to Class A groups, the regulator is required to first consider whether any of the tests for exclusion from liability apply. There are six tests in total, and judgments in relation to whether or not the tests apply are taken on a balance of probabilities, after considering the relevant information that has been obtained. The exclusion tests must be applied in the sequence in which they are set out. They must not be applied to exclude every member of the liability group. This means essentially that the person(s) responsible for bearing the cost of remediation may well therefore be the last one(s) left. Having applied the exclusion tests, the regulator is then required to apportion liability between members of the Class A liability group, so as to reflect the relative responsibility of each of those members for creating or continuing the risk now being caused. If no information is available to make an assessment of relative responsibility, the statutory guidance advises regulators to apportion liability in equal shares.In relation to Class B liability groups, the only exclusion test applicable is to exclude those who do not have an interest in the capital value of land. Again, the test is not to be applied if it would result in the exclusion of all the members of the liability group.In terms of apportionment between members of a Class B liability group, the guidance indicates that where remediation refers to a particular area of land, liability should be apportioned to members


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who own or occupy that particular area of land. Otherwise, apportionment should be made on the basis of the capital value of the land in question. A determination of an appeal against the service of a remediation notice illustrates how this complex regime works in practice. This involved Redland Minerals Limited (Redland) and Crest Nicholson Residential plc (Crest), who were both found to be Class A appropriate persons and liable to remediate contaminated land. Redland had formerly owned the site and Crest had developed it for housing. Chemicals from the site were found to have seeped into the underlying chalk aquifer, leading to the closure of a number of water abstraction boreholes and threatening the potable water supply. Both Redland and Crest were found to have caused the contamination to be on, in and under the site; whilst Crest had not brought the chemicals onto the site, the Secretary of State found that as a result of its action and inaction during its ownership in the way it dealt with the site, it too had caused the contamination. The Secretary of State particularly pointed to the fact that Crest had demolished hard-standings, leaving contaminated soil exposed to rainfall leaching for some two years before the new houses were built, despite it being aware of the presence of contamination on the site. This had caused contaminants that would otherwise have been removed to remain and to leach deeper and faster into the ground.The Secretary of State apportioned liability between Redland and Crest as 85:15 for one contaminant and 45:55 for another. In the case of the second contaminant, Redland had provided a limited amount of information on its presence, but not sufficient to enable Crest to have been aware of the presence of it in the aquifer. Liability on the basis of the “sold with information” test was therefore only partly reduced. No information had been provided on contamination of the site by the first contaminant. Civil liability for contaminated land is joint and several. Accordingly, where one of the torts of nuisance, negligence, trespass or breach of statutory duty is made out, then if breaches by different persons caused the claimant to suffer loss, injury or damage, he is entitled to sue all or any of them for the full amount of his loss. This is particularly pertinent in the case of the tort of nuisance, as subsequent owners or occupiers may be alleged to have adopted a continuing nuisance caused by a predecessor. The Civil Liability (Contribution) Act in 1978 enables a tortfeasor to claim contribution from other tortfeasors responsible for the same loss or damage (see question 5.4 below). Defra has adopted the following approach in the Environmental Damage Regulations where multi-party causation arises: where more than one activity contributes to an incident, the operator of any of the activities can be required to remediate, and where environmental damage is caused by the actions of a small number of identifiable operators, the regulator may notify more than one operator and serve a remediation notice on each one. In the latter case, guidance accompanying the implementing regulations indicates that operators should endeavour to agree between themselves the shares in which they should bear the costs of the measures to be carried out. If remedial action is not carried out, the authority may carry out necessary work and reclaim the costs against any or all of the operators concerned – with operators able to claim contribution from any other operator who is also responsible for the damage (see question 5.4 below).In November 2016, in the case of Price and another v Powys County Council, the High Court confirmed that a local authority could be a ‘responsible person’ under Part 2A of the regime, in respect of contamination caused by a predecessor; however, the local authority later successfully appealed this decision on other grounds.


The nature of contaminated land is such that it is not always possible to determine at the outset of a remediation programme exactly what will be required to be done to remediate it. Consequently, and subject to procedural safeguards such as the concept of the regulator acting reasonably and the requirement for appropriate and proportionate regulation, a regulator can require additional works to be carried out even though a programme of environmental remediation has been “agreed”, such as when the regulator becomes dissatisfied with the progress of the remediation works or considers that the works will not achieve the agreed remediation objectives.In terms of third-party challenges, it is conceivable that where an agreement is reached between a party and a regulator with regard to remediation works to be carried out on the party’s land, a third party could challenge the agreement by way of judicial review in the Administrative Court on the basis of the agreement representing a decision by the regulator. Cases may also be heard by a dedicated fast-track court for environmental and planning judicial review cases, as detailed in the Criminal Justice and Courts Act 2015 which received Royal Assent on 15 February 2015. To successfully challenge the agreement, the third party would be required to show grounds for bringing judicial review, by demonstrating that the decision-maker reached its decision on the basis of illegality, irrationality or procedural impropriety.Third parties may complain to the Local Government Ombudsman if they feel that a local authority’s behaviour has resulted in injustice as a result of maladministration. The Ombudsman will investigate the complaint and make findings including rulings for compensation in the event that the complaint is upheld. The Parliamentary Ombudsman investigates complaints concerning such issues where the Environment Agency is involved.


Whilst it is a general principle of environmental law that the polluter should pay for any pollution he causes, this conflicts with the general rule in relation to property transactions of “caveat emptor”, or let the buyer beware. Accordingly, a potential buyer or tenant must satisfy itself as to the state and condition of the property to be acquired or leased, subject, however, to the seller or landlord’s obligation to disclose matters about which the other party expressly seeks information (other than where the seller makes no representation other than to insist upon the buyer relying on its own inspections). Private rights of action may arise where there has been a failure to make such disclosure or as a result of a breach of contract for mis-description, misrepresentation or fraudulent concealment. Representing that a property is free from contamination when it is, in fact, heavily contaminated may give rise to a remedy. Misrepresentation requires there to be a misrepresentation of a material fact in relation to the property, which may arise, for example, where answers to preliminary inquiries are false or misleading. It gives rise to a right of action for damages and/or rescission of the contract depending on the nature of the misrepresentation. Similar remedies apply in relation to fraudulent concealment, which involves the seller actively concealing some defect in the property.


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Liability in environmental law for contamination is typically predicated on the basis of “causing” or “knowingly permitting”, and subsequent owners or occupiers may be liable for contamination which pre-dates their ownership or occupation of a site, where they have both the knowledge of the presence of the substance causing pollution, and the power to prevent the substance being there or escaping from their site. As a consequence, a private right of action to recover against the original polluter may also arise where the subsequent owner or occupier has been found jointly and severally liable at common law for contamination. The Civil Liability (Contribution) Act 1978 allows any person liable in respect of any damage suffered by another to recover a contribution from any other person liable in respect of the same damage (whether jointly or otherwise). A person is liable under the provisions of the Act whether the basis of his liability is in tort, breach of contract, breach of trust or otherwise. The amount of contribution that can be ordered is such as may be found by the court to be just and equitable, with regard to the extent of the person’s responsibility for the damage in question. The court’s powers are, however, subject to the overriding principle that one defendant cannot be found liable to pay a greater sum than can be recovered from him by the claimant. The statutory guidance under Part 2A EPA 1990 also provides mechanisms whereby a seller of land can effectively transfer the liability risks associated with contamination to a purchaser, for example, where a seller has provided knowledge of contamination to a purchaser and it is reasonable that the purchaser (who is a member of the same Class A liability group) should bear liability for its remediation, although it is also possible for a purchaser in such circumstances to agree with the seller that the seller will retain remediation liability.


The power to obtain monetary damages for aesthetic harm to public assets is limited. Under the Environmental Damage Regulations, aesthetic harm to public assets could, for example, be covered by the definition of biodiversity damage (see question 5.1 above), provided the other triggers specified apply, e.g. the site affected is a SSSI. Where biodiversity damage is caused, public authorities are able to claim damages for aesthetic harms, in the sense of requiring the operator to remediate the harm caused by returning the habitat to its baseline condition or, where this is not possible, to provide complementary or compensatory remediation; see question 5.1 above.



Environmental regulators have wide powers to obtain information to enable them to discharge their functions. The nature of these powers depends on the circumstances. For example, under paragraph 4 of Schedule 5 of the EP Regulations 2016, applicants for an environmental permit must provide such further information as is reasonably required by the regulator in order to determine the application. Regulation 61(1) also provides that the relevant regulatory authority may, by written notice, require any person to furnish the authority with such information as the authority

reasonably considers it needs to discharge its functions under the EP Regulations 2016, in such form and within such period as is specified in the notice; it is an offence to fail, without reasonable excuse, to comply with any requirement of such a notice.Various general and specific powers of enforcing agencies and persons authorised by them are set out in section 108 of the Environment Act 1995, including powers to require any person whom an authorised person has reasonable cause to believe to be able to give any information relevant to any examination or investigation, to answer such questions as the authorised person thinks fit to ask and to sign a declaration of the truth of his answers. The powers do not, however, extend to requiring the production of documents that are protected by legal privilege.In addition to information-gathering powers contained in environmental legislation, regulatory authorities have powers where criminal offences have been committed to obtain information about the commission of the offences pursuant to powers under the Police and Criminal Evidence Act 1984. These include powers to search premises, conduct sampling and interview persons (including employees) in the course of investigating whether an offence has been committed.



In England, there is no legal duty placed on persons generally to inform and involve the regulatory authorities upon becoming aware of an environmental problem. However, this may arise in the following circumstances:■ there may be reporting obligations in permits. For example,

a permit authorising the operation of a Part A installation under the UK environmental permitting regime must include a condition requiring the operator to supply the regulator regularly with the results of the monitoring of emissions and to inform the regulator, without delay, of any incident or accident which is causing or may cause significant pollution. Monitoring and reporting obligations are also typically included in water discharge and abstraction licences;

■ the operators of sites regulated under the Control of Major Accident Hazard (COMAH) Regulations 2015 are required to inform the Competent Authority (i.e. the HSE and EA, acting jointly), as soon as practicable, of the occurrence of any major accident at such a site;

■ there is a general duty on the operators of a wide scope of occupational activities to report the discovery of “environmental damage” to the relevant regulator (see question 5.1 above); and

■ a “duty to warn” may arise in certain circumstances under common law, such as where a person responsible for a dangerous incident or state of affairs is aware that it poses a danger to third parties.

Also, in circumstances where the person responsible for pollution has committed a criminal offence (e.g. by illegally causing waste to be deposited or polluting matter to enter controlled waters), the proactive disclosure of information concerning the existence of pollution or its migration may provide mitigating facts which would be taken into account when a court is assessing the penalties for the offence.


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A person does have an affirmative obligation to investigate land for contamination in certain circumstances. For example, it is a requirement that a site condition report be submitted to the enforcing authority where the (proposed) operator of a Part A EP activity is contemplating making an environmental permit application. Site investigations may also be necessary where they are stipulated in a remediation notice served under the contaminated land provisions of Part 2A of the EPA 1990 or a works notice served under section 161A of the Water Resources Act 1991. They may also be required as a condition to a planning consent; whether any given land is contaminated to an extent that it requires remediation in order for a proposed development to proceed, being a material consideration in the planning process.


The basic position in England is caveat emptor or “let the buyer beware” (see question 5.4 above). Purchasers will usually undertake environmental due diligence to reveal any environmental risks associated with the target’s business or assets. Environmental representations and warranties are often required by prospective purchasers as a contractual mechanism effectively requiring disclosure of information by the seller. This is because merger and acquisition transactions are normally documented so that a purchaser cannot sue for breach of a representation or warranty to the extent that the seller has fairly disclosed information about the subject matter of the representation or warranty. Sellers should always be careful when giving replies to enquiries raised by prospective purchasers concerning environmental matters, as providing a false or misleading response could be actionable.In hostile takeover transactions, prospective purchasers are normally reliant on whatever information they can glean about the target’s environmental problems from publicly available sources. In the context of friendly takeovers, such information may well be provided by agreement of the target. Pursuant to the Seveso-III Directive, implemented by the COMAH Regulations 2015, and the Aarhus Convention, there is now an increase in the amount of public information required to be provided in relation to COMAH sites (including lower tier COMAH sites). As such, prospective purchasers in a hostile takeover may have greater access to environmental information than was previously possible. Recent legislation on narrative corporate reporting will also affect to some extent the way companies report on environmental information, as well as social and human rights matters. The Non-financial Reporting Directive 2014 was implemented in the UK following a consultation launched by BEIS (then the Department of Business, Innovation and Skills) in February 2016. The Directive provides for mandatory reporting on environmental and non-environmental matters by large companies throughout the EU. This overlaps with existing obligations in England under ss.414A-414D of the Companies Act 2006, but extends to “public interest entities” which may not already be covered by the English regime. In November 2016, BEIS confirmed that the Directive would be implemented as an addition to the existing UK reporting framework.

8 General


Environmental indemnities provide important contractual mechanisms for allocating environmental risks in transactions. It is possible to use an environmental indemnity to limit exposure for actual or potential environment-related liabilities, as well as to effectively transfer risk for such liabilities to another person. The use of such indemnities is a common way of allocating environmental liabilities as between a seller and a purchaser. Following the implementation of the contaminated land provisions of Part 2A of the EPA 1990, the contractual allocation of environmental risks has assumed increased importance. For example, the Statutory Guidance under Part 2A specifically provides for agreements on liabilities to be entered into between persons who are responsible for the costs of a remediation action concerning contaminated land under Part 2A, and that the enforcing authority should generally make determinations on the exclusion, apportionment and attribution of liability in order to give effect to such agreements. Typically, environmental indemnities contain detailed provisions as to the scope of the indemnities and the events that trigger claims under them. The indemnities normally contain a range of financial and other limitations to govern the relationship between the parties. For example, financial limitations may include de minimis, aggregate thresholds and respective caps for claims, and sometimes costs-sharing as between the parties; there are normally also other limitations limiting the purchaser’s ability to claim where the claim arises as a result of post-completion actions by the purchaser. Conduct and dispute-resolution provisions are also typically included.


There is nothing to prevent a company establishing English incorporated companies with limited liability (SPVs) to own and occupy property that may incur future liabilities to third parties. It is essential, however, that such ownership is made known to third parties and that steps are taken to minimise the risk of third parties believing the company in question is acting as an agent or that another company is the owner or occupier. This is an ongoing process, as an agency can arise at any time by conduct. It may be possible to isolate the liabilities arising from site-specific environmental problems by transferring properties that have contamination issues into SPVs.An exception arises where the liability results from acts or omissions of persons (other than the SPV established to hold the relevant properties) who caused or knowingly permitted the environmental problems. If, for example, those persons remain companies within the group, it is difficult to see how they would escape liability unless they are wound up (see below).Another exception concerns situations where the liability in question is an existing one. Where this is the case, the courts would examine the facts and circumstances carefully to determine whether it was


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in fact the intention of a party in setting up the SPV to evade the obligation, as the courts have demonstrated a lack of sympathy for use of the corporate form as a device for evading existing liabilities.Even where this type of SPV is created and run properly in holding contaminated properties that may give rise to environmental liabilities, it could well be that the financial amount of liabilities stated in the SPV’s balance sheet would need to be consolidated with the group’s accounts.If a company is insolvent either as a result of environmental liabilities or otherwise, subject to the directors doing all they can to minimise losses to creditors, liquidation will be inevitable. The liquidation process requires the appointed liquidator to realise all available assets of the company and to distribute their value to creditors according to statutory priority. At the end of the liquidation process, the company will be dissolved. Any creditors (including environmental creditors) remaining unpaid or partly unpaid will then be highly unlikely to receive any further payment.This may seem a rather drastic “solution” to the problem of an environmental liability arising, particularly if the company owns valuable assets and/or has an otherwise healthy business. Such a company may instead consider effecting a transfer of its business and assets to a “clean” corporate vehicle, leaving behind some or all of its liabilities (including environmental liabilities). However, the company must receive fair consideration. If it does not, the appointed liquidator may use statutory powers to challenge the transaction as being at an undervalue, provided that it occurred no more than two years before the entry into liquidation (there is no time limit if it can be shown that the transaction was effected in order to put assets beyond creditors’ reach). If the challenge is successful, the court has the power to make a wide range of orders for the purpose of restoring the company to the position it would have been in had the transaction not occurred. Directors’ duties and disqualification issues may also arise.In certain circumstances, where a regulatory authority itself incurs costs, it may be entitled to serve a charging notice specifying the amount which the authority claims is recoverable from the company concerned (e.g. s.78P of the EPA 1990, concerning costs incurred by the enforcing authority in cleaning up contaminated land). Where a charging notice has been validly served (and subject to any rights of appeal against the notice), the cost becomes a charge on the premises and is registerable as such, taking priority over non-statutory creditors.


As a general principle, a company’s acts are not the acts of its shareholders, nor are its liabilities the liabilities of its shareholders. The liability of shareholders in a limited liability company is usually limited to paying up the unpaid amount of the nominal value of their shares; the courts strictly apply this principle. By way of exception to this general rule: (a) if a company acts as an agent for its shareholders then, on normal agency principles, its shareholders may be liable for its acts. The conduct of the parties will be looked at closely and each situation will turn on its facts; (b) a company’s shareholders may have given direct contractual ‘comfort’ to third parties (e.g. guarantees or indemnities); and (c) the courts will not allow shareholders to “hide behind” a limited company in order to facilitate fraud or use such a company as a device or “sham” to evade its own existing obligations.

If directors are (or become) accustomed to acting on the directions or instructions of the shareholders, those shareholders in certain circumstances, typically involving fraudulent or wrongful trading, could be personally liable as “shadow directors” for the liabilities of the company. Even if a company is “wholly owned” by a parent, that is not of itself sufficient to give rise to an agency relationship. However, a subsidiary could, on the facts, be the “puppet” of the parent and, as such, be found to act as its agent. In that case, the parent could be liable as principal for the express (or implied) authorised acts of its agent subsidiary. Statute also intervenes in certain cases. The EPA 1990 and the Water Resources Act 1991 contain provisions which can make a company’s shareholders liable “where the affairs of a body corporate are managed by its members” (e.g. s.157 of the EPA 1990). Under that section, a member of a company may be prosecuted as though he is a director where an offence is committed by the company and is proved to have been attributable to any neglect on the part of the member in question. This gives rise to a criminal (as opposed to a civil) liability, although it is likely that, were a prosecution to succeed, the prosecuting authority would also seek an order for recovery of its costs, which may include the clean-up costs it had incurred.In Chandler v Cape plc [2012] EWCA (Civ) 525, the Court of Appeal held, essentially, that Cape owed a direct duty of care to its subsidiary’s employee, who had developed an asbestos-related disease. The court emphasised that the duty of care owed by a parent company to a subsidiary’s employees does not exist automatically and only arises in particular circumstances: parent companies have a separate legal personality and, on the facts, it was inappropriate to “pierce the corporate veil”. However, the court considered, having regard to the particular facts of the case, that Cape had assumed duties of care to its subsidiary’s employees, on the basis that: (i) Cape and the subsidiary had relatively similar businesses; (ii) Cape knew (or ought to have known) that the subsidiary’s system of work in relation to asbestos was unsafe; and (iii) Cape knew (or ought to have foreseen) that the subsidiary or its employees would rely on Cape applying its superior knowledge to protect the subsidiary’s employees. In a more recent case (Lungowe and others v Vedanta Resources plc [2017] EWCA Civ 1528), the Court of Appeal further clarified that:■ A duty may be owed by a parent company to the employee of

a subsidiary, or a party directly affected by the operations of that subsidiary, in certain circumstances.

■ Those circumstances may arise where the parent company (a) has taken direct responsibility for devising a material health and safety policy the adequacy of which is the subject of the claim, or (b) controls the operations which give rise to the claim.

■ The first of the four indicia in Chandler v Cape Plc (i.e. that the businesses of the parent and subsidiary are in a relevant respect the same), requires not simply that the businesses of the parent and the subsidiary are in the relevant respect the same, but that the parent is well placed, because of its knowledge and expertise to protect the employees of the subsidiary.

■ Such a duty may be owed in analogous situations, not only to employees of the subsidiary but to those affected by the operations of the subsidiary…

Under the common law, English courts have jurisdiction to hear cases involving incidents occurring abroad where the defendant company is ‘domiciled’ within England. In Lubbe v Cape plc ([2000] 4 All ER 268), South African claimants were entitled to bring proceedings ‘as of right’ in the English courts – meaning that they invoked the traditional territorial jurisdiction of the English Court over a corporate defendant who is ‘domiciled’ in England.


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Prior to the case of Owusu (discussed below), an English defendant against whom a claim had been brought by an overseas claimant could apply to stay the proceedings on the grounds of forum non conveniens. However, in Owusu v Jackson ([2005] ECR I 1383), the European Court of Justice (ECJ) ruled that, under the Brussels I Regulation, a claimant was entitled to bring proceedings in England (being a Contracting Party to the Brussels Convention) provided the defendant is domiciled there, even where England had no connection with the events which resulted in the relevant loss. In Owusu, a British national domiciled in the UK suffered serious injuries on a property in Jamaica. The defendant property owner was also domiciled in the UK. The claimant sued in the English courts for breach of an implied term that the private beach where the accident occurred would be reasonably safe or free from hidden dangers. Some commentators view the decision as controversial, largely excluding as it does any consideration of forum non conveniens principles, which, prior to Owusu, had involved the courts applying a two-stage test, essentially: (1) has the English domiciled defendant shown that the courts of another jurisdiction are the more appropriate forum for the issues raised in the action; and (2) if so, can the claimant show that the interests of justice nevertheless require the action to be heard in England? The matter may, in due course, be the subject of further consideration at the European Court of Justice level. The recast Brussels Regulation has not resolved the questions raised by Owusu. (Notwithstanding the decision in Owusu, it remains possible to argue that the proceedings brought in England against an English defendant should be stayed in certain circumstances, where the same or similar proceedings are pending in another state.)The Owusu principle was recently confirmed by the Court of Appeal in Lungowe and others v Vedanta Resources Plc. A similar action in which Nigerian claimants allege damage resulting from oil spillages at the defendant’s pipelines is currently pending before the Court of Appeal (for the first instance decision see Okpabi and others v Royal Dutch Shell plc and another [2017] EWHC 89 (TCC)). In February 2017, a group of Kenyan nationals were unsuccessful in bringing an action against an English parent for failing to prevent ethnic violence as it was held that there was not sufficient proximity for the parent company to owe a duty of care on behalf of the subsidiary (AAA and others v Unilever plc and another [2017] EWHC 371 (QB)).


Sections 43A to 43L and 103A of the Employment Rights Act 1996 (as inserted by the Public Interest Disclosure Act 1998) have the effect of rendering an employee’s contractual duty of confidentiality towards their employer void to the extent that those duties would prevent the employee from making a “protected disclosure”. Protected disclosures are allowed where (in the reasonable belief of the person disclosing) they show one or more of a number of matters stipulated in section 43B of the Employment Rights Act 1996, which include the committing of a criminal offence, the endangering of the health and safety of any individual, or damage to the environment.The disclosure must be made in good faith and cannot be regarded as a “protected disclosure” if the person disclosing commits a criminal offence in doing so (e.g. a disclosure which would fall under s.1 of the Official Secrets Act 1989). If an employee is dismissed on the basis of a “protected disclosure”, the dismissal is automatically unfair.Section 43F also allows an employee to make a disclosure to a “prescribed person” if they reasonably believe that a “relevant failure”

has occurred or is occurring and that information they are disclosing is true or substantially true. Both defined terms refer to the Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2003, and include disclosure to bodies such as the Environment Agency, the Health and Safety Executive, and the Food Standards Agency.The Enterprise and Regulatory Reform Act 2013 requires that for disclosures made on or after 25 June 2013, the whistle-blower must have a reasonable belief that the disclosure is in the public interest in order for it to be considered a “protected disclosure”. Employment tribunals can send details of whistle-blowing claims direct to a regulator (also known as a prescribed person) where the claimant has given their express consent, under the Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2010 (SI 2010/131).


US-style “class actions” are not currently available in the UK. The Court of Appeal’s decision in the case of Emerald Supplies Ltd v British Airways Plc [2010] EWCA Civ 1284 has made it clear that the English courts are not prepared to interpret the existing court rules to allow a form of class action to be created without specific legislation that would allow such claims. For example, the Consumer Rights Act, which came into force on 1 October 2015, introduces a specific procedure pursuant to which opt-in and opt-out private actions can be brought for breaches of competition law.Under the existing rules governing Group Litigation Orders, environmental claims can be brought by groups of claimants, but all members of the group must be identified at the start of the litigation or at a point in the pre-trial procedure laid down by the court. Although the action may be mounted by way of collective or “generic” pleadings, ultimately each member of the group must prove that their particular injury or loss was attributable to the causative agent or event of which they complain and damages are awarded on an individual basis. In order to obtain collective damages or injunctive relief a separate, simultaneous claim can be brought under Civil Procedure Rule 19.6.Damages awards in the UK are set by professional judges, not juries, and do not generally contain any punitive element. They therefore tend to be lower than in the US.In June 2013, the European Commission published a recommendation on collective redress requesting that EU Member States implement “opt-in” collective action mechanisms abiding by a number of non-binding “common European principles” for enforcement of rights granted under EU law. Member States were asked to implement the requisite mechanisms by 26 July 2015, following which the Commission would conduct an assessment of the measures to ascertain if further measures are required. The mechanisms aim to cease or prevent unlawful business practices which affect multiple claimants, and cut across several EU policy areas, including consumer protection and the environment. The UK has adopted rules to implement certain aspects of the recommendation through the Consumer Rights Act, as described above.


This depends on the type of proceedings being pursued and also to some extent whether the individual (and the case) qualifies for public funding from the Legal Services Commission via the Community Legal Service (previously known as legal aid). In the


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rare cases where the latter applies to environmental litigation, some or all of the costs involved in pursuing the case will be funded from the public purse.The general rule in English litigation is that ‘costs follow the event’: the loser will be required to pay the winner’s legal costs after taxation (if appropriate), as well as its own costs. One exception to this is in cases involving environmental judicial review proceedings engaging the Aarhus Convention (see question 1.3 above): English courts have the power to make an order to reflect the Aarhus principle that access to justice in environmental matters should not be prohibitively expensive. These orders have previously been known as “Protective Costs Orders” or PCOs, but are now to be known as Costs Capping Orders or “CCOs” (since August 2016).The old rules gave the courts considerable discretion regarding the ability to make PCOs. In its 2013 consultation on proposals for further reform of judicial review, the UK Government expressed its concern that the courts’ expansive approach to PCOs had tipped the balance too far by allowing such orders to be used when a claimant is bringing judicial review for their own benefit.Accordingly, the new rules (contained in sections 88 to 90 of the Criminal Justice and Courts Act 2015) introduced a new code for costs capping in judicial reviews and a new form of judicial review costs capping order (“JRCCO”). The court may now only make a JRCCO if it is satisfied that:■ The proceedings are “public interest proceedings” (meaning

there is an issue that is the subject of the proceedings which is of general public importance and the public interest requires the issue to be resolved and the proceedings are likely to provide an appropriate means of doing so).

■ In the absence of the order, the applicant for judicial review would withdraw the application for judicial review or cease to participate in the proceedings.

■ It would be reasonable for the applicant to do so.When considering whether to make a JRCCO, the court must have regard to:■ The financial resources of the parties to the proceedings (this

includes the financial resources of any person who provides, or may provide, financial support to the parties).

■ The extent to which the claimant is likely to benefit if he is granted relief.

■ The extent to which any person who has provided, or may provide, the claimant with financial support is likely to benefit if relief is granted to the applicant for judicial review.

■ Whether legal representatives for the claimant are acting free of charge.

■ Whether the claimant is an appropriate person to represent the interests of other persons or the public interest generally.

In March 2017, the Aarhus Convention Compliance Committee published its findings that the EU had violated the Aarhus Convention by failing to secure sufficient access to justice in environmental matters for members of the public. The European Commission published a communication in response in April 2017, highlighting discrepancies in standing rules across Member States as being problematic, particularly for NGOs, and launching environmental implementation review dialogues between the Commission and each Member State.



The EU emissions trading scheme (ETS) created by Directive 2003/87/EC applies. The EU ETS creates a scheme for greenhouse gas (GHG) emissions allowance trading within the Community which began operation in 2005. Following political agreement on Directive 2009/29/EC, the third phase of the scheme, which runs from 2013–2020, is now in force. The European Commission confirmed in their 2017 Work Programme that they will continue to work on the draft Directive for the next EU ETS phase, which will run from 2021–2030.Only CO2 emissions were covered under the initial operation of the EU ETS; coverage has now been extended to include other GHG emissions. In addition to energy-intensive industries (e.g. production/processing of ferrous metals, mineral products, and pulp and paper) and large combustion installations (those with a 20 megawatt or greater thermal capacity), from 1 January 2013, CO2 emissions from petrochemicals, ammonia and aluminium production were brought into the scheme, as well as nitrous oxide emissions from nitric, adipic and glyoxylic acid production and perfluorocarbons from the aluminium sector; the capture, transport and geological storage of greenhouse gas emissions is also covered. The Commission’s Work Programme 2017 confirmed that the Commission would continue to work on the draft Effort Sharing Regulations, which will set emission reduction targets for non EU-ETS sectors such as transport and agriculture.All installations covered by the EU ETS scheme need a GHG emissions permit (non-tradable) to emit GHG. Operators of installations must surrender a number of allowances equal to the total emissions from that installation during the preceding calendar year. The penalty for non-compliance was set at 100 Euros/tonne CO2 in 2013, and rises annually in line with Eurozone inflation. The UK legislation for implementing the EU ETS sets out rules for the issue, transfer and surrender of permits and penalties for non-compliance. Subject to certain exceptions, the EU ETS also recognises trading in credits generated under Clean Development Mechanism (CDM) and Joint Implementation (JI) projects approved under the Kyoto Protocol.Member States must prepare a base national allocation table (NAT), setting out the allocation of allowances. The NAT must be adjusted annually and submitted to the European Commission for approval. Allocation of allowances is now on the basis of fully harmonised rules. A Market Stability Reserve will be introduced from 2019 which will automatically adjust the annual supply of allowances up or down in accordance with the number of allowances in circulation at the time. Since January 2012, emissions from the aviation sector have been included in the EU ETS. However, the 2013 “Stop the Clock” Decision suspended the EU ETS obligations on operators for flights into and out of the EEA until April 2014. The April 2014 deadline in the Decision was effectively extended until 31 December 2016 by the EU ETS Aviation Extending Regulation 2014 (Regulation 421/2014), and according to a provisional agreement between the


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Council of the European Union, the European Council and the European Parliament the derogation will now be extended until 31 December 2023. International aviation organisations and non-EU countries have expressed strong opposition to the EU ETS scheme for the aviation sector. The delay to its operation was to facilitate discussions within the International Civil Aviation Organisation (ICAO) on a global market-based mechanism (GMBM). In October 2016, the ICAO agreed to establish such a GMBM through which airlines may offset the growth of their carbon dioxide emissions. There will be a pilot phase from 2021–2023, followed by a voluntary first phase from 2024–2023 with compulsory participation from 2024–2026. In 2021, the number of allowances allocated to aircraft operators will be set at a level 10 per cent below the average allocation of the period 2015–2016, and will decrease annually at the same rate as the total cap for the EU ETS. Half of the allowances for extra-EEA flights would be auctioned from 2021. The CRC Energy Efficiency Scheme (CRC) has been in place since April 2010. It is a mandatory carbon emissions reporting and pricing scheme which tackles GHG emissions from large non-energy-intensive organisations using more than 6,000 megawatt-hours (MWh) per year of electricity. Participants of the CRC need to measure and report their carbon emissions annually. From 2012, participants could buy allowances from the Government each year to cover their emissions in the previous year. Over the years, the CRC has been the subject of substantial modification in response to criticism from participants regarding its complexity and the administrative burden it places on them to ensure compliance. In the 2016 Budget, the Government announced its intentions to abolish the CRC after the 2018/19 compliance year. It was also announced that the Government would consult on a single simplified reporting framework drawn from the most effective elements of the current energy-efficiency and carbon-reduction reporting schemes to be introduced before April 2019. This consultation began in October 2017 and is scheduled to close in January 2018.


Since 1 October 2013, legislation requires the mandatory disclosure of annual GHG emissions from activities for which a company is responsible, to the extent it is practical for such emissions to be assessed. The requirement applies to quoted companies, namely all UK-incorporated companies whose equity share capital is listed on the main market of the London Stock Exchange, officially listed in a European Economic Area state or admitted to dealing on the New York Stock Exchange or NASDAQ. The information must be provided in the directors’ report.Environmental Reporting Guidelines: Including mandatory GHG emissions reporting guidance published by Defra indicates that the reporting requirement covers both UK and overseas operations (if appropriate). Companies do not need to report on supply chain emissions, nor on outputs from the company, e.g. emissions from their products when they are used by consumers. The guidance does suggest that companies should consider reporting these separately “to give a wider picture of [the organisation] to investors and shareholders”.The legislation is not prescriptive as to the methodology to be adopted to report emissions data; it simply requires the directors’ reports to state the methodologies used to calculate the disclosed information. The guidance emphasises the importance of using robust and accepted methods, and recommends the use of a widely recognised independent standard such as ISO 14064, the Greenhouse Gas Protocol or the Government’s own Environmental Reporting Guidance.

The sanction for non-compliance is limited to an investigation by the Conduct Committee of the Financial Reporting Council, and follow-up action (if appropriate) by way of preparation of a revised report. Whilst the Conduct Committee has the power to apply to the court for a declaration that the report does not comply with the requirements of the regulations, and for an order requiring the preparation of a revised report, this is seen very much as a weapon of last resort, with the Conduct Committee seeking to operate by agreement with companies. Article 8(4) of the EU Energy Efficiency Directive 2012 requires all Member States to introduce a regime of regular energy audits for large enterprises to promote energy-efficiency measures. These audits must be carried out by 5 December 2015, and then every four years thereafter. In the UK this is achieved through the Energy Savings Opportunity Scheme (ESOS) which has been in force in the UK since 17 July 2014.In November 2016, the High Court delivered its judgment in the long-running judicial review application brought by ClientEarth regarding the Government’s failure to comply with the Air Quality Directive 2008/50/EC. The Court quashed the Government’s proposals to introduce clean air zones because they failed to comply with the Directive or the Air Quality Standards Regulations 2010. Following the judgment the Government submitted a revised Air Quality Plan for tackling NO2 that requires specified local authorities to carry out studies to identify how to meet the legal limits of NO2 in the shortest possible time. The plan includes setting up a £255 million Implementation Fund to support local authorities; establishing a Clean Air Fund for local authorities to bid for additional money; and a £100 million budget for retrofitting and new low emission buses.The Government also consulted on the following:■ proposals to extend the Emissions Performance standard to

apply to coal-fired power stations, and to close all unabated coal-fired power stations by 2025 (although there is debate surrounding the definition of ‘unabated’); and

■ the implementation of the Medium Combustion Plants Directive 2015, which regulates emissions from fuel combustion in plants with a rated thermal input not exceeding 50MW.

The revised National Emissions Ceiling Directive, which places additional restrictions on several atmospheric pollutants, came into force on 31 December 2016. Member States are required to implement it within 18 months.


Passed in 2008, the Climate Change Act has the twin aims of helping the UK transition towards a low-carbon economy, and demonstrating UK leadership internationally. Under the Act, the Government committed the UK to a legally-binding target of an 80 per cent reduction in GHG emissions by 2050, as against 1990 levels. It also requires a reduction in emissions of at least 34 per cent by 2020. To assist in meeting these targets, binding carbon budgets for successive five-year periods are set by the Committee on Climate Change (CCC). The CCC is an expert, independent public body tasked with assessing how the UK can best achieve its emissions reduction targets through the effort made by the part of the economy covered by cap-and-trade schemes (the traded sector), and by the rest of the economy (the non-traded sector), as well as assessing progress towards the statutory carbon budgets.


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In July 2016, the Government publicly accepted the recommendations made in the CCC’s fifth carbon budget report and announced that the fifth carbon budget for the period 2028–2032 will limit annual UK GHG emissions to an average of 57 per cent below 1990 levels.In October 2016, the Government announced its intention to publish a GHG emission reduction strategy in 2017, which will set out the processes through which the Government intends to meet future statutory carbon budgets under the Climate Change Act 2008.At both the EU and national levels, the means to achieve emissions reductions include the EU ETS (see question 9.1 above), as well as measures to encourage investment in renewable energy technologies and increased energy efficiency (see question 1.2 above). The UK is also subject to the EU targets set in the Climate and Renewable Energy Package, which sees the EU as a whole having to achieve a minimum 20 per cent reduction in EU GHG emissions by 2020 (against 2005 levels). In October 2014, the EU set out its 2030 Climate and Energy Framework, centred on a target of a 43 per cent reduction in domestic greenhouse gas emissions (against 2005 levels). The framework also sets the target of increasing the share of renewable energy to at least 27 per cent of total energy consumption by 2030, and proposes to reform and stabilise the EU ETS regime. In November 2016, the Commission published the ‘Clean Energy for All Europeans’ draft legislation formalising the framework, including: a draft revised Renewable Energy Directive; a draft revised Energy Efficiency Directive; and, several proposals for EU electricity market reform and regulation. Local authorities are required to ensure that new development is sustainable, which includes achieving GHG emission reductions. The National Planning Policy Framework (NPPF), together with Planning for Climate Change – Guidance for Local Authorities, set out how planning should contribute to reducing emissions and stabilising climate change, as well as adapting for the anticipated effects. The NPPF directly cites the 2008 Climate Change Act as a relevant consideration in decision-making, making the objective of an 80 per cent reduction in carbon dioxide emissions by 2050 clearly relevant to the duty of planning authorities to shape policy which reduces carbon dioxide emissions. In particular, local authorities, in their role as the local planning authority, are required to: plan for new developments in areas and ways that reduce greenhouse gas emissions; support energy efficiency improvements to existing buildings; set local requirements for the sustainability of buildings in a way that is consistent with the Government’s policy on zero carbon buildings; have a strategy to promote energy from renewable and low-carbon sources; design their policies to maximise the development of renewable and low carbon energy, while ensuring that adverse impacts are addressed; consider identifying suitable areas for renewable and low-carbon energy sources and supporting infrastructure; and identify opportunities where development can benefit from decentralised, renewable and low-carbon energy supplies. In its February 2017 White Paper, ‘Fixing our broken housing market’, the Government has proposed to amend the list of climate change factors set out in the NPPF to include rising temperatures.In November 2016, the UK ratified the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement. Principal commitments under the Agreement include a target for zero net emissions from 2050 onwards, and a maximum 1.5 degrees Celsius increase in global temperature.In November 2017, the UK ratified the Kigali amendment to the UN Montreal Protcol that commits nations to reducing hydrofluorocarbon greenhouse gases (HFCs) by 85 per cent between 2019 and 2036.

10 Asbestos


Whereas the first US asbestos-related disease cases were brought in as early as the 1930s, it was not until 1950 that the first asbestos-related claim was settled in the UK, and the early 1970s that a series of cases against the Central Asbestos Co. Ltd. resulted in an award of damages by the English courts. A number of factors may explain the relatively slow growth of litigation in the UK, including, for example: (1) the historical existence of compensation schemes and insurance obligations relating to occupational asbestos exposure (the first UK scheme was established in 1932, and since 1972 employers have been legally obliged to purchase employer’s liability insurance to meet claims for work-related injuries or illness); (2) the difficulties for claimants in proving that their claims are not statute-barred and, where they worked for more than one employer, that they should be able to recover damages for “non-cumulative” diseases (such as mesothelioma); and (3) the unavailability in the UK of “class actions”, contingency fee arrangements and punitive damages.In recent years, civil litigation procedure in England has undergone substantial reform, aimed at ensuring more uniform access to justice for claimants and increasing the efficiency and speed of the litigation process. A Practice Note published by the Senior Master of the English High Court created a special “fast-track” claims-handling procedure for mesothelioma cases. Also, the availability of after-the-event insurance for legal costs, and judicial erosion of the prohibition on US-style conditional fee arrangements, meant that funding was more readily available for asbestos disease claims.In 2014, the Government confirmed it would not be introducing an out-of-court process or a dedicated pre-action protocol; it planned to bring into force provisions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 for mesothelioma, whereby claimants in successful mesothelioma cases would no longer be able to recover success fees and after-the-event (ATE) insurance premiums from defendants. In R (Whitston (Asbestos Victims Support Groups Forum UK)) v Secretary of State for Justice [2014] EWHC 3044 (Admin), this decision was challenged in judicial review. Judgment was handed down in October 2014, establishing that a full impact review should have been undertaken before bringing the relevant provisions into force for mesothelioma cases. As such, the Government would not be able to remove the exception relating to ATE premiums and success fees until it had undertaken a review of the likely impacts.The Mesothelioma Act 2014 established a payment scheme for individuals with diffuse mesothelioma and their dependants where the employer or employer’s liability insurer cannot be found. The so-called Diffuse Mesothelioma Payment Scheme, which came into force in April 2014, is funded by levies on existing liability insurers, based on their percentage of the current insurance market. In 2015, amendments led to an increase in the level of payment that eligible applicants could receive. The payment was raised from 80 per cent to 100 per cent of average civil damages for people diagnosed on or after 10 February 2015, or their eligible dependants. The English courts have generally taken a pro-claimant approach to asbestos claims. For example, in Fairchild, a previous decision was overturned that had effectively barred claimants exposed to asbestos dust by more than one employer from recovering damages for mesothelioma on the grounds that the claimant could not prove which of the employers was responsible. The Compensation Act


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2006 confirmed that all employers of a claimant who has developed mesothelioma are potentially “on the hook” for the full amount of his or her loss. Notably, in the Employers’ Liability “Trigger” Litigation [2012] UKSC 14, the Supreme Court held, in relation to Employer’s Liability (EL) policies, that where policy wording refers to disease having been “sustained” or “contracted”, the trigger for the policy responding is when the employee is wrongfully exposed to asbestos, not at the time the tumour starts to develop. As a result, liability is triggered as long as the EL policy was in place at the date of the exposure. The court also confirmed that in construing EL policies, the concept of a disease being “caused” during the policy period must be interpreted flexibly enough to embrace the role assigned to exposure by the Fairchild rule. Consequently, once a number of employers have been found liable for having caused the exposure, the employers’ insurers were also liable. The ruling reflects general industry practice, although it is a significant departure from the Court of Appeal’s judgment in the case, which had held that the trigger for the policy responding is when the tumour starts to develop.The English courts have taken a less claimant-friendly approach to the question of the availability of compensation for persons suffering from pleural plaques who, though they have not yet contracted the symptoms of an asbestos-related disease, are nonetheless worried that they may do so in future.


The Control of Asbestos Regulations 2012 (“the Asbestos Regulations”) implement Directive 2009/148/EC. They impose an express duty to “manage the risk” from Asbestos-Containing Materials (ACMs) and require employers and other duty holders to ensure that, as far as is reasonably practicable, no-one can come to any harm from asbestos on their premises.If ACMs are in good condition, not likely to be damaged and not likely to be worked on or disturbed, the Asbestos Regulations provide that it is better to leave them in place and implement a system of management, and impose a duty to manage the risk of those ACMs. Appropriate steps to be taken might include: (a) noting the presence of ACMs and maintaining a register of location and condition; (b) labelling such locations with an asbestos warning sign; and (c) introducing an on-site “permit to work” system (to ensure that anyone who comes to carry out work on the premises does not start before they are presented with the relevant information on asbestos risks, and to record the use of any protective measures or equipment required).ACMs in poor condition must be repaired under the Regulations (e.g. by sealing or enclosing the ACMs to prevent further damage), or removed.More generally, the Asbestos Regulations oblige duty holders to: (a) find out whether there is asbestos in or on their premises, its amount and what condition it is in (presuming that materials contain asbestos unless there is strong evidence that they do not). This will generally involve engaging a suitably trained person to conduct a survey of the premises; (b) make and maintain records of the location and condition of ACMs or presumed ACMs on the premises; (c) assess the risk from the material, seeking specialist advice, if necessary, from an asbestos surveyor, a laboratory or a licensed contractor; (d) prepare a detailed plan setting out how the risk from the material will be managed; (e) implement the plan and review it periodically; and (f) provide information on the location and condition of the material to anyone who is liable to work on or disturb it. From April 2015, additional obligations under the Asbestos Regulations come

into force, requiring medical surveillance for those undertaking “non-licensable work” with asbestos, which includes sporadic, low intensity and short-term exposure to asbestos. The basic position in the UK is that employers have a degree of latitude in deciding on the means to control site asbestos exposures against the background of a duty to carry out continuous risk assessment.



Notwithstanding that, historically, environmental insurance has not been widely purchased in the UK, there are signs that the uptake of policies is increasing. It is possible to obtain cover for remediation liabilities, with the relevant policies written on a claims-made, site-specific basis. Typical policy periods are 10 years for ‘pre-existing conditions’ (i.e. environmental conditions existing before policy inception, but manifesting during the policy period) and one to five years for ‘new conditions’ (i.e. incidents/pollution that first exist after policy inception). The scope of cover would typically include enforced regulatory clean-up costs for on-site contamination and cover for off-site third party injury and asset damage. Cover may also be available for third party claims arising from migration of known conditions, although typically excluding on-site clean-up of such conditions. Some environmental insurance is also available for gradual pollution.A further type of insurance available is known as contractor’s pollution legal liability cover, which is designed to protect contractors against pollution conditions caused by the operations covered under the policy, including work performed by sub-contractors. Many large companies have historically covered themselves primarily through the use of captive insurers, but some companies are looking either to reinsure their captive environmental liabilities or to purchase direct environmental insurance to plug gaps in the cover provided by the captive. The Flood Reinsurance Scheme (the insurance scheme preferred by both the Association of British Insurers and the Government) came into force on 4 April 2016 and offers affordable insurance to homeowners whose properties are deemed to be at high risk of flooding.Environmental insurance is sometimes used as a method of allocating environmental risk as part of M&A transactions, although it is not likely to supplant traditional risk allocation tools such as warranties and indemnities. However, there is a growing awareness of the role that insurance can play as a transaction solution, both pre- and post-disposal, particularly as lenders have become more risk-averse given current market conditions. There are also a number of innovative insurance-backed environmental risk-transfer products coming onto the UK market.


It is difficult to obtain environmental insurance claims figures, as insurers carefully guard such information. However, there appears to have been very little significant claims experience to date in respect of the relatively new products described above. This is not surprising, as these products have not been written in any volume until very recently and tend to be relatively “long-tail” in nature.


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transitional period that may be agreed). At least until Brexit, the UK will continue to be obliged to implement and enforce EU environmental laws. It seems likely that the UK would continue to apply the substance of much of EU environmental legislation, albeit with no direct say by the ECJ on how the UK implements and enforces it (again, subject to any agreed transitional arrangements). Much will depend on the shape of the deal that finally emerges from the Brexit talks between the EU and UK. Unrelated to Brexit, there appears to be a developing trend in using England as a forum for bringing collective redress proceedings founded on environmental or human rights grounds (see the Vedanta and Okpabi cases discussed at question 8.4; also Arroya v Equion Energia Ltd [2016] EWCH 1699). This trend reflects increasing European interest in this area: the French loi de vigilance, adopted in March 2017, imposes a statutory duty on qualifying companies to take steps to ensure that their subsidiaries are complying with environmental law; a similar provision is also being considered in Switzerland.


12 Updates


Speculation continues as to the implications Brexit will have on environmental law and policy in the UK. The Government’s European Union (Withdrawal) Bill would repeal the European Communities Act 1972, which provides authority for EU law to have effect as national law in the UK, but at the same time transfer EU laws then currently in force onto the UK statute book. The Government’s March 2017 White Paper commits to “bring an end to the jurisdiction of the Court of Justice of the European Union in the UK”, and, if this commitment is fulfilled, the ECJ and the European Commission would no longer aid the enforcement of environmental law in the UK after Brexit (except during any


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Freshfields Bruckhaus Deringer is a worldwide law firm – in the last year we’ve helped clients do business in over 200 legal jurisdictions, including the world’s most challenging legal environments.

Our environment, planning and regulatory group has more than 80 lawyers around the world ready to advise you on how EU and international legislation, global conventions and national laws could affect your business.

We can help you deliver infrastructure projects, and manage your industrial risk from regulatory intervention across the world. We can also help you resolve disputes with other parties, and manage your environmental, planning and regulatory risk in corporate and finance deals.

Daniel Lawrence is a senior environment and regulatory adviser in the Freshfields Bruckhaus Deringer EPR group. He has vast experience of negotiating, and documenting the allocation of environmental, health and safety (EHS) related risks and liabilities in the context of corporate, finance and property transactions, and has advised on EHS and other regulatory issues affecting a wide range of industry sectors. He also has extensive experience of regulatory investigations concerning EHS-related matters and in complex litigation involving pollution. He has an LL.M. in Environmental, Planning and Regulatory law and is a former chairman of the UK Environmental Law Association.

Daniel LawrenceFreshfields Bruckhaus Deringer LLP65 Fleet StreetLondon, EC4Y 1HSUnited Kingdom


John Blain is a London-based partner in Freshfields’ dispute resolution practice and co-heads the Environment, Planning and Regulatory Group.

John’s practice focuses on both product risk and environmental regulation issues. Specifically, he advises on product development, regulatory compliance, the defence of contentious matters and on the use of hazardous substances, and supply chain issues. John has advised energy companies on the J-Block and Hewett UK North Sea litigation, consumer goods clients on RoHS and WEEE compliance, and manufacturing clients on asbestos-related issues. John has a special interest in corporate social responsibility (CSR) issues, having previously been the partner responsible for the firm’s CSR reporting programme and the chair of the firm’s Environmental Working Group.

John Blain Freshfields Bruckhaus Deringer LLP65 Fleet StreetLondon, EC4Y 1HSUnited Kingdom



Chapter 9

Borenius Attorneys Ltd

Casper Herler

Henna Lusenius

Finland


In accordance with the Finnish Act on the Openness of Government Activities (621/1999), all official documents must be available to the public unless specifically otherwise provided by law.



An environmental permit is required for all activities listed in Appendix 1 of the FEPA. Under certain preconditions, an environmental permit is also required for activities that may cause pollution of a water body or place an unreasonable burden on the surroundings as well as for conducting wastewater. All the environmental effects of an activity are considered within the same permit procedure, regardless of in which element of environment the effects occur (soil, water, air, etc.). The scope of activities covered is broader than in the EU’s IPPC and IED directives.


The competent appeal body in environmental issues is the Administrative Court, and all parties to the permission procedure may appeal the authority’s decisions. In addition, environmental NGOs have a right of appeal in most environmental decision-making processes.There are generally no specific grounds for appeal, although the grounds of appeal are slightly more limited in zoning matters. In connection with the third phase of the major amendment of FEPA, nearly all environmental issues will require a leave of appeal from the Administrative Court to the Supreme Administrative Court as of January 2018.



Finland does not have a federal structure, hence the environmental policy is regulated through state and municipal authorities. The state authorities have a regional representation. The Ministry of the Environment defines environmental policies and makes strategic plans at national level, sets administrative controls as well as targets for environmental protection and prepares environmental legislation. The Finnish Environment Institute (“SYKE”) produces and compiles environmental data, develops new ways to protect the environment and supervises international waste transportation.The AVI Agencies (the Regional State Administrative Agency) are the main environmental authorities responsible for environmental licensing. In certain smaller-scale activities specified in the Finnish Environmental Protection Act (527/2014, “FEPA”), environmental and water permits are granted by municipal environmental protection authorities. The ELY centres (the Centre for Economic Development, Transport and the Environment) are regionally responsible for supervision of compliance with the environmental permits throughout the entire life cycle of operations. In addition, the ELY centres ensure that public interest is taken into account in environmental and water issues.In addition, municipalities promote and supervise environmental protection locally. Chemical safety permits and mining permits are granted by the Finnish Safety and Chemicals Agency, which also acts as the supervisory authority with respect to the compliance of the operators with the said permits.


The enforcement of Finnish environmental law is strongly based on preliminary supervision, which in practise relies on a comprehensive environmental permitting system. Recently, however, the role of subsequent supervision has increased due to a wide-ranging transition in environmental legislation to a lighter permitting process.


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Borenius Attorneys Ltd Finland


An Environmental impact assessment (“EIA”) procedure must be applied to projects that may have a significant adverse impact on the environment or for which an assessment is required by an international agreement binding on Finland. Projects subject to EIA are specified in the EIA Act (252/2017). The list covers 50 project types. In addition, a discretionary EIA may be organised for other project types as well as smaller projects close to the thresholds if the project, in terms of its quality and scope, would likely cause significant environmental impact comparable to the projects listed in the EIA Act.An EIA does not free the operator from its duty to apply for an environmental permit. However, a permit cannot be granted before the permit authority has obtained the assessment report and the coordination authority (the ELY centre or, in projects related to nuclear power plants, the Ministry of Employment and the Economy) has given its statement. Even when an EIA under the EIA Act does not apply, the environmental licensing procedure under the FEPA and the zoning procedure under the Finnish Land Use and Building Act (132/1999, “LUBA”) require a limited EIA.


If the permit regulations or the environmental legislation are violated, the supervisory authority (ELY centre) may use administrative compulsion, which may take the form of a coercive fine suspension of the activity or notice of enforced compliance. In case of violation of the permit conditions despite a written caution by the supervisory authority, the permit authority may revoke the permit, forcing the operator to close down the activity. In the event of soil or groundwater contamination, the supervisory authority may impose a remediation obligation on the operator. The supervisory authority may also initiate a criminal investigation where a corporate fine and confiscation of the proceeds of crime are possible. The threshold for doing so has become lower in recent years; hence companies and officers face a material risk for criminal investigation and prosecution in cases of incompliance with permits and legislation.

3 Waste


In accordance with the EU Waste Directive and the Finnish Waste Act (646/2011), waste is defined as any substance or object, which the holder discards, intends to discard or is required to discard. According to the Waste Act, a substance or object is not waste but a by-product, if it results from a production process whose primary aim is not the production of that substance or object, and: ■ further use of the substance or object is certain; ■ the substance or object can be used directly as is, or without

any further processing other than normal industrial practice; ■ the substance or object is produced as an integral part of a

production process; and ■ the substance or object fulfils all relevant product requirements

and requirements for the protection of the environment and

human health for the specific use thereof and, when assessed overall, its use would pose no hazard or harm to human health or the environment.

There is special regulation for handling (e.g. storage, packaging, transport and recycling) of hazardous waste.


Under the Waste Act, the producer/holder of waste is responsible for organising waste management. This includes the obligation to see to the appropriate disposal of waste in landfills and waste processing facilities in accordance with the relevant legislation. The storage and disposal of waste originating from operations subject to environmental permit is, however, regulated in the permit conditions.


The waste producer/holder’s responsibility for organising waste management is terminated and transferred to a new holder when the waste is delivered to a lawful consignee. However, responsibility is not transferred to a mere carrier transporting waste on behalf of another party. Waste may only be delivered to a party that: ■ has been registered as a professional waste transporter or

dealer; or■ has the right under an environmental permit to receive the

waste in question.


The producer’s liability applies for certain products specified in the Waste Act (e.g. certain vehicles, car tyres, electronic equipment, batteries, packages, recycled paper). Hence, the producer of the product is responsible for organising waste management, regardless of who the waste holder is.

4 Liabilities


The breach of environmental laws or permits may lead to civil, criminal or administrative sanctions.In the event of soil or groundwater contamination, either the party, which has originally caused the contamination or the party currently in possession of the area (e.g. the current owner or tenant) may be required to assess the need for remediation and take the necessary actions required by the authorities. There are not many defences available, but the extent of remediation required for the contaminated site is dependent upon the purpose of use of the site.The supervisory authority for operations subject to an environmental permit may impose a remediation obligation on the operator and may also initiate a criminal investigation where a corporate fine and confiscation of the proceeds of crime are possible.


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Environmental liability in relation to third parties cannot be avoided by contractual agreement. However, as agreements regarding the division of environmental liability are binding between the parties, a party may raise a civil action against the counterparty and claim that it should stand for the costs accrued to the party due to environmental liabilities.


An operator may be liable for restoring contaminated soil and groundwater, paying compensation for environmental damage as well as for damage to protected species and natural habitats notwithstanding that the polluting activity has been operated within the permit limits.


There is no legislation or case law explicitly allocating liability under public law or regulations concerning environmental damage to the directors of a company, unless their ownership in the company is significant enough for them to be regarded as the factual polluter or operator. In contrast, chapter 48 of the Criminal Code (39/1889) allocates liability for environmental offences to the person in whose sphere of responsibility the act of negligence belongs. The allocation rules do not exclude, e.g. external board members or officers of a parent company. The formal position of an officer in the corporation does not as such exclude liability, as the assessment is made on an overall basis with due account to the factual participation and responsibility of the person in the unlawful activity. As the Criminal Code prohibits both intentional and negligent impairment of the environment, breaches of environmental legislation may easily lead to a criminal investigation.Criminal liability of directors and officers is best prevented by monitoring compliance and clearly allocating the environmental responsibilities within the company as well as by providing the officers of a local subsidiary enough power to remain in factual control of the subsidiary’s operation. Based on a ruling by the Supreme Court (KKO:2016:58) in 2016 directors of the board can also be held liable if they have not supervised that substantial environmental issues are sufficiently attended to.


The acquisition of company shares implies that the whole target company, its environmental liabilities included, is transferred to the acquiring company. Consequently, the acquiring company may face liability for possible contamination of soil or groundwater, or other environmental damage that the activity may have caused in the past. As liabilities for soil and groundwater contamination may extend far back in time, the risks may be substantial, especially in acquisitions of old industrial companies. Potential liabilities for previous sites of operations will also follow the acquired company.The acquisition of assets may imply a risk of secondary liability for soil or groundwater contamination, as the acquirer may be considered liable as the holder of the contaminated property if the actual polluter cannot be found or has ceased to exist. Moreover,

the acquirer may also face liability under the Act on Compensation for Environmental Damage (737/1994, ACED) if the acquirer knew or should have known about the pollution or the risk of pollution at the time of the transfer. The acquirer of a facility may also become liable for responsibilities under an environmental permit regarding the closing of operations and aftercare of, e.g., non-operational industrial landfills.


In certain justified situations specified in the ACED and the FEPA, liability may be extended to the shareholder of the operator of the polluting activity. This rule may also be applied to the lender financing the operations; however, only in the rare event that the lender exercises factual control over the operator (e.g. ordinary covenants should not as such render the lender liable).

5 Contaminated Land


In accordance with the FEPA, liability for remediation of so-called new soil contamination (contamination that occurred after 1 January 1994) lies primarily with the polluter, i.e. the party whose activities have caused the contamination. The polluter is required to restore the contaminated soil to a condition that will not cause harm or hazard to the environment or harm to health. The holder of the property where the contamination has occurred may face secondary liability – however, only if the polluter cannot be found or cannot be made to fulfil its remediation responsibility – and:■ the contamination has taken place with the consent of the

holder of the property; or■ the holder was or should have been aware of the contamination

when the property was acquired.Finnish legislation does not, as a main rule, allow retroactive application of liability. However, case law developed on the basis of the old Waste Management Act (673/1978) allows the establishment of liability for historic soil contamination that originates from activities between 1 April 1979 and 31 December 1993 on the polluter or the holder (owner and/or tenant) of the contaminated property. Although there are no specific rules on which party should be responsible for remediation, recent court practice suggests that polluters would be primarily liable before holders. However, if the soil polluting activities have ceased prior to 1 April 1979, only the holder of the property can be held liable for remediation based on the Waste Management Act (Supreme Administrative Court, KHO 2006:30). Other grounds for liability may also evolve; in KHO 2013:187 the Supreme Administrative Court considered a municipality liable for landfill which was closed in the 1950s based on waste management rules in the 1927 health protection legislation. In addition to soil contamination, the FEPA contains a groundwater pollution prohibition. Liability for groundwater contamination lies with the polluter. A non-polluting holder of the contaminated groundwater area cannot be held liable for remediation. If the groundwater has been contaminated through polluted soil, it is possible to impose both soil and groundwater remediation liabilities for the polluter (KHO 1996 A 29). Liability for groundwater contamination can be extended on the basis of the old Water Act (264/1961) to activities that have been operational as of 1 April 1962.


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There are no clear rules for allocation of liability where more than one person is responsible for contamination.


This is possible if the circumstances around the original decision have changed.


The current owner may demand authorities to take action and order a liable party to assess and/or remediate a site. An inter partes agreement does not bind authorities or third party claimants for the benefit of a polluter. An acquirer may be considered liable as the holder of the contaminated property if the actual polluter cannot be found or has ceased to exist. Moreover, the acquirer may also face liability under the ACED if the acquirer knew or should have known about the pollution or the risk of pollution at the time of the transfer.


In accordance with the ACED, a polluter shall pay reasonable compensation for the costs incurred by authorities for preventing environmental damage or reinstating a polluted environment. In addition, the Water Act (587/2011) regulates liability for damage caused by water resources management projects to, e.g., fish stocks or fishing.



For the purpose of supervision and enforcement of the environmental legislation, the environmental authorities are entitled to gain access to places where activities are engaged in and to make inspections and tests, carry out measurements and take samples. The supervision of activities is primarily conducted through monitoring and reporting conducted by the operator, which means that investigations usually take place only if the operator does not present an adequate report or otherwise neglects its monitoring duties. The new FEPA introduces risk-based monitoring, thus the intensity of authority monitoring is determined based on dependency on risk, size and track record.



Yes, the relevant environmental acts contain such duties towards the authorities.


The FEPA contains a list of so-called directive facilities in accordance with the Industrial Emissions Directive (“IED”) which are, under certain preconditions, under obligation to perform a soil and groundwater baseline study to be attached to an environmental permit application. When the company dissolves activities, soil and groundwater conditions must be reinvestigated and compared to the results of the baseline study. In the case increased contamination of soil or groundwater is detected, or if the baseline of the site is found harmful for health or environment, the operator is under obligation to remediate the site.In addition, if there are grounds to suspect contamination of soil and/or groundwater, the operator of the polluting activity or, under certain preconditions the holder of the area, is under obligation to establish the size of the contaminated area and the need for remediation.


The FEPA contains a specific provision on the obligation to disclose environmental information in connection with transfer of land. The provision applies to asset sales, real estate sales and new lease contracts.

8 General


It is possible to agree on an environmental indemnity. However, such indemnity is only effective between the parties to the agreement and is therefore not binding upon the authorities.


No, Finnish legislation does not allow this.


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Finland’s national climate actions are largely based on the framework set by the UN Climate Change Convention, the Kyoto Protocol, the Paris Convention and the EU. The Finnish national strategy for adapting to climate change outlines adaptation measures for 15 sectors up to the year 2050 and includes anticipatory measures as well as measures responding to the effects of climate change. In order to achieve the long-term objective, the parliamentary committee on energy and climate issues has prepared a roadmap extending to the year 2050 and serving as a strategy guide on the journey towards achieving a carbon-neutral society. The measures to be taken in order to reduce greenhouse gas emissions by 80–95% are related to renewable energy, energy efficiency and clean-tech solutions.

10 Asbestos


Asbestos litigation cases in Finland relate mostly to neglect of asbestos safety regulations and compensation for occupational diseases caused by asbestos.


The use of asbestos-containing materials was partly prohibited in Finland in 1977 and totally prohibited in 1994. Asbestos is currently not considered to constitute a health risk when found in intact materials, which are in normal use. Therefore, there is no explicit legal obligation to remove asbestos-containing material on site unless it is found hazardous for health (i.e. loose or friable). It is, however, obligatory to conduct an asbestos testing to all buildings built before 1994 prior to any construction work. The handling of asbestos-containing materials (e.g. demolition work) is strictly regulated.



Under the Finnish Environmental Damage Insurance Act (81/1998), all companies whose activities involve a material risk of environmental damage or whose operations cause harm to the environment in general shall be covered by environmental damage insurance. Voluntary insurance types, such as liability insurance and property insurance, are also available.


The environmental insurance claims experience in Finland is limited, as there is only one case involving a dispute over the statutory environmental damage insurance.


The Finnish general corporate law does not contain any specific rule regarding piercing the corporate veil. However, in certain justified situations specified in the ACED and the FEPA, liability may be extended to the parent company or shareholder of the operator of the polluting activity. Liability is not limited to officers of the corporation. However, this rule only applies if the parent company or shareholder is deemed to exercise factual control over the operator.


No, there are none.


No, they are not.


No, but the Finnish administrative process is low in costs for the parties, as damages are seldom imposed and high bills of costs are adjusted. However, parties to a civil process bear a much greater risk of costs (e.g. damages based on the ACED).



As a member of the EU, Finland has implemented the EU Emissions Trading Directive through the national Emissions Trading Act (311/2011), meaning that most sectors of heavy industry, and with certain restrictions in the aviation industry, are subject to the European Union Emissions Trading Scheme (EU ETS). About 600 facilities in Finland are currently subject to the EU ETS.


The IED has been implemented in Finland in connection with the major amendment of the FEPA in 2014, including the requirement for employing the best available technique for reducing greenhouse gas emissions in industrial operations. If the operations are not subject to emissions trading, the monitoring and reporting of greenhouse gases is regulated in the environmental permit.


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alia, a more focused supervision system and a lighter environmental permitting procedure by adopting a one-stop-shop model. The one-stop-shop model will combine various permits, such as environmental permit, water permit and building permit into one application procedure. The model allows the combination and temporal coordination of various environmental matters. During the implementation of the one-stop-shop model, a new permitting authority called the State Permitting and Supervisory Authority (LUOVA) will be established.

12 Updates


The third phase of the major amendment of the FEPA is currently under preparation. The amendment is planned to introduce, inter


Established in 1911, Borenius is one of the largest and most experienced law firms in Finland. Our services cover all areas of corporate law. Our commitment to our clients’ success is firmly grounded in strong expertise, long-term commitment, genuine involvement, experience and innovation.

The environment and natural resources practice of Borenius is one of the largest and most acknowledged in Finland. Our practice is specialised in strategic advise for large projects requiring coordination of a number of regulatory proceedings and complex stakeholder relations. We frequently advice clients on land use planning, building and other environmental licensing, environmental impact assessments, environmental liabilities, nature conservation, mining and natural resources, chemicals, renewables, energy and emissions trading.

Casper Herler (LL.M. 2000, LL.D. 2008, University of Helsinki; Attorney-at-law; partner; managing partner) heads the Environment and Natural Resources practice at Borenius. He advises clients on a wide range of issues related to environmental law, natural resources and infrastructure projects as well as corporate responsibility (CSR). He is regularly involved in assessing environmental liabilities in transactions and financing arrangements. Clients also recognise him as the leading Finnish mining lawyer. Trade associations and industrial clients frequently rely on his experience when safeguarding their interests in legislative reforms.

Prior to joining Borenius, Casper was a Partner with another law firm. He has also worked at the Ministry of the Environment and teaches environmental law at the University of Helsinki. Casper also has previous experience in legislative work in the field of environmental and mining law and has been a specialist counsel at Pöyry Oyj. He has a doctoral degree in law and has dissertated on soil and groundwater contamination liability.

Casper HerlerBorenius Attorneys Ltd Eteläesplanadi 200130 HelsinkiFinland

Tel: +358 20 713 3288Email: [email protected]: www.borenius.com

Henna Lusenius (LL.M. 2007, University of Turku; senior associate) advises clients on environmental law and land use issues, as well as on real estate law and transactions.

Prior to graduating from the University of Turku and joining Borenius as a Lawyer, Henna worked as a Trainee in other Finnish law firms. She has also studied law at Charles University in Prague.

Henna LuseniusBorenius Attorneys Ltd Eteläesplanadi 200130 HelsinkiFinland

Tel: +358 20 713 3587Email: [email protected]: www.borenius.com


Chapter 10

August Debouzy

Emmanuelle Mignon

Vincent Brenot

France

the public with a general right of access to environment-related information held, received or established by public authorities. The conditions of such are governed by the environmental code and the code ruling over the relations between the administration and the public (“code des relations entre le public et l’administration”). It is worth noting that access may be limited to information whose communication does not present a threat to national security, defence or other secret information protected by law.In addition, any public decision presenting an impact on the environment is subject to public participation. The public is also invited to submit comments on plans and projects that are likely to impact the environment through the process of public inquiries. Those are taken into account by the administrative authorities when making their decision regarding the project. Participation of the public and transparency in decision-making concerning environmental issues have been further reinforced by a 2016 ordinance that increases the dialogue ahead of the decision-making process, at a stage where future decisions can still evolve easily to take into account the observations of the public. Participation of the public is also made easier through its dematerialisation: the public will be able to provide feedback and comments via the internet.



The main environmental permit is the one related to ICPE regulation. Pursuant to such regulation, facilities falling within the scope of it are subject to an integrated permit system that regulates all discharges regarding air, water and soil and other potential nuisances. Depending on the level of risk they present for the environment, such facilities can be either subject to declaration, registration or authorisation, each of these following a distinct administrative procedure.However, under French environmental law, a wider range of activities may require specific environmental permits under specific regulations (for example, forest cleaning authorisation, authorisation to use Genetically Modified Organisms (GMO), specific authorisations for natural reserves or waste processing agreements, etc.).In the past, this superposition of permits resulted in the obligation for facilities subject to ICPE regulation to apply to the IPCE permit as well as to any other environmental authorisation required for



First, French environmental policy is based on European law, particularly on the Treaty on the Functioning of the European Union, as well as relevant regulations and directives. Then, at the national level, the environmental code provides for the main regulations concerning environmental policy. The Environmental Charter adds key constitutional level principles such as the right to live in a balanced and healthy environment, the obligation for public authorities to act in line with the precautionary principle and the “polluter pays” principle. At the national level, the Ministry of ecological and solidarity transition (name of the Ministry in charge of the Environment since June 2017) is in charge of managing and developing environmental policies in a number of fields including energy, climate change, air and water pollution, biodiversity, transport and urban development. At the local level, prefects (“préfets”), who represent the State, are vested with the power to administer and deliver permits for certain installations registered for the protection of the environment (“Installations Classées pour la Protection de l’Environnement”, “ICPE”), as well as for projects that could impact water resources. Depending on the level of risk the installations present, as well as the nature of the activities, such environmental authorisations impose different formalities to the operators. The competencies of local governments are residual.


Civil penalties and criminal fines can be imposed to secure the enforcement of environmental laws and permits. Certain serious and wilful violations can result in imprisonment (rare). Administrative sanctions are usually taken following on-site inspections revealing non-compliance with permits. The rehabilitation of a polluted site can also be ordered.


The Environmental Charter and the environmental code both grant


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their specific case (for example, forest cleaning authorisation, power production authorisation, etc.). Since March 2017, a new procedure for environmental authorisations is established. ICPE installations are subject to only one unified environmental authorisation: this new procedure serves as a substitute for most of the other environmental procedures that such installations previously may have to go through individually with respect to their activity. Nonetheless, note that the legal framework applicable to such unified environmental authorisation, apart from its issuance procedure, remains the legal framework applicable to each environmental authorisation that such unified environmental authorisation is substituted to.Regarding the transfer of ICPE authorisation, registration or declaration, such permit can be transferred to a new operator provided that notice is given to the competent préfet within one or three month following this transfer. However, for certain facilities (those showing the highest level of risk), the transfer is subject to the préfet’s prior authorisation with a three-month notice.


The implementation of the unique environmental authorisation has also modified the litigation regime applicable to ICPE permits. Such authorisations, or any related decision (modification, sanction, non-issuance, etc.) can be challenged by petitioners or operators before the competent administrative court within two months as from the date on which the contested decision has been notified to them. Moreover note that the issuance of such authorisations (including any modified authorisation or a change of the operator) can also be appealed by any interested third parties, including municipalities, within four months as from the date of performance of the last required publication measure (for instance, publication of the decision on the prefecture internet website or in the town hall).


Unique environmental authorisation applicants are required to join an environmental impact assessment to their application. They are also required to provide a risk assessment.Nonetheless, those are not the only projects that are subject to those types of requirements. Indeed, the environmental code lays down categories of projects that may have a significant impact on the environment or human health. Depending on their characteristics, such projects can either be automatically subject to an environmental assessment or after a case-by-case analysis performed by the Environmental Authority. The environmental assessment must contain information regarding the impact of the installation or project on the environment, as well as the contemplated measures to avoid them and reasonable alternative solutions. Special requirements are added for transport infrastructures, ICPE and nuclear installations.


The violation of a permit or operation without one can result in criminal sanctions including fines ranging from 75,000 to 300,000

Euros and/or imprisonment sentences up to five years. Those fines can be multiplied by five for convicted legal entities. Finally, in addition to those sanctions, parties can be ordered to suspend their activities for a maximum period of a year or what is required to rehabilitate the affected area. Notwithstanding those criminal sanctions, the préfet may take administrative measures against an operator in breach of a permit. Once they identified an offence, administrative authorities can issue a formal notice to the operator. If the latter does not comply with the notice within the prescribed time, it can be subject to the following sanctions: mandatory deposit of a sum corresponding to the amount needed for the works to be implemented; suspension of the facility’s operation until it has complied with the imposed conditions; performance of the works by the authorities at the operator’s expense; as well as fines and daily penalties. In case of emergency, the administrative authority can set the necessary measures to prevent serious and imminent dangers to public health, security or the environment.

3 Waste


Waste is defined as any substance, object or, more generally, any movables which the holder discards or intends or is required to discard. The fact that the substance can or will be reused or recovered does not exclude it from the definition of waste nor does it release the holder from the obligations that come with it. Only when a substance has undergone a specific treatment and recovery process that makes it correspond to certain criteria will it cease to qualify as waste. Finally, when the substance is not likely to be reused or recovered under the current technical and economic conditions, it is considered to be ultimate waste.Several categories of waste are subject to more stringent requirements. These are the following: hazardous waste; radioactive waste; used oil; medical waste; electrical and electronic equipment waste; household waste derived from particularly dangerous chemical products; furniture; packaging waste, as well as waste containing PCB.


Waste storage is only allowed at waste storage facilities. Unless the site qualifies as one of these facilities, waste cannot be stored there other than temporarily. Even so, producers are required to sort and safe store it pending its removal by certified contractors.


Producers of waste remain responsible for its management until its elimination or final recovery, even when it is transferred for treatment to third parties. Hence, producers are jointly and severally liable with waste holders for any damage caused by the waste at stake. They shall ensure that their contractors are entitled to treat waste.


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In case of unlawful waste management or disposal, public authorities may carry out the necessary measures at the producer’s or holder’s expense, suspend the facility’s operation and impose fines and daily penalties.


Waste elimination is considered as a last resort measure in the environmental code. Indeed, other methods should be favoured such as treatment for re-use, recycling or any other form of waste recovery, especially its use for energy purposes.Moreover, under the producer’s enlarged responsibility principle, producers, distributors or importers of products generating waste can be required to take over or contribute to waste prevention and management. They can do so either by establishing individual systems of waste collection and treatment or by using collective treatment organisations. Those take-back schemes apply only to certain types of waste, including household waste deriving from chemical products, end-of-life vehicles, furniture and electronic equipment.

4 Liabilities


Any violation or incident can trigger civil, administrative, criminal and environmental liabilities. Through civil liability, third parties affected by environmental damage can seek compensation if they can prove wrongful or careless conduct, damage and causation. Where contributory negligence from the plaintiff can be proven, indemnities can be reduced. Another possibility is to resort to the “abnormal private nuisance” in the absence of any violation of the law or of a permit. Those violations can also carry administrative liabilities consisting in various sanctions (facility’s operation suspension, fines, etc.) mentioned above. Those are usually triggered after a party fails to comply with a notice issued by the administration requiring that certain corrective measures be taken by the party. Certain articles of the environmental code directly provide for criminal sanctions. Other than that, criminal liability can be brought on the basis of general criminal grounds, including the endangerment of a person’s life. Those sanctions consist in fines and/or imprisonment.Finally, an environmental liability regime was created in 2008 that applies to direct and indirect damages caused to the environment. Those include deteriorations affecting soils and that could threaten human health, as well as water, species and natural habitats protected by the European Birds and Habitats Directives, and ecological services. For this type of liability, operators are required to take preventive measures to avoid the occurrence of the damage and, in case of damage, are required to rehabilitate the polluted site.


Environmental permits are granted subject to the rights of third parties. As such, operation under and compliance with a permit

does not constitute a safeguard against liability for environmental damage. French law does not have an equivalent to the “permit defence” system.


First, directors and officers can be held criminally liable for the breach of an environmental regulation that provides for criminal sanctions. Moreover, if the damage they caused harmed a third party, D&Os can be held civilly liable. Nonetheless, claimants bear the somewhat difficult burden of proving that the damage resulted from an intentional and serious fault that was incompatible with the regular exercise of their corporate functions. For that reason, acting against the company in itself might be a more strategic recourse. Interestingly, a company can also be held criminally liable, along with or independently from their D&Os, for criminal offences committed by its representatives on their behalf. D&Os can get insurance for criminal liability to the extent they can prove lack of intent to cause the damage. Insurance covering damages incurred by third parties can also be subscribed by the company on behalf of its D&Os.


Liability attaches to the current operator of a site, or the last operator if the site is not currently operated. In the context of a share sale, the operator does not change and, as such, liabilities fully remain with the entity at question. In the case of an asset purchase, a change of operator should be notified to (or more rarely authorised by) the competent authorities and all liabilities will be transferred to the new operator. Note that in case of pollution resulting from a previous activity conducted at the site and which is not carried on by the new operator, liability attaches to the operator having previously conducted the polluting activity which is not conducted by the current operator.


In principle, lenders are not liable for their borrowers’ environmental wrongdoings. However, note that lenders could be found liable for those damages if they are shown to have had direct control over the polluter. Moreover, in certain circumstances, parent companies may be held liable for environmental damages caused by one of their bankrupted subsidiaries.

5 Contaminated Land


Concerning soil pollution originating from an activity listed in article L.165-2 of the environmental code or from an ICPE or a nuclear installation, liability is attached to the current or last operator of the site (or to the one who substituted itself to the operator in case of ICPE installations) unless, as noted above (see question 4.4), in case of a change of activity. Where soil contamination has another


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origin, persons at the origin of the contamination or holders could be liable. Furthermore, if none of the above parties can be held responsible, the owner of the polluted land is liable when negligent or involved in any manner in that pollution. Where the liable person cannot be identified or is insolvent, the State can charge the Agency for the environment and energy control (“Agence de l’environnement et de la maîtrise de l’énergie” “ADEME”), or any other competent public entity, with the remediation of the site.Note that, for ICPE installations, site contamination is mainly dealt with at the moment of site closure. Operators are responsible for the remediation of the site that should be left environmentally safe in accordance with its future intended use.


Under the environmental liability regime, when environmental damage is caused by several parties, the prevention or remediation costs are allocated among the parties according to the contribution of their activity to the damage or its imminent threat. Concerning ICPE installations in particular, site operators are the ones responsible for contamination. The last operator of the site remains liable after closure, regardless of a land sale, until a new operator takes over the installation. Once the change of operator is notified to (or authorised by) the competent authorities, the former operator is discharged from any liability for contamination towards authorities (save in case of change of activities, see section 4). Contractual agreements modifying this allocation of responsibilities are not enforceable towards authorities. Landowners cannot be held liable per se under the ICPE installation regime. Nonetheless, their liability can be retained in certain circumstances under waste laws or the polluted sites regime.


Remediation orders constitute unilateral administrative acts issued by the préfet that can be challenged before the administrative courts, including by third parties. Once the rehabilitation of the site is complete and where it is necessary for the protection of the environment, the préfet can still issue another order requiring additional work. In case the use of the site is modified at a later stage, no additional measures can be required from the last operator unless he is the one who decided the modification.


The new operator of a site can act against the former one in several settings: breach of pre-contractual information obligations; pollution caused by a former activity that he did not pursue; or non-compliance with site closure remediation obligations.Through contractual clauses, the seller and the buyer of a contaminated land may allocate the risk of liability as they choose. Note, however, that those agreements will not be enforceable against third parties, including the administration. Finally, at the time of site closure, an

interested party (usually a land developer) can be substituted to the last operator and bear all the remediation work, depending on his intended future use of the land. Should the substituting party fail to comply with its obligations or lack the necessary financial guarantees, the former operator will be the one liable for the rehabilitation of the site.


Under torts, the government can claim damages if it suffered a prejudice (commercial, reputational, moral, aesthetic, etc.) as a result of harm caused to the environment. Moreover, the government can obtain monetary damages to compensate for an environmental harm in and for itself (the “ecological prejudice”) and not only through another type of prejudice exposed above. The notion of “ecological prejudice”, created by the courts following the “Erika” shipwreck, was indeed introduced in the Civil Code in 2016. Similarly, local governments are entitled to act against a party who caused damage to the environment on their territory, following a violation of environmental laws.



Environmental inspectors are commissioned by public authorities and given authority to visit the installations and collect any information and documents they might need to fulfil their mission. In case the operator refuses access to the site to those agents, visits can be authorised by the competent court (tribunal de grande instance).



The environmental code lays down general prevention measures, including the obligation to report to the authorities any damage or persistent threat of damage to the environment. The operator is also required to take any measure to avoid the damage or remediate to it when it has already occurred.This general obligation is also transposed in the provisions concerning ICPE installations. For those, the operator is under the duty to report any incidents resulting from the operation of the facility and that present a risk for public health, security or the environment. Similarly, reporting to the authorities of incidents likely to affect water quality and conservation is required.


ICPE installations, when filing for an environmental permit, must include a study of the condition of the land in their impact study. Moreover, in the course of operations and under certain circumstances, soil and water investigations can be ordered. For example, whenever a notable change occurs in operating conditions, the operator is under


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the obligation to conduct a soil pollution assessment. Finally, with the closure of such sites comes an obligation to investigate land for pollution and propose remedial measures.Besides ICPE installations, those kinds of soil investigations are also required for any project happening on any site registered as polluted.


The environmental code provides that if an ICPE installation has ever been active on a site, the seller of that site has an obligation to inform the buyer in writing. If not, and in case a pollution renders the site unfit for the use specified in the contract, the buyer can obtain, in a two-year period after the discovery of the pollution, the cancellation of the sale, the rehabilitation of the site at the seller’s expense or the restitution of part of the price. Similarly, the seller or lessor of a land classified as one with a risk of soil pollution must inform the buyer or tenant. In most cases, however, there is no particular obligation to report potential environmental risks. Nonetheless, provisions of the French Civil Code relating to good faith and information disclosure in contractual relationships can also be applicable. In any case, it is recommended to always conduct an environmental audit during the due diligence process to avoid any risk of future liability.

8 General


Environmental indemnities can be used contractually and be enforceable between private parties. However, they do not discharge parties from liability towards third parties, including public authorities. Those will still be able to act against the party who is designated by law as being the one liable for the pollution in question.


Dissolving of a company is subject to specific corporate rules laid down in the commerce code. Dissolving a company for the sole purpose of escaping environmental liabilities is most likely to be considered fraudulent.


In principle, shareholders are not liable for actions committed by the entity at stake. However, under provisions of the environmental code, the corporate veil may give in. Corporations that hold more than 50% of the capital of another company and having committed a fault resulting in their subsidiary’s insolvency may be responsible

for the financing of all the environmental remediation measures falling to their affiliate. Moreover, the environmental code defines the “operator” as being not only the actual one but also the person who exercises control over the activity. A parent company could be held liable in lieu of its subsidiary under that definition. Under provisions of the civil code, French national courts have jurisdiction over cases in which the plaintiff or the defendant has French nationality.


Before 2016, the law protected whistle-blowers who reported environmental and health-related violations. In 2016, a law was passed that extended protection to any person who reveals, selflessly and in good faith, any crime, misdemeanour or serious violation of the law, as well as any threat that could harm the public interest. Protections include preservation of their privacy, as well as protection from any sanction, dismissal or discriminatory measure taken on the grounds of those revelations.


A 2016 law created the mechanism of group actions in environmental matters for the first time. The field covered by this law is particularly broad and ranges from actions harming air and water quality to those relating to nuclear security. The admissibility of this environmental group action is subordinated to the proof, in the context of an environmental pollution, that several individuals have suffered a harm having the same cause and the same author. Those actions can only be brought by certain accredited non-profits. Finally, the aim of those actions is to enjoin the termination of the action or breach at stake and/or to obtain damages.Punitive damages are not applicable in the French jurisdiction.


Individuals or public interest groups do not benefit from any exemption from liability to pay legal costs when pursuing environmental litigation. In civil and administrative proceedings, the costs are usually charged to the losing party and environmental associations could, as winning parties, be entitled to the recovery of the legal costs incurred, as part of the financial harm they suffered.Meanwhile, in criminal proceedings, legal costs are ordinarily incurred by the State. It is important to bear in mind that abusive indemnification attempts by a party can result in legal costs being charged to that party.



France participates in the European Union Emissions Trading System (EU ETS), a carbon market that was set up in 2005 to meet


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contracted an asbestos-related disease in the workplace. However, a 2015 decision now suggests a relaxing of that rule: wherever an employer can prove he took all the necessary and legally imposed security measures to avoid the risk, he will not be held liable. Workers who have not yet developed any disease but have been exposed to asbestos in certain listed facilities are also automatically entitled to compensation from their employer under an “anxiety prejudice”.Criminal convictions have been more uncommon so far.


Since 1997, materials containing asbestos may no longer be produced nor used in France. However, asbestos is still present in many buildings constructed before that date. Owners of properties built before that date face the obligation to perform a tracking on components identified in the code of public health in order to assess the potential presence of asbestos. The results of this tracking will determine whether or not additional actions (periodic evaluations, containment or removal work, etc.) are necessary. This information must all be kept in an “asbestos file”, accessible to different parties. Special requirements are imposed at the time of sale or demolition.Under the labour code, employers have duties to conduct risk assessment concerning asbestos.



Insurance against nuclear risks and hydrocarbon sea pollution is mandatory. In addition to this, optional environmental insurance has developed. The two main ones are the civil responsibility insurance for environmental damage and the environmental responsibility insurance. The first one includes damages suffered by third parties and caused by environmental damages created by the entity; the second covers environmental damages that did not harm any third party. Note that none of those cover environmental damages caused by intentional fault, violations of the law or poor maintenance condition of the facility.


There does not seem to be any particularity to the environmental insurance claims experience and any disagreement between the insured and his insurance are settled by the competent judge.

12 Updates


The law for the restoration of biodiversity, nature and landscapes was passed in August 2016 and inscribed the ecological prejudice in the Civil Code. It also led to the creation of the French Agency

the European Union’s commitments under the Kyoto Protocol. This system functions as a cap-and-trade programme. Indeed, the European Union imposes a limit on the total amount of emissions coming from industries enrolled (thermoelectric, cement, refinery, aviation, etc.). Those are then allocated quotas corresponding to a certain level of emissions. If their emissions go beyond this level, they are required to obtain the quotas corresponding to this excess. To cover their emissions, companies are given two options: buy allowances on the carbon market from industries emitting less than expected; or buy international credits (in limited amounts) from emission-saving projects in other parts of the world. The price of a tonne of carbon is currently very low and fluctuates around five euros per tonne on the ECX, a platform for carbon emissions trading. Over the years, the sum of quotas allocated free of charge and the cap set on emissions have been decreasing while the scope of application (both in terms of gases covered as well as sectors and countries included) of EU ETS has expanded.


Private entities employing more than 500 people (or more than 250 people if the entity is located outside Metropolitan France) as well as the State, certain decentralised public authorities and public entities employing more than 250 people are required to establish an assessment of their greenhouse gas emissions. This appraisal is made public and updated every four years for private entities and every three years for public ones. The record is also sent to the competent administrative authority.


France has been accelerating the development of environmental policies since a 2001 law making the fight against climate change a national priority. Through the adoption of climate plans, revised every other year, as well as with the Grenelle I and II legal frameworks, France has committed to numerous matters including emissions reduction, waste recovery and biodiversity conservation. More recently, a law for the energy transition towards green growth was adopted with commitments to cut GHG emissions by 40% by 2030 (as compared to 1990 levels) and to reduce the share of the nuclear sector in terms of electricity production.

10 Asbestos


In 2000, a compensation fund (FIVA) was created to compensate asbestos victims. Eligible beneficiaries must seek indemnities by filing an application for compensation with the FIVA. They can also initiate litigation against their past employer in order to obtain indemnities. However, once the victim has been compensated by the FIVA, the damages he/she might obtain through legal action will be allocated to the reimbursement of the costs incurred by the FIVA, unless the court decides to provide the victim with an additional compensation. Litigation has mostly developed against employers, who can be held liable on gross negligence grounds. Note that gross negligence was almost systematically assessed, whenever an employee had


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We strive to keep up with and understand the fast moving changes in the world around us in order to react and anticipate, and rise to tomorrow’s challenges.

We think of ourselves as a think tank based on our expertise, a keen observer of what goes on in companies and a key player in their development, and as such, we are firmly committed to our clients. We provide advice to our clients in a secure setting, allowing them to grow and succeed.

We share our know-how with those who do not necessarily have access to legal advice, such as certain start-up companies and community organisations.

Taking full advantage of our unique position at the crossroads between the business world and public affairs, we endeavour to move the law forward and make our voice heard. We are key players in supporting community initiatives.

Emmanuelle Mignon, member of the French Council of State (the supreme administrative court), joined August Debouzy’s Public Regulatory Environment as a partner in February 2015.

Having entered the Council of State upon leaving the ENA School for high-level civil servants, Emmanuelle worked as rapporteur at the litigation division and the internal affairs division, manager of the resource centre, government commissioner and assessor. Emmanuelle also worked eight years with Nicolas Sarkozy, advising him on his various ministerial and political duties and served as his Chief of Staff during his Presidency. From 2010 to 2012, she served as General Secretary at EuropaCorp.

She handles all aspects of public law, including economic, constitutional and European aspects. Her technical skills combined with her knowledge of the machinery of government are of significant value to the firm’s clients, in both transactional and litigation matters. Emmanuelle teaches French and European public law, European Union litigation as well as public governance at the Institut d’Études Politiques de Paris (IEP Paris) and the Assas-University.

Emmanuelle MignonAugust Debouzy8, avenue de Messine 75008 Paris France

Tel: +33 1 45 61 79 73Email: [email protected]: www.august-debouzy.com

A partner in the Public Regulatory Environment team since 2014, Vincent Brenot has both litigation and transactional practice.

He is recognised for his expertise and know-how in public/environmental law, which he places at the service of public and private, French and international clients. He has significant experience in public procurement and public finance law. He also advises clients in planning and environmental law, both in the sector of renewable energies and polluted sites and soils, more specifically in the context of real estate and M&A transactions.

With more than 15 years’ experience acquired at international law firms Freshfields and Willkie Farr & Gallagher, where he became a partner, Vincent’s experience in complex transnational deals is a strong plus for the firm’s international clients.

Vincent BrenotAugust Debouzy8, avenue de Messine 75008 Paris France

Tel: +33 1 45 61 79 73Email: [email protected]: www.august-debouzy.com

For the first time, the purpose of such complaints is to find the French State liable for the bad air quality despite the successive air quality plans. The trials are currently ongoing, and it is not possible to foresee their outcome yet. In a recent decision, dated July 12th, 2017, The Conseil d’Etat (French supreme administrative court) enjoined the government to take all “necessary measures” to efficiently act against the bad air quality in highly-polluted parts of France. Before March 31st, 2018, an air quality plan must be issued by public authorities in order to significantly diminish the nitrogen dioxide and fine particles PM10 emissions according to the European Commission standards.


for Biodiversity whose mission is to reinforce environmental public policies and to mobilise civil society in the fight against erosion of biodiversity. As mentioned above, a new procedure for environmental authorisations was established in March 2017. In June 2017, an appeal was filed against the French State by a Parisian citizen who suffers from serious respiratory troubles. Her health problems worsen considerably during pollution peaks. Similarly, others litigation proceedings have been introduced across the country.


Chapter 11

Pinsent Masons Germany LLP Dr. Thomas Wölfl

Germany


Environmental information has been systematically gathered and analysed for many years. There is a tradition of public consultations for sensitive facilities or developments, in particular with regard to certain industries and infrastructure. Information about so-called brownfield sites is available from public cadastres and groundwater quality maps. Administrative evaluation of data relevant to the determination of environmental action has a longstanding tradition. Environmental information in the broadest meaning of the term must be made accessible to anybody on the basis of the Environmental Information Act (Umweltinformationsgesetz). This legislation was first introduced in 1994 and was substantially revised in 2005 based on the Aarhus Convention. Although the Environmental Information Act only governs access to information held by the federal administration, it has been a blue print for legislation in all states, which adopted equivalent laws. Access to environmental information for members of the public is granted free of cost for oral or simple written disclosures as well as file reviews at government offices. Certain restrictions apply in order to safeguard national security, private property and data protection interests.



There is no concept of an environmental permit as such. As the national enforcement systems rely on administrative oversight, the process of permitting any operation that could adversely impact on the environment includes, to some extent, an assessment of the foreseeable environmental ramifications based on different legislation. The level of involvement and assessment, however, varies depending on the applicable permit regime, which is determined by nature, scale and scope of the individual project. In the case of offshore pipelines, for example, a variety of different permits from different authorities is required, including different impact assessments. Object-related permits (Sachkonzessionen), which predominate, are freely transferable; typically with ownership or operator position of the asset. A notification to the authority is sometimes required.



Environmental protection has been defined as a state objective (Staatsziel) in the German Constitution (Grundgesetz) since 1994. It provides that legislature, government and all public bodies shall strive to safeguard the environment and natural resources for the benefit of future generations. This objective is also embodied in all constitutions of the 16 states (Bundesländer). Numerous EU acts were influential in shaping the system of environmental law in Germany. Despite different initiatives, no uniform environmental code (Umweltgesetzbuch) was adopted. Federal and state agencies have different powers with regard to enforcement. The administrations of the states are generally tasked with the enforcement of federal law. Few specialised areas, such as nuclear power for instance, fall under the responsibility of direct federal administration. Enforcement powers reach vertically from state ministries over regions to local communities.


German regulators have been active in policy shaping, as for example evidenced by the early offshore consenting schemes. In general, there is much public awareness of environmental issues. From a practitioner’s point of view, Germany heavily relies on its permit, licences and audit systems where applicable. Administrative oversight of industries and operations that may impact on the environment is mainly informed by experts’ opinion at the consenting stage. The effectiveness of environmental enforcement often differs depending on the applicable permit regime, in particular, whether audits of facilities are prescribed. The current practice also takes recourse to the deterring effects of administrative sanctions and prosecution in cases of environmental non-compliance. The current enforcement approach is completed by the relatively recent possibility of certain NGOs and acknowledged interest groups to initiate judicial review on the grounds of non-compliance with environmental law.


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Pinsent Masons Germany LLP Germany

Personal permits (Personalkonzessionen), i.e. permits that are granted to an applicant based on individual qualifications, are non-transferable.


The applicant has full recourse to administrative and judicial review. The appeal can be based on a wrongful denial of an application or limited to specific erroneous conditions. Appeals that could not be amicably resolved by consultation with the regulator can be further pursued in the courts for public administration (Verwaltungsgerichte). It must be noted that the German authorities enjoy a rather wide margin of discretion in relation to environmental permit requirements.


Yes. This depends on the nature and scale of the individual facility for new developments. The assessment is typically part of the original permit process as there is no standalone environmental permit. Projects that fall within the scope of the environmental instruments are typically subject to public notification requirements, public consultations and require providing project-related information and environmental assessments. All elements are considered in the final decision of the competent authority whether to grant the permit including any conditions thereto. The same applies to a number of facilities that already enjoy permitted status. Certain polluting operations are subject to regular environmental audits. Such audits can result in remediation actions or additional operating conditions. Germany has adopted legislation pertaining to Environmental Impact Assessment (Gesetz über die Umweltverträglichkeitsprüfung) in line with European requirements. It prescribes a formal assessment process that complements, but does not substitute, the administrative permit requirements for certain industrial and infrastructure developments. EIA will not apply after the permit stage.


Possible enforcement instruments that are available to the authorities are: a specific compliance action by administrative decision, including remediation of non-compliant situations, which are typically underpinned by enforcement fines (Zwangsgeld); in case of non-compliance within a deadline, execution by substitution at the violator’s expense and even forceful closure of facilities. This enforcement regime is supplemented by a system of administrative offences that trigger administrative fines (Bußgelder) as well as prosecution (Strafverfolgung). It is particularly noteworthy that the operation of a regulated facility without or materially outside the scope of a permit constitutes a criminal offence.

3 Waste


The statutory definition of waste according to Section 3 (1) 1 of the Closed Substance Cycle Act (Kreislaufwirtschaftsgesetz) reads: “Waste is any material or substance the possessor of which disposes, wants to dispose or must dispose of.” This statutory definition is in line with the applicable European understanding of waste as any movable item in or intended for disposal. It follows that either factual disposal, apparent intent to dispose or a legal obligation to dispose of a substance or material renders it waste for the purposes of the law. Due to the specific nature of the definition, contaminated soil in situ is not regarded as constituting waste. It only becomes waste once mobilised during excavations. Prior to this, contaminated soil is governed by federal legislation on soil protection (Bundes-Bodenschutzgesetz). Certain industries, such as nuclear and mining, do not fall under the scope of the Closed Substance Cycle Act. Furthermore, waste is categorised as being hazardous and non-hazardous. Permit requirements and control mechanisms vary depending on the applicable waste category. The law takes a differentiated approach with a view to the substance and the level of involvement that individuals have with it (storage, transportation, collection and disposal). The key instrument of administrative control is the system of waste classification and registration, which seeks to establish accountability of waste streams even across borders.


Waste producers may either be households or commercial operators. The statutory obligation to recycle or dispose of waste in an appropriate manner rests both with the producer and any possessor. Waste storage in households is not permissible as there is a duty to dispose of such waste through authorised municipal collections. In the commercial sector, waste storage is regulated depending on the nature and quantity of the waste. In general, production permits do not imply the permission to store waste on site. Production facilities typically have approved waste-management plans that contain short-term storage allowances. Waste disposal on site is not feasible. Onsite use of materials that originate from the facility is only permissible if it can be demonstrated that the remaining waste qualifies as recycling and, indeed, not disposal. An example of this is the use of demolition debris at a construction site as filling material (safe water law permit requirements).


Producers of waste retain liability for their waste. Handling, recycling and disposal contracts may be awarded or corporate schemes contracted out with regard to waste. However, strict standards must be applied by the contracting party with regard to the eligible contractor. This becomes the more pertinent the more hazardous the waste is.


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Ultimately, the (public legal) liability to recycle and dispose of waste in a legal manner remains with the producer until such material ceased to qualify as waste. This only happens, if the material was either successfully recycled or disposed of in an approved facility (for instance, a landfill). Consequently, if a recycling contractor goes bankrupt and material in its possession traces to the producer, the producer will have to retrieve “its fraction of waste” for treatment.


Take-back and recovery obligations regarding waste are regulated taking a selective approach in respect to certain products. The Packaging Ordinance (Verpackungsverordnung) requires manufacturers and distributors to accept defunct packaging of goods for recycling or disposal. A specialised collection system was established, which is mandatory. Beverage containers also fall under the scope of the ordinance with provisions for a monetary refund system at retail level. The End-of-Life Vehicles Ordinance (Altfahrzeugverordnung) requires manufacturers or importers of vehicles registered within the EU to accept these back and to implement recycling schemes for them. The Electrical and Electronic Equipment Act as well as the Battery Act provide for the establishment of a freely accessible collection system to consumers for all kinds of electronic waste and (rechargeable) batteries. The statutes place the manufacturer, importer and, within limits, the re-seller of such goods under a duty to accept their defunct products for recycling or safe disposal. All products concerned must be pre-registered as a condition for lawful marketing or distribution. All legal instruments mentioned above have in common that the liability for disposal remains with the ultimate originator and that cost-free return options have to be made available to consumers.

4 Liabilities


The environmental liability concept comprises three categories: public law; civil law; and criminal law. Various intersections between those three exist. Public law liability for environmental non-compliance derives from various statutes and ordinances that aim at environmental protection. In addition, administrative orders can be adopted in cases of imminent danger on the basis of public order legislation. The concept of public law liability is best described as the set of statutory enforcement instruments available to the authorities against permit holders/operators or polluters. Whenever remediation is required, the person legally liable has to take all necessary compliance action and has to bear all costs associated with any remediation action. The Environmental Damage Act (Umweltschadensgesetz) establishes a strict liability of industries for adverse impacts on soil, waterbodies and biodiversity. Civil law liability encompasses all claims for indemnification and damages in relation to environmental impacts. Potential claims can vary in scope. Most commonly, civil law claims between neighbouring property owners deal with emission control. Damages can be awarded if private property was, indeed, damaged or expenses for remediation of adverse impacts were incurred. Environmental indemnifications

are frequently a stressing-point in real estate transactions, especially with a view to soil contaminations and hazardous construction materials. It is noteworthy, that certain public law statutes provide for civil compensation claims against a polluter or other parties liable pursuant to public law. The Environmental Liabilities Act (Umwelthaftungsgesetz) contains a strict liability for certain facilities that can be environmentally harmful and, in turn, harm human beings. Criminal liability can arise in cases of infringement of penal code provisions, for instance if necessary permits were not obtained or existing ones materially breached. The potential for effective defences against any of such liability claims is rather limited given that either strict liability or negligence applies.


The “defence of permitted use” remains a contested one. More recent case law of the federal judiciary tends to state that this defence was only admissible provided that the permit in question directly allowed the adverse environmental impact to occur (for instance, mining). The defence would not be available if an impact only occurred incidentally during the permitted operations. This defence bears more relevance to older cases in which the adverse impact originated in times when contemporary environmental laws were not in force yet.


It is argued that directors/corporate officers could attract civil legal lability, but to date no relevant precedent exists. Cases of adverse environmental impacts need to be carefully differentiated from such concerning negligence with regard to operational safety of a facility. Directors/corporate officers will be the ones prosecuted in any case that involves a private legal entity operating a non-permitted facility. The German penal code does not provide for corporate prosecution, but allocates criminal liability to the individuals in management. Various insurance policies are available under D&O- as well as PI-schemes to cover environmental liabilities also. Infringements by wilful intent are excluded in general.


Perpetual liability in every respect is inevitable in any share deal or fully fledged merger. The acquirer will be liable for any incidents or findings prior to and after closing of the acquisition. The situation can be similar even in an asset deal with regard to soil and groundwater contamination that originated after 1 March 1999 because of the German legislation. The owner of a soil-polluted or water-polluting property will remain liable to decontaminate besides the historical polluter. However, the liability can be limited on a statutory or, to some extent, on a contractual basis. Compensation claims against the polluter are also afforded. Depending on the type of environmental impact or damage, the liability implications between share and asset deal may not differ significantly. The target assets, therefore, always require careful analysis.


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There is neither a concept of lender’s liability nor a similar legal mechanism to this effect in Germany.

5 Contaminated Land


Contaminated soil and groundwater pollution caused as a result of it are governed by the Federal Soil Protection Act (Bundes-Bodenschutzgesetz). It stipulates a liability of polluters (incl. their universal legal successors), current land owners, previous land owners (who knew or ought to have known about environmental issues when acquiring title) and possessors (i.e. lessees, operators etc.) of a contaminated site. Authorities have statutory powers to require information, effect searches and soil analysis in order to tackle sources of contamination and they frequently do so.


Authorities enjoy a wide margin of discretion as to which liable party to engage. All liable parties can be approached for a full decontamination provided that they are in a position to reasonably and effectively perform necessary searches and remediation measures. In turn, the party held liable by the authorities will have a statutory compensation claim against any other liable party in proportion to the extent these others caused the pollution.


Public law agreements on decontamination measures are a common tool. They are legally binding on the parties involved, including the authorities, who cannot make additional demands after entering into such an agreement. This legally binding effect is limited to the pollution concerned. The authority would not be pre-empted if previously unknown contamination was discovered on site. Third parties as stakeholders can and must be a party to such agreements. They can only challenge an agreement if their legitimate concerns or formal position as a stakeholder in the clean-up were unlawfully curtailed. No other challenges by third parties to such an agreement can be made. General challenges of third parties are not admissible in court.


Yes, there is a statutory compensation claim afforded to all statutory liable parties in respect of clean-up costs. Such claim is dependent

on the extent of the pollution the counter-party caused. However, litigating such claims is intrinsically difficult with regard to the applicable burden of proof. This compensation claim can be contractually excluded, but only with effect between the parties to the agreement. So any subsequent acquirer of the property could claim from a previous owner. A vendor can prevent this by obligating the acquirer to exclude all compensation claims in the future conveyance of title to another party, but residual risks remain, due to the statutory liability regime. Equally, the vendor and purchaser can agree to indemnify one another for specific contamination, which would, however, not prevent the authorities from holding them liable contrary to such an agreement.


No such claims are available.



The competent authorities have comprehensive investigative powers that derive from various statutes and often correspond with a duty of industrial operators to maintain relevant information. In general, they can request information, conduct site inspections and require or effect samples. Depending on the nature and subject matter of the investigation, which could be conducted pursuant to administrative penal law, also interviews of staff members may occur.



There is no duty to self-incrimination, especially if the nature of the pollution may imply criminal liability. However, in other situations a duty to notify the authorities could stem from public order or sector-specific legislation, provided that an imminent danger to health and safety existed or hazardous materials were involved. Many states have adopted legislation that requires land owners, possessors (e.g. lessees, operators) or constructors to report any reasonable suspicion about soil/groundwater contamination on their property to the authorities. Failure not to comply can trigger an administrative fine (Bußgeld).


The Federal Soil Protection Act (Bundes-Bodenschutzgesetz) mandates that proprietors take all reasonable actions to avoid all and any dangers originating from adverse soil impacts (schädliche Bodenveränderungen) on their property. This constitutes an affirmative statutory obligation, which will apply regardless of any


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administrative action being initiated. However, it does not limit the powers of the authorities to decree specific actions to be undertaken by the liable persons as the case may be.


Any adverse environmental impact on any given property constitutes a defect (Sachmangel) pursuant to German statutory law of sale. Full disclosure is required in any transactional situation, especially in order not to render contractual limitations of liability and indemnity of the seller, which can usually be agreed, null and void. The same would apply in joint venture and merger situations because the German courts have recognised that environmental impacts are significant circumstances for any deal type that directly affect property/transaction value. Consequentially, contracting parties can expect reasonable disclosure. It may, however, be difficult to adequately assess what kind of “environmental problem” requires full disclosure (for example, suspicious former uses).

8 General


The three categories of environmental liability in German law need to be distinguished in such a situation. In general, contractual indemnities can be agreed and are legally binding on the parties (adequate disclosure provided). Payments under such indemnification will discharge a party’s contractual liability. Any public legal liability, i.e. the exposure to be held liable by an environmental regulator for the indemnified incident, will persist. Equally so, any criminal liability and the possibility of prosecution for environmental non-compliance remain unaffected.


A true off-balance sheet structure for environmental liabilities is not feasible in most cases that involve non-movable assets due to the statutory framework in Germany. However, proactive asset holding and corporate structuring can limit exposure to some extent. It is not possible to effectively evade environmental liabilities by a simple asset transfer and subsequent liquidation of the company, especially an inadequately capitalised SPV.


In general, shareholders cannot be held liable for environmental non-compliance or pollution caused by a company provided that they did not personally contribute. This applies to all limited liability corporate formations, but not to non-incorporated legal partnerships.

Certain statutes such as the Federal Soil Protection Act provide for a liability of parent companies for their subsidiaries provided that they exercise a dominant influence (controlling agreement). The federal judiciary developed case law that disregards the corporate shield in situations of manifest abuse, which will apply (broadly speaking) to corporate structures where known contaminated assets were transferred to undercapitalised entities. German courts do not have jurisdiction over claims for pollution caused abroad by a foreign subsidiary.


No uniform legal approach to whistle-blowing exists. Certain areas of law provide for protection of notifying staff depending on the area of non-compliance that is concerned. This applies mostly to occupational health & safety situations, but not to general environmental compliance or pollution issues. Indeed, German labour law does not protect general whistle-blowing.


The concept of penal or exemplary damages does not exist in German law. Neither are group or class actions possible. The procedural concept strongly differs from the Anglo-American legal perspective. Only claimants that can show direct individual rights at stake (subjektive öffentliche Rechte) have standing in the administrative courts. A more recent change in legislation allows certain interest groups/NGOs to bring environmental action, particularly challenges to permits and planning consents.


No such privileges exist. The usual statutory cost liabilities apply (“loser pays all”). However, German litigation is far less cost-intensive than for instance in the UK or the US due to statutorily capped court and lawyer fees that a losing party would incur. So a legal privilege or lack of such in this sector might seem less pertinent.



The EU Emissions Trading System (EU ETS) is practised in Germany since the European framework was established. It is one important pillar of the government’s longstanding dedication to climate change policy. The third trading phase is presently in force (2013–2020). It is considered to be more challenging on the Member States and their industries as an EU-wide emissions’ cap was introduced. The certificate trading is well established at federal level and a familiar tool to national stakeholders. November 2017 saw the so-called Trilogue-consultations at the level of the European Institutions for yet another reform of the trading system. While formal consent of the European Council and the European Parliament is pending, it is believed by the German


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A wide range of environmental insurances is available on the German market. These range from standard liability policies to more tailored products for distinct risks arising from specialised business operations. Appropriate insurance cover for industrial operations is increasingly considered as best practice. The situation is more difficult with regard to transactions-related indemnity insurances. Environmental insurance is extremely rare among non-corporate owners.


Surprisingly little litigation has arisen around environmental insurance claims. It cannot be regarded as a virulent legal issue. Most insurance claims that surfaced meriting public coverage were related to personal injury claims, rather than to pollution in general. The latter litigation has typically arisen over insurance for soil contamination in bankruptcy cases.

12 Updates


Certain NGOs appear to make increasing use of their more recent powers to initiate litigation for environmental compliance. This seems to have become a relevant tool of regulatory review and subsequent enforcement. The administrative court in Stuttgart, for instance, found that the city continuously fell short to adopt comprehensive plans in order to minimise air pollution (Verwaltungsgericht Stuttgart, 19 July 2017 – 13 K 5412/15). The administrative court in Düsseldorf had handed down a similar ruling for the capital of North Rhine-Westphalia (Verwaltungsgericht Düsseldorf, 13 September 2016 – 3 K 7695/15). Traffic bans in 2018 for the worst polluted areas could be a result of this. A ruling by the federal court at Leipzig (Bundesverwaltungsgericht) is pending. It is expected to be handed down in February 2018.Air pollution awareness is closely entwined with the still prominent so-called Diesel scandal. The entire issue is ongoing and far from having arrived at a solution, especially considering matters of customer restitution and harmonised engine testing criteria. The government addressed this in November 2017 during its “Diesel summits”. A cross-funded action plan aiming, inter alia, at enhanced e-mobility in public transportation and smart infrastructure was announced.


regulator to help re-incentivise the national market that has seen substantial oversupply in permits. Starting in 2019, annually 24% (instead of 12%) of surplus will be transferred into the Market Stability Reserve (MSR). The MSR will be capped from 2023 onward by the amount of auctioned permits, so that fewer permits will be in circulation. All other surplus permits will be cancelled.


Different monitoring requirements apply, not only in respect of CO2, for certain industrial facilities pursuant to federal emission control legislation. Monitoring and reporting can additionally be specified in the relevant operating permit. The competent authorities may require information on greenhouse gas emissions as part of their general competencies to operational supervision of regulated industries. However, no general monitoring procedure apart from the EU ETS is in effect.


The German government has planned to decarbonise the energy sector and cut emissions for several years now. The plan has become known as the “energy transition” (Energiewende). The goal is to cut emissions by 40% by 2020 (compared to 1990 levels) and by at least 80% by 2050. This target excels even the EU’s goal to cut emissions. Substantive investment has been undertaken in shaping a functioning renewables’ market and in the decommissioning of conventional power plants. An expanded action plan was presented in 2017 by the competent federal ministry that introduces significant caps to emissions from energy production.

10 Asbestos


In contrast to the US-experience, Germany has not seen substantive litigation over asbestos. Illness due to asbestos exposure is recognised as occupational hazard and covered by health insurance plans. Occasional claims by individuals for damages for pain and suffering (Schmerzensgeld) have received sparse media coverage.


Although asbestos has been a banned substance since 1993, no national asbestos register for potentially contaminated sites exists. Asbestos issues are dealt with on a single case assessment basis, predominately during demolition works (permit process). Decontamination in existing buildings is typically triggered when structural damage to a material known to contain asbestos occurred. The owner is under a duty to dispose of the material in a safe manner under the applicable waste and hazardous substances laws.


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Pinsent Masons is an international law firm whose origins trace back to 1769. Today, the firm has a legal team of around 1,700 lawyers operating out of 24 offices across Europe, the Middle East, Asia Pacific and South Africa.

Since opening our German business in 2012, operating out of Munich and Düsseldorf, our expertise has rapidly become recognised (JUVE 2016 award winner: ‘Law Firm of the Year – Region South’) and has been ranked among the top 50 law firms in Germany in 2017. Outside of our own global office network we have well established ongoing relationships with an international network of law firms and deliver seamless services to our clients wherever they need it.

Combining sector experience and legal expertise ensures that our clients receive cutting-edge legal services in the Technology, Life Sciences, Energy and Real Estate sectors.

Thomas is a real estate and environmental specialist with more than 10 years’ experience advising investors, developers and businesses in a range of sectors including Energy and Infrastructure. He has acted as lead advisor on numerous real estate transactions and has broad experience in all matters of private and public property law including construction law.

Thomas regularly advises in relation to construction permits, licences and proceedings pursuant to federal emission control legislation. His expertise also covers all aspects of environmental law which places Thomas in the unique position to cover a multitude of compliance aspects in any real property’s life cycle. Clients value him for his outspoken, passionate and hands-on approach.

Thomas worked at an Anglo-American law firm and the legal arm of a Big Four firm before joining Pinsent Masons in February 2016.

Dr.ThomasWölfl,LL.M.(Kent)Pinsent Masons Germany LLPHeinrich-Heine-Allee 5340213 DüsseldorfGermany

Tel: +49 211 88271 505Email: [email protected]: www.pinsentmasons.com


Chapter 12

PSA

Priti Suri

Arya Tripathy

India

The Enforcement mechanism followed by CPCB and SPCBs involve several aspects such as prohibition of industrial activities without prior environmental permits, ensuring compliance through periodic reporting and inspection, conducting environment impact assessments for certain industries and projects, and imposing liability for breach and non-compliance. Additionally, the judiciary plays a significant role in progressively resolving environmental concerns. The SC and State High Courts have taken suo moto cognisance in environmental matters. For instance, in 2014, pursuant to a newspaper article, the SC initiated suo moto proceedings to address Yamuna river pollution and passed suitable directions to the concerned authorities for regulating effluent discharge (In Re: News Item Published in Hindustan Times Titles ‘And Quiet Flows the Maily Yamuna’). Further, the SC has substantially simplified the locus standi for initiating public interest litigation (PIL), enabling several cases on environmental cause, and, in fact, a lot of Indian environmental jurisprudence is owed to these.


The Right to Information Act (RTI) entitles every citizen to seek information from public authorities, unless information requisitioned is specifically exempt. Generally, the exempt category includes information which is privileged, confidential, lis pendens, official secrets, or relates to sovereignty and national security. RTI mandates public authorities to maintain records for easy access and publish the names of specific officers who should be contacted for obtaining information. It obligates the public authorities to publish mandatory information such as organisation structure, powers and duties, decision-making process, policy, applicable law, and internal manuals. An interested citizen can file an RTI application for a minimal fee of INR 10, and the public authority is mandated to respond with the information within 30 days.



Requirement of environmental permits is dependent on the entity’s business. For instance, an industrial plant can be established in a pollution control area after obtaining a permit from the concerned SPCB under the Air (Prevention and Control of Pollution) Act (Air



The Constitution, judicial principles established by the Indian courts, and the National Environment Policy, 2006 (NEP) provide the basis for Indian environmental policy-making. The directive principles of the Constitution require the government to protect and improve the environment. Article 21 of the Constitution, guaranteeing the fundamental right to life for every human being, has been expanded to include the right to a clean and pollution-free environment. The doctrine of sustainable development, intra-generational equity, polluters-pay and precautionary principle were made integral to Indian environmental policy through several landmark court decisions. The Supreme Court (SC) in the Oleum Gas Leak case evolved the “absolute liability” principle, which makes an enterprise engaged in hazardous or inherently dangerous activity accountable and absolutely liable for compensation, despite all reasonable care. Pursuant to the Constitutional mandate, the Central Government (CG) adopted the NEP. Its salient features include conservation of critical environmental resources, intra- and inter-generational equity, integration of environmental concerns in developmental policy-making, efficient resource utilisation and good governance. It lays out action plans for regulatory and process reforms, strategies for capacity development, and building a robust system of environment impact assessments.The Ministry of Environment and Forest (MoEF) along with the Central Pollution Control Board (CPCB) and State Pollution Control Boards (SPCBs) of each state administer and enforce environmental laws in India. Further, a special tribunal, the National Green Tribunal (NGT) was established in 2010 to speedily dispose of cases relating to environment protection, conservation, and granting relief in environmental matters, which has taken a rather strict approach towards ensuring compliance with environmental law.


The MoEF prefers a participatory and inclusive approach for policy and law making, wherein the draft is opened for consultation with industry experts, civil-societies and the public before notification.


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Act). Similarly, any industry or operation resulting in the release of sewage or trade effluents into a water stream or on land must obtain consent from the concerned SPCB under the Water (Prevention and Control of Pollution Act) (Water Act). A particular business can be the subject matter of multiple permits.A permit may be transferred to an entity engaged in similar activity, provided the statute or its terms allow. To illustrate, the Air Act specifically allows the consent holder to transfer the permit pursuant to a business transfer.


The applicant is provided a hearing opportunity before a permit is refused. It is also entitled to appeal against permit refusal, or imposition of unreasonable or illegal conditions, within 30 days of such refusal or imposition to the designated appellate authority.


Yes, an environmental impact assessment (EIA) is mandatory for 29 categories of developmental activities such as mining, oil and gas exploration, oil pipelines, nuclear power, chloralkali, chemical fertilisers, sugar, and township development, provided the investment involved is INR 500 million or above. Once the project site is identified, the entity must apply for EIA along with a pre-feasibility report. The process of EIA involves four stages, namely screening, scoping, public consultation and appraisal. Thereafter, a report is prepared and environmental clearance is granted. While there is no legal requirement for environmental audit as such, most environmental rules mandate submission of periodic reports to the concerned authority. For instance, every entity with a permit under Air Act, Water Act and Hazardous Wastes (Management, Handling and Transboundary Movement) Rules (HWM Rules) must submit an annual environment statement to the concerned SPCB by March 31. This inevitably requires entities to conduct an environmental audit.


Violation of permit conditions can result in a permit’s suspension, cancellation or revocation. Additionally, the entity can be penalised with a fine, or imprisonment of the person in control of the entity’s affairs, or both.

3 Waste


There is no generic definition of “waste” and it is commonly understood to mean an environmental pollutant. The Environment Protection Act (EPA) empowers MoEF to lay down emission standards for environmental pollutants from various sources. Pursuant to this, waste management rules for five kinds of waste have been notified:

■ Hazardous: The HWM Rules define hazardous waste as any waste which, by its physical or other characteristics, causes or can cause danger to health or the environment, either in isolation, or in combination with substances. It provides a list of processes and industries that must comply with the rules such as mining, lead-based production, petro-chemicals, asbestos and tannery.

■ Bio-medical: Bio-medical waste is defined under the Bio-medical Waste (Management and Handling) Rules as waste generated in healthcare processes like human anatomical, animal, micro-biological and bio-technology, discarded medicines, cytotoxic drugs and incineration ash.

■ Plastic: The Plastic Waste (Management and Handling) Rules define plastic waste as any plastic product such as carry bags, pouches and sachets, discarded after use or after their intended life is over.

■ E-waste: The E-waste (Management) Rules (E-waste Rules) define e-waste as electrical and electronic equipment, in whole or part, discarded by the consumer or bulk consumer including rejects from the manufacturing, refurbishment and repair process.

■ Construction and demolition: The Construction and Demolition Waste Management Rules (CDW Rules) explains this as waste comprising of building materials, debris and rubble resulting from construction, re-modelling, repair and demolition of any civil structure.

All the above-mentioned rules delineate obligations of different parties involved in generation, management and handling of each category of waste. In a nutshell, they (i) lay down the standards and procedure for generation, storage, segregation, processing, transportation, import-export, disposal, recycling, and dealing with waste, (ii) mandate prior authorisation from concerned SPCBs, (iii) direct reporting of accidents and unexpected events, and (iv) require filing of returns and maintenance of documents. However, some of them impose stricter obligations on the occupier, i.e. the person who controls the affairs of the establishment. For instance, under the CDW Rules, an entity generating waste of 20 tonnes or more in one day must submit a waste management plan and get approval from the designated authority.


The aforementioned rules require the producer to handle safely, segregate and label waste at the point of generation. Subsequently, it must channel waste for disposal or processing, through authorised collection centres, recyclers or re-processors. It is also mandatory to maintain a record for storage, collection, segregation, transfer, or sale of waste. Certain rules prescribe a timeline for storage at the producer’s premise. Some others require the producer to provide financial assistance to local authorities for setting up a waste management system. In essence, the producer must ensure waste is transported from the premises as per prescribed standards and without any adverse effect on human beings and the environment.


The actual test for imposing liability for waste management is identifying who exercises control over the concerned stage. This


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determination is based on facts and circumstance. Since the producer generates the waste, he is absolutely liable for any act or omission on his premises, or which affects the effective disposal of waste after it is transferred. As long as the producer complies with applicable rules and transfers the waste to an authorised person for disposal or treatment, it is unlikely that he will be subsequently held liable.


Statutory obligation to take-back and recover waste is provided under the following rules:■ As per HWM Rules, if hazardous waste is illegally trafficked,

the importer must re-export the waste at its own cost within 90 days from its arrival in India.

■ Under the E-waste Rules, a producer of certain equipment such as personal computers, facsimile and telephones is subject to “extended producer responsibility” for channelling back certain quantities of e-waste generated. For this, the producer individually or collectively can roll out a plan with CPCB’s approval for implementing a take-back mechanism.

Other waste management rules do not provide for specific take-back requirements. Nonetheless, under equity and as a contractual obligation, if the producer fails to comply with his obligations at the time of initial treatment, the authorised transferee can insist on the take-back at the producer’s cost and recover damages for loss incurred.

4 Liabilities


Breach of environmental law entails civil as well as criminal liability. Contravention of the EPA and the rules thereunder is punishable with imprisonment between five to seven years, or a fine of up to INR 100,000, or both. Similarly, non-compliance with Air and Water Acts may lead to imprisonment between three months and six years, or a fine, or both. Notwithstanding this, the SC can impose exemplary damages and remediation costs on an entity engaged in hazardous or dangerous activity. To give an example, in 2013, the SC required Sterlite Industries to deposit INR 1 billion towards remediation for violation of green norms by its copper smelting plant. Further, the SC has required the closure of polluting industries several times, such as the closure of limestone quarries (RLEK vs. State of Uttar Pradesh), leather tanneries (Vellore Citizen Welfare Forum vs. UOI) causing ecological imbalance and environmental deterioration. Furthermore, in a recent case (Vardhaman Kaushik vs. Union of India), NGT pursuant to the SC’s directive to Delhi government, passed an order banning 10-year-old diesel-run heavy vehicles, in order to preserve ambient air quality of the national capital. Civil liability may arise when an aggrieved individual claims damages under tort principles, or files a writ petition seeking judicial direction. Barring situations where “absolute liability” applies (see question 1.1 above), the entity can prove lack of intention, involuntary action, exercise of due diligence, and implementation of mitigation steps for defending liability. Where “absolute liability” triggers, the foregoing defences are not available because the entity’s awareness and foreseeability of the adverse consequences is assumed.


Yes, an operator can be made liable for environmental damage, despite compliance with permit limits. However, this rigour is mostly applied to hazardous and dangerous industries, and the EIA covered developmental projects as an extension of the “polluters-pay” and “absolute liability” principles.


Yes, directors and officers attract personal liability for company’s environmental wrongdoing. As per the EPA, Water and Air Acts, “offences by companies” means an offence by a person (mostly a director designated as occupier) directly in charge of and responsible for conducting a company’s business. Further, any other director can be proceeded against, if it is established that the offence was committed with his consent, connivance or negligence. The alleged director or officer must prove absence of any knowledge and exercise of due diligence in the discharge of his duties to absolve liability.A company may obtain D&O insurance for covering personal liability for a company’s environmental wrongdoings.


In a share sale, the acquirer assumes the company’s ownership and control, resulting in an indirect acquisition of all assets and liabilities, including environmental permits, obligations and liabilities pertaining thereto. The transaction structure prevents selective picking of environmental liabilities and the acquirer must step into the target’s shoes to discharge them. In contrast, an asset purchase enables the buyer to purchase specific assets, where it may assume all liabilities, or require prior discharge of liabilities, or performance of rectification steps.


Since lenders are not responsible for the company’s business, they are not liable for its environmental wrongdoing or remediation costs. However, if a lender nominates a director to the company’s board, such director can be held liable as discussed in question 4.3 above.

5 Contaminated Land


There is no specific legislation for soil and groundwater contamination. Contamination is viewed as “environmental pollution” and hence, the liability is affixed under the EPA, its waste management rules (see question 3.1 above), and the Water Act.


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However, the judiciary has played a crucial role to cover the lack of specialised legislation. It has relied on sustainable development, polluters-pay and absolute liability principle to impose exemplary damages, direct closure and mandated remedial and clean-up measures.


Contamination occurs gradually over the course of time and proving the precise events that lead to it is difficult. At any given point, an entity can designate one director or officer as the “occupier” of the factory, plant or site. Hence, the approach is to impose liability on the current occupier even for historical contamination. This heightens the significance of thorough environment audit and due diligence before acquisition of an asset prone to contamination.


The regulator has the ability to seek additional work, provided it is reasonable and related to the remediation scheme. A third party can challenge the scheme only when it has locus or proves an overarching public interest. The Planning Commission in the 12th Five Year Plan (2012–2017) has highlighted the need for remediation of contaminated sites. Accordingly, MoEF aims to develop institutional and methodological framework for rehabilitation. Until such framework, the regulators can frame individual remediation schemes.


A prospective occupier cannot escape liability, if it has prior knowledge, or reasonable anticipation of such contamination. Nonetheless, prospective and previous occupiers often agree on remedial steps as pre-closure obligation, representation and warranties, and indemnifications. Enforcing these clauses is time-consuming and may not be sufficient to cover the risk. Thus, a buyer must conduct thorough diligence prior to signing the transfer deed.


There is no statutory provision that specifically empowers regulators to obtain monetary damages for aesthetic harms. However, the SC has established the “public trust doctrine” (M.C. Mehta vs. Kamal Nath) requiring the State to act as a trustee and take all steps including imposition of restitution costs for protection of public assets like rivers, sea and forest. Further, the SC has elaborated on the polluters-pay principle to prevent deterioration of heritage sites. In the Taj Trapezium case, the SC required relocation of 292 polluting industries causing acid-rains and corrosion of the Taj Mahal monument.



The EPA, Air and Water Acts empower the CPCB and SPCB to take all expedient steps for controlling environmental pollution, including inspecting sites, examining and testing of process and plant, seeking and verifying records, conducting searches, examining witnesses, taking samples for testing and analysis and giving directions and orders. Further, they can initiate proceedings for non-compliance to levy penalty or impose personal criminal liability on the occupier.



Applicable environmental law makes it obligatory for the occupier to immediately inform concerned authorities and take mitigation steps when there is an accident or any unforeseen event, which results or may result in excessive discharge of pollutants and off-site migration. As part of mitigation steps, the occupier must inform potentially affected third parties.


The pre-feasibility report submitted for EIA (see question 2.3 above) must disclose the risk of contamination due to release of effluents. For this, the project proponent must investigate the land for existing contamination and the future impact. Apart from this, there is no statutory obligation for investigating land contamination.


The seller must make material disclosures which may affect the buyer’s decision. In M&A transactions involving hazardous entities, non-disclosure of existing and contingent environmental liability can be equated with wilful concealment, questioning the contractual validity. Thus, the transferor must populate a detailed disclosure schedule highlighting liability issues. In any case, the transferee must conduct due diligence to identify risks and incorporate contractual protections inter se parties.


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8 General


While it is possible to use indemnification for limiting actual or potential environmental liability inter se contracting parties, its enforcement is tedious. Further, it shall not bind the regulators or courts in affixing liability on the indemnifier for his conduct.


Potential environmental liabilities which the company is aware of are contingent liabilities and must be disclosed in the audited financials. Non-disclosure may amount to falsification of accounts, or fraud, which is punishable with imprisonment and a fine. Dissolution or liquidation does not absolve the directors, and in certain cases the promoters, from any liability that may befall them post-dissolution.


A company is a separate legal entity, different from its shareholders. Any action of the company is deemed to be done by its directors. Thus, a shareholder cannot be held liable, unless the facts require piercing of the corporate veil. Limited scenarios such as fraud, misleading public disclosures, and account falsification permit piercing, where it must be proved that no real distinction existed between the shareholders versus the board. Yes, a foreign parent can be held liable for its subsidiary’s activity. In the Bhopal Gas Leak case, lethal gas was released by an Indian subsidiary’s factory. Several claims were filed in US courts against the US parent entity. The SC observed that both entities were liable as the US parent controlled and was responsible for the Indian subsidiary’s affairs.


The Whistleblowers Act (which is yet to be implemented through a notification) ensures protection of anyone who blows the whistle against a public official and will not cover situations where the complaint is against a private entity. However, as good governance practice, most companies have a whistleblower policy and establish an internal vigilance mechanism to prevent victimisation.


While the typical US class action suits are not feasible, a group with the same interest can initiate a representative suit, despite each

individual having a different cause of action. Further, any public-spirited person can initiate PIL by invoking the writ jurisdiction of the SC and High Courts, irrespective of any direct cause of action. Yes, plenary and exemplary damages can be awarded in environmental claims.


There is no exemption from payment of litigation costs for public interest groups pursuing environmental litigation. They can specifically apply for cost recovery from the adversary, but the courts have absolute discretion in granting such an application.



India has implemented three measures resembling emission trading but incorporating distinct features to balance development and climate change: ■ Perform Achieve and Trade: This aims at achieving low-

cost, energy-intensity targets by trading in energy-saving certificates. It covers 478 facilities in the thermal power, fertiliser, cement, iron and steel, chloralkali, aluminium, textiles and pulp and paper sectors. Each facility must achieve its own target within a specified timeline or purchase energy certificates from others for compliance.

■ Renewable Energy Credit Trading System: Herein, the State Electricity Commission requires power companies to purchase a certain percentage of their power from renewable sources such as solar, wind, small-scale hydro, bio-mass, bio-fuel and municipal waste. In order to comply or to profit from surplus, power companies may trade their renewable energy credits with others.

■ Pilot Emissions Trading Scheme: MoEF and CPCB have mandated three states: Gujarat; Tamil Nadu; and Maharashtra to implement this for reducing detrimental air particulates as identified by SPCB, and mandating certain facilities to adhere to emission caps.

However, India’s emission trading market is yet to transit into advanced stages.


The Ozone Depleting Substances (Regulation) Rules aim at regulating the production and consumption of ozone depleting substances through mandatory permit requirement and reporting by producers, importers, exporters, distributors as well as bulk purchasers. Pursuant to India’s international commitments under the Vienna Convention and the Montreal Protocol, the MoEF’s Ozone Cell has proactively phased out production and consumption of chloroflurocarbons, carbontetrachlorides and halons. It has been implementing accelerated projects with stakeholders to phase out hydrochloroflurocarbons as well. Additionally, the Air Act prohibits industries in pollution control area to discharge pollutants and toxic emissions beyond fixed standards. Further, as a permit condition under the Air Act, industrial units


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The Public Liability Insurance Act mandates entities dealing with hazardous substances to obtain accident insurance for immediate relief to any injured party. The insurance value must be equivalent to a company’s paid-up capital, or for other entities, the cumulative of the market value of all assets, subject to a maximum of INR 500 million. The Indian environmental risks insurance market involves private companies because state-owned insurers do not offer environmental insurance as part of their portfolio. Private insurers cover a variety of risks such as pollution, storage, transportation, acts of god and collaborator’s liability risks. The terms vary, and are standard contracts with limited negotiability of the insured, but the key coverage exclusions are claims for asbestos and lead, terrorism, state of war and prior knowledge of the policyholder. It is noteworthy that, owing to the exponential increase of pollution in India’s major metropolitans, the general populace has become increasingly wary about comprehensive health insurance coverage, and, as of fiscal 2016, health insurance premium rates registered a compounded annual growth rate of 32%.


There is lack of public information on privately materialised environmental insurance claims. However, it is interesting to note that several health insurers (such as Bajaj Allianz General Insurance, Future Generali India, and ICICI Lombard) have acknowledged a rise in water and air pollution-related health hazard claims ranging between INR 20,000 to INR 70,000, as of fiscal 2016. While it was expected that adjudication of private claims will increase with NGT’s establishment, most of the cases dealt by NGT centre around environmental clearance, pollution and wildlife conservation issues.

12 Updates


The increasing depletion of ambient air quality in the national capital and other metropolitans in India has been a moot point for regulators and the judiciary has taken drastic steps for containing the pollution. In October 2017, the SC in a pending PIL ordered the suspension of all authorisations granted for sale of fire crackers in the national capital region, with the prime objective of identifying whether burning fire crackers during Diwali (which is the biggest Indian festival!) adversely impacts the air quality. Similarly, in November 2017, the NGT banned all structural construction and emission creating industrial activity in the national capital region to reduce the levels of smog (Vardhaman Kaushik vs. UOI). Lastly, pursuant to India’s ratification of the Paris Agreement on October 2, 2016, where India committed to reduce greenhouse gases and keep global temperature at 2°C less than pre-industrial phase, the government has commissioned three research institutions (Energy Research Institute, Observer Research Foundation and

PSA India

are required to maintain ambient air quality standards, a register of emissions and report when they are exceeded along with reasons thereof.


The National Action Plan on Climate Change, 2008 provides the policy approach and sets eight national missions for the government to devise strategies, action plans and evaluation measures: ■ increase solar energy use by advancing technology; ■ improve energy efficiency;■ make habitats sustainable through efficient urban planning;■ ensure integrated water resource management;■ sustain the Himalayan ecosystem;■ create green India for ecological balance and bio-diversity;■ develop a resilient agriculture sector; and ■ create robust strategic knowledge. Further, the Intended Nationally Determined Contribution (INDC) is a policy guide that outlines post-2020 climate actions, with an aim to devise programmes and measures that will lead to sustainable lifestyles, climate justice to the poor and vulnerable, cleaner economic development, reduced emission intensity of the country’s GDP, enhance cover of carbon sinks, and facilitate adaptation.

10 Asbestos


Indian asbestos litigation is nascent. In 1995, the SC, recognising the injurious effects of asbestos (Consumer Education & Research Centre vs. UOI), stated that the producer has the legal, moral and social responsibility to provide protective measures for anyone exposed to asbestos’ harmful consequences. Employers were made responsible for liquidated damages as compensation to asbestosis-affected workmen. It passed various directions for maintaining a workmen health record and review of permissible exposure standards. In 2010, MoEF published a guidance manual for asbestos-based industries to conduct EIA for cleaner production, monitoring of environmental quality, and waste minimisation. In 2011, the SC directed the government to review existing safeguards (Kalyaneshwari vs. UOI). Subsequently, manufacture and mining of blue and brown asbestos was banned, though India continues to import white asbestos. Human rights commissions and NGOs (such as Ban Asbestos Network of India, Toxic Watch Alliance and Occupational Health India) are pro-actively involved in public awareness and seeking a complete ban. A bill highlighting the carcinogenic effect of white asbestos and imposing an absolute ban is pending in Parliament.


As stated in question 10.1 above, there is no specific asbestos legislation. Nonetheless, manufacturing, handling and processing of asbestos is a “hazardous process” under the Factories Act, thereby, obligating stricter compliances on occupiers for workmen safety and health. The occupier must conduct EIA and comply with HWM Rules for proper waste disposal.


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Centre for Study of Science, Technology and Policy) to recommend measures for a long-term low carbon growth trajectory for India. It is expected that the research studies and projects conducted by these organisations will be instrumental for projecting the economic growth and concomitant greenhouse gas effect for the period 2030–2045.

PSA India

PSA is a pragmatic client-driven, solution-oriented firm recognised for its high-quality legal service, responsiveness and client commitment in the Indian legal market. The firm offers a broad-based service for its clients, and represents a diverse base of clients operating in manufacturing, services and start-ups. The environmental practice counsels clients in various industries including automotive & component manufacturers, chemicals, energy and pharmaceuticals in connection with air, water, noise and solid, hazardous and toxic waste standards. The team identifies, quantifies liabilities and risks, interpreting and evaluating data to assist clients in decision-making, managing and mitigating risks. We assist in securing essential regulatory approvals for greenfield projects, negotiate administrative orders with regulators to address concerns. In addition, we conduct audits to ensure compliance, reporting and certification, as well as implement corrective action priorities and develop plans to address systemic deviations.

Priti Suri, Founder and Managing Partner, is a seasoned lawyer with over three decades of experience spread across three continents – the US, Europe and India. A first-generation lawyer, she started her career as a litigator and evolved rapidly as a business lawyer, now known for her pragmatic ability to “get the deal done” and “solve problems”. Priti’s representations are over USD 10 billion across a spectrum of industries.

An active member of the international bar, Priti chaired the India Committee of ABA for two years and is its current senior adviser. She was honoured with the prestigious “Mayre Rasmussen Award” for the Advancement of Women in International Law by ABA in April 2017, the first ever Asian to receive this award. She also chaired the Women Business Lawyers’ Committee of IPBA for four years. Committed to encouraging women in the law, she initiated the formation of the Society of Women Lawyers-India, the first platform for professional women to address their evolving challenges and is its current President.

She has been featured in IBLJ India’s top 100 lawyers A-listing for the last two consecutive years.

Priti SuriPSA 14 A&B Hansalaya 15 Barakhamba Road New Delhi 110001 India

Tel: +91 11 4350 0500Email: [email protected]: www.psalegal.com

Arya Tripathy, Senior Associate, graduated from Hidayatullah National Law University in 2011. She firmly believes in simplifying the legal maze and providing business-centric advice to her clients. She is adept and systematic in advising domestic and international clients on diverse aspects of business law, M&A, compliance, law of contracts, environmental laws, labour and employment laws. She works closely with clients engaged in defence, pharmacy, automobiles, oil & gas, food, infrastructure and technology. She actively provides pro bono advisory to non-profit organisations engaged in environment protection and sustainable development.

She has published various academic articles in reputed international and national journals like All India Reporter, Supreme Court Cases, Madras Law Journal, International Journal of Trade in Services, and Indian Journal of Human Rights and Social Justice. Since graduating from law school, she has judged various national and international moot court competitions and continues to publish articles in reputed journals.

Arya TripathyPSA 14 A&B Hansalaya 15 Barakhamba Road New Delhi 110001 India

Tel: +91 11 4350 0521Email: [email protected]: www.psalegal.com


Chapter 13

Makarim & Taira S.

Alexandra Gerungan

Hendrik Alfian Pasaribu

Indonesia

assesses environmental documents and provides input and basic considerations for decision-making and the environmental feasibility of business/activities to the MOE, Governors, or Regents/Mayors. The National Water Resources Board formulates national regulations and management strategies for water resources, and provides considerations for the determination of river areas and groundwater basins and their control and evaluation. The MOE has quite recently established a Security and Law Enforcement for the Environment and Forests Unit, the activities of which are aimed at reducing interference, threats and violations of environment and forestry law.


Under the Environmental Law, everyone has the right to access data or information related to environmental protection and management, which according to its nature and objectives is open to the public. This includes environmental impact analysis documents, reports and the evaluation of the results of environmental monitoring, whether for compliance or changes in the quality of the environment and layout plan. The Environmental Law requires the MOE, Governors or Regents/Mayors, according to their respective authorities, to publish every application and environmental licence decision and organise public participation, especially to provide an opportunity to raise objections in hearings, which are part of the environmental permit decision-making process.Under the Environmental Law and MOE Regulation No. 6 of 2011, the MOE has an integral and coordinated environmental public information system to publish information as per requests from the public and to publish such information on among other places, the official website of the MOE and notice boards.



An environmental licence is required in order to obtain a business licence for any business activities of which require an AMDAL or Environmental Management and Monitoring Program (“UKL–UPL”). Under the Environmental Law and MOE Regulation No. 5 of 2012, the criteria for business activities that require an AMDAL include those that cause changes to the formation of the land and



Environmental protection in Indonesia is principally regulated by Law No. 32 of 2009 on The Management and Protection of the Environment (“Environmental Law”). Under the Law on Regional Governments (Law No. 23 of 2014 as lastly amended by Law No. 9 of 2015), which grants regional autonomy to regional Governments, including with regard to the protection of the environment, implementing regulations of the Environmental Law are formulated at national as well as regional level.The Environmental Law is primarily administered and enforced by the Ministry of the Environment (“MOE”), Governors, and Regents/Mayors according to their respective authorities. Other institutions have also been established to deal with specific issues related to the protection of the environment, for example, the Regional Environmental Management Agency (“BPLHD”) for regional control, the AMDAL Appraisal Commission for administering environmental impact assessments (“AMDAL”), the National Water Resources Board (Dewan Sumber Daya Air) for water resource control, and the Security and Law Enforcement Centre for the Environment and Forests (Balai Pengamanan dan Penegakan Hukum Lingkungan Hidup dan Kehutanan).


For the purposes of, among other things, protecting and managing the environment, and supervising compliance by parties responsible for businesses and/or activities in their areas with the relevant regulations on the protection and management of the environment and with their environmental licences, the MOE, Governors, and Regents/Mayors according to their respective authorities, may appoint environmental supervision officials from among the civil servants of the technical institutions responsible for environmental matters. Each province and regency/municipality has its own technical institution in charge of environmental matters in the region. For example, the BPLHD, established at provincial or regency/municipal level, monitors and controls activities that may damage the environment, implements environmental policies formulated by the MOE, and issues warnings to parties violating the environmental regulations. The AMDAL Appraisal Commission


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landscape, exploit natural resources, whether renewable or non-renewable, could potentially cause environmental pollution and/or damage as well as squander and degrade natural resources in their utilisation, and/or apply technology predicted to have a significant potential to influence the environment. A UKL–UPL is required for, among others, business activities which do not meet the criteria for the requirement to have an AMDAL, or which are not located in and/or directly adjacent to a protected area.Under Government Regulation (“GR”) No. 27 of 2012, in the event of a change of ownership of a business, the environmental licence may be transferred from the initial owner to its successor by submitting an application for an amendment to the existing environmental licence to the MOE, Governor or Regent/Mayor, according to their respective authorities.


The environmental regulations do not provide a right of appeal against such decisions. However, under the Law on The Administrative Courts (Law No. 5 of 1986 as amended by Law No. 51 of 2009), decisions of State administrative officials that are concrete, individual, and final, from which legal consequences arise, can constitute the grounds for a lawsuit in the administrative courts. Therefore, a decision by an environmental regulator not to grant an environmental licence may be brought to the administrative court. MOE Regulation No. 17 of 2012 allows anyone to file a lawsuit in the State administrative court against a decision on an environmental licence.


Any business/activity likely to have a significant impact on the environment requires an environmental impact assessment (“AMDAL”). Polluting industries or installations/projects therefore require an AMDAL. The criteria for a significant impact and the types of business activities which require an AMDAL are provided in MOE Regulation No. 5 of 2012 (as explained in the answer to question 2.1 above). An Environmental Audit to evaluate compliance with Government requirements and policies is only required for certain ‘high-risk’ business activities (e.g., petrochemical, oil and gas refineries, and nuclear power plants) and in the event of non-compliance with the regulations. The procedure for conducting an Environmental Audit is provided in MOE Regulation No. 3 of 2013 on Environmental Audits.


Administrative sanctions may be imposed for violations of environmental licences. These include written warnings, compulsory action (including the suspension of production or all business activities, the cancellation of production facilities, the closure of waste water or emission disposal tunnels, the demolition or confiscation of goods or equipment that could potentially lead to violations, and other actions aimed at halting the violation and restoring the environmental function) and the suspension of, or revocation of, an environmental licence. Repairing any damage caused to the environment may also be required.

3 Waste


The Environmental Law divides waste into: (a) residue of a business activity; and (b) hazardous and toxic (“B3”) Waste that is the residue of a business activity containing substances, energy and/or other components which, due to their nature, concentration and/or quantity can both directly and indirectly pollute and/or damage the environment, public health and the sustainability of human and other life forms. The Environmental Law requires all producers of B3 Waste or expired B3 materials to manage the B3 Waste and to hold a licence from the MOE, Governor and/or Regent/Mayor according to their respective authorities. Further, according to GR No. 101 of 2014 (“GR 101/2014”), B3 Waste producers must implement B3 Waste management, including the reduction, storage, collection, transport, utilisation, processing, and/or disposal of B3 Waste. GR 101/2014 divides B3 Waste into 2 (two) categories based on its risk: (i) B3 Waste which is acute and has a direct impact on humans and certainly will have a negative impact on the environment (“B3 Waste Category 1”); and (ii) B3 Waste which has a delayed effect and has an indirect impact on humans and the environment and sub-chronic or chronic toxicity (“B3 Waste Category 2”). According to its sources, B3 Waste consists of: (i) B3 Waste from non-specific sources; (ii) B3 Waste from expired B3, spilled B3, B3 which does not meet the specifications of the products to be discarded and former B3 packaging; and (iii) B3 Waste from specific sources which are either specific general sources or specific special sources.


Under GR 101/2014, producers of B3 Waste may store up to 50 kg (fifty kilograms) of B3 Waste per day for up to 90 (ninety) days after production. If the B3 Waste produced is less than 50 kg (fifty kilograms) per day, the producer may store the B3 Waste for 180 (one hundred and eighty) days after production for Category 1 B3 Waste, and 365 (three hundred and sixty-five) days after production for Category 2 B3 Waste from non-specific sources and specific general sources. For Category 2 B3 Waste from specific special sources, the producer may store the B3 Waste for 365 (three hundred and sixty-five) days after production. Producers must have a B3 Waste Management Licence to store B3 Waste. The licence is valid for 5 (five) years and can be extended.


Under GR 101/2014, transferring B3 Waste to another party for disposal/treatment off-site does not reduce the responsibility of the producer for the management of the B3 Waste it produces. Therefore, the producer retains residual liability for its B3 Waste.


GR 101/2014 obliges B3 Waste producers to implement B3 Waste management, including its reduction, storage, collection, transport,


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utilisation, processing and disposal, and hold the licences required for these activities. The aims of these activities are to eliminate or reduce the risks that may arise from B3 Waste and reduce B3 Waste dumping, as a last resort. If a B3 Waste producer cannot do so, it may assign its B3 Waste collection, utilisation, processing and disposal to another party which has the relevant licence. However, B3 Waste producers remain liable for the B3 Waste they produce even after it has been transferred and/or exported to a third party to be disposed of or managed.

4 Liabilities


The Environmental Law has a strict liability provision which applies to any party engaged in a business activity using B3 Waste, producing and/or managing B3 Waste and/or causing a serious threat to the environment under which it is fully responsible for any damage without the plaintiff having to prove that that party was at fault.The defendant may argue that the compensation which can be sought should be limited to a certain amount under MOE Regulation No. 7 of 2014 on Compensation for Contamination and/or Damage to the Environment (“MOE Regulation 7/2014”) as the guideline for calculating the compensation and the remedial action that must be taken.


The Environmental Law applies the strict liability principle, which means that even if the person found liable was not at fault or negligent, he/she can be held liable for the environmental damage which occurred.


Under the Environmental Law, criminal sanctions may be imposed on the business entity and/or person who gave the order or acted as the leader in a crime committed by, for, or on behalf of, a business entity. If the crime was committed on the orders of a director or other company officer, he/she may be held liable. MOE Regulation No. 18 of 2009 (“MOE Regulation 18/2009”) requires companies whose main activity is B3 Waste management to have environmental insurance cover of at least IDR5 billion. Directors and other officers may have insurance only for B3 Waste management.


Regardless of a share sale, environmental liability remains with the company, unless it can be proved that the purchaser intervened by giving the order or leading the activity that led to environmental liability for, or on behalf of, the company. A purchaser of assets will not be held liable for any environmental damage caused by the company. The liability may be transferred to the purchaser if it is acknowledged in the sale and purchase agreement.


Under the Environmental Law, liability for the environmental wrongdoing committed by a business entity is held by the business entity and/or the person who gave the order or acted as the leader of any crime committed by, for, or on behalf of a business entity. Lenders may only be held liable for the environmental wrongdoing or any remediation costs to the extent set forth in the loan agreements.

5 Contaminated Land


Under the Environmental Law, a party guilty of contaminating the soil or groundwater may be required to perform certain actions and/or pay compensation. These actions may include the recovery of the pollution and/or destruction, taking certain actions to guarantee that there will be no recurring pollution or destruction, and taking certain actions to prevent negative impacts on the environment.


The liability is allocated through a court decision or a consent reached by agreement among the disputing parties through the environmental dispute resolution mechanism.


Once the parties enter into a remediated settlement agreement outside the courts, they must register the settlement agreement with the district court to obtain a deed of settlement which is legally enforceable. Neither party, nor any third party can then challenge the agreement.


Anyone who suffers a loss because of contamination by a previous owner or occupier has the right to take action to seek compensation. Under the Environmental Law, the polluter is responsible for managing the land contaminated by the B3 Waste it produced. Therefore, liability cannot be transferred to the purchaser, unless the purchaser acknowledges the B3 Waste risk in the sale and purchase agreement.


Yes, under MOE Regulation 7/2014, aesthetics are one of the factors used to calculate the compensation to be paid to the Government.


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Under the Environmental Law, environmental supervision officials appointed by the MOE, Governors, and Regents/Mayors have the authority and power to monitor and inspect equipment and take samples and photographs. This is to ensure compliance by all parties whose businesses or activities are covered by the environmental and management regulations.



Under the Environmental Law, reporting is a person’s right, not an obligation. Everyone has the right to report alleged pollution and/or damage to the environment to the Minister, the Governor, Regent/Mayor, or Head of the local Government agency responsible for the environment.


Under the Environmental Law, the police or civil servant investigators will investigate an alleged environmental crime upon receipt of a report. They will then summon the complainant and the suspect, followed by the witnesses and experts to explain all the facts and provide relevant evidence before deciding whether to prosecute.


There is no specific requirement under Law No. 40 of 2007 on Limited Liability Companies (the “Company Law”) for a seller to disclose environmental problems to a prospective purchaser. However, companies conducting a merger and/or takeover are required to disclose any issues which have affected their activities during the current book year. These may include environmental problems.

8 General


In principle, the person responsible for the business or activity which caused the pollution or damage to the environment must pay damages and/or take remedial action, and is also liable to criminal sanctions. In a contract, the seller and purchaser may agree to

limit their exposure to environmental liability. However, criminal sanctions may still be imposed on the companies for environmental crimes.


Neither sheltering environmental liabilities off balance sheet, nor escaping environmental liabilities through the dissolution of the company is possible. Under the Environmental Law, damages must be paid by a business for any damage to the environment or pollution caused by its activities. It must also take remedial action, and could be liable to criminal sanctions.


Under the Environmental Law, for corporate crimes (crimes committed by, for, or on behalf of a business entity), the sanctions are imposed on the entity (represented by its management duly authorised to act on its behalf) and/or the person(s) who issued the instruction to commit the crime or acted as the leader in the crime. Additional sanctions may be imposed on companies, such as closing the company down or halting the activity (completely or partly) and the imposition of the obligation to remedy the effects of the crime or to repair any environmental damage. Therefore, a shareholder cannot be held liable for breaches of the Environmental Law and neither can the parent company.


There is no specific regulation regarding the protection of whistle-blowers in an environmental violation. However, under Supreme Court Regulation No. 4 of 2011, some protection of whistle-blowers is provided for crimes such as corruption, money laundering, drug trafficking, terrorism, human trafficking and other organised crimes.


Yes, according to Article 91 of the Environmental Law, communities have a right to file a class action on their own behalf and/or for the benefit of the community, for any losses suffered due to pollution and/or damage to the environment. The procedure for a class action is provided in Supreme Court Regulation No. 1 of 2002. Under the Environmental Law, penal or exemplary damages are available and may be imposed for certain environmental crimes.


Under Law No. 48 of 2009 on The Powers of the Judiciary, claimants may request exemptions from liability to pay court costs when pursuing litigation. If the claimant does not have the economic resources to pay the costs, they will be paid by the State.


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10 Asbestos


Since Indonesia does not prohibit asbestos, there has been no asbestos litigation to date.


Under Minister of Manpower Decree No. 3 of 1985, the management of a business entity (i.e. the employer) using asbestos (or any B3) must provide its workers with protective equipment (clothing). It must also measure asbestos dust particles in the air in the work environment every three months or with a certain frequency. A proper ventilation system must be installed in every work area/room and is subject to inspection every three months. The results of these inspections must be kept on file for at least three years. Under MOE Regulation 63/2016, asbestos waste must be disposed of by spreading it out evenly on the ground and covering it with earth up to a depth of at least 25cm (twenty-five centimetres) or in some other appropriate way.



Only one type of environmental insurance to cover the impact of B3 Waste is available in Indonesia. This is mandatory under MOE 18/2009 which requires any company whose main activity is managing and/or processing B3 Waste which does not originate from its own activity to have environmental insurance cover for its B3 Waste management. According to Central Statistical Agency data, in 2014, there were 83 (eighty-three) loss insurance companies in Indonesia. However, only a few of them provide environmental insurance in the market.


Unfortunately, we know of no environmental insurance claims having been submitted in Indonesia. Since the Environmental Law is relatively new, there is no precedent for environmental insurance claims to date.

12 Updates


In 2016, the North Jakarta District Court ruled on a civil case between the MOE (as the Plaintiff) and PT Jatim Jaya Perkasa (as the Defendant) related to a plantation fire in the Defendant’s oil palm plantation area. The MOE claimed compensation in the amount of




Indonesia implements the clean development mechanism (“CDM”), which generates emission credits through projects that reduce greenhouse gas emissions in various sectors. The CDM is one of the mechanisms under the Kyoto Protocol, which will expire in 2020. A Presidential Regulation on The State Action Plan to Reduce the Greenhouse Effect was issued in 2011 and specifies various activities which may directly or indirectly reduce the greenhouse effect in agriculture, energy and transportation, forestry and peat land areas, industrial areas and waste management, as well as how to monitor and report greenhouse gas emissions. In order to reduce greenhouse gas emissions and mitigate climate change, the Indonesian Government also has a programme called Reducing Emissions from Deforestation and Forest Degradation Plus (“REDD+”). REDD+ has gained a lot of momentum in Indonesia, particularly after the Government signed a letter of intent (“LoI”) with Norway in 2010. In 2015, Presidential Regulation No. 16/2015 was issued under which BP REDD+ and the National Council on Climate Change (“DNPI”) is integrated into the Ministry of the Environment and Forestry. MOE has now issued the guidelines for preparing the climate change adaptation action.


Various CDM-related regulations have been issued for the relevant sectors, such as energy, power-generation and forestry. For example, Ministry of Forestry Regulation No. P.14/Menhut-II/2004 provides the procedure for afforestation and reforestation to achieve the purposes of the CDM. MOE Decree No. 206 of 2005 established a National Commission on the Clean Development Mechanism whose main role is to approve proposed CDM projects if they meet the national sustainable development criteria and to monitor and evaluate progress in each project.


The primary overall policy approach is to reduce the greenhouse effect, as shown in the State Action Plan to Reduce the Greenhouse Effect. Indonesia has also ratified the United Nations Framework Convention on Climate Change (under Law No. 6 of 1994) and the Kyoto Protocol (under Law No. 17 of 2004). Since ratifying these two conventions, under the Environmental Law, the Government, through the MOE, has the duty to identify greenhouse gas emissions. Law No. 31 of 2009 on Meteorology, Climatology, and Geophysics requires the identification of greenhouse gas emissions to formulate policies on climate change. The MOE has also issued the guidelines for preparing the climate change adaptation action. The MOE has also established a Control for Climate Change and Land and Forest Fire Unit which, among other things, facilitates the mitigation of climate change, inventory of greenhouse gases and the evaluation and reporting of local action plans in reducing greenhouse gases.


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Established in 1980 by two Harvard graduates, Nono Anwar Makarim and Frank Taira Supit, Makarim & Taira S. is a leading business law firm in Indonesia offering a full range of corporate, banking, litigation and specialist legal services to national and international clients. Our long-standing reputation with policymakers, regulators, state-owned companies and leading industry groups provides us with important insights into the latest Government policies and industry positions. The firm has received recognition in a number of leading international legal guides and surveys by advising many clients on innovative deals. We are committed to providing excellent service in a timely and commercially-oriented manner. From the initial foreign investment decision to the establishment and operation of a successful Indonesian business, from dispute resolution to M&A, the firm has long become the favoured, trusted Indonesian counsel in providing practical solutions and advice on every aspect of doing business in Indonesia.

Alexandra Gerungan is a Partner dealing with litigation/dispute resolution at Makarim & Taira S. She has successfully handled litigation and dispute resolution cases across highly diverse sectors.

Her experience ranges from civil lawsuits to arbitration; alternative dispute resolution; anti-corruption investigation; employment issues; land/property cases; insurance, banking and future exchange claims/disputes; police investigations (for example, related to allegations of forestry and environmental crimes); and internal/independent investigations. She also advises on related matters such as due diligence and general investigations, liquidation, bankruptcy/suspension of payment, and land/property issues.

Drawing on her experience, she is moreover able to advise clients on transaction structures, agreements and general business practices with a view to preventing the emergence of future disputes or issues.

Alexandra is a frequent contributor to and a co-author of various reports, articles and publications on litigation, arbitration, alternate dispute resolution, environment matters, rule of law, compliance issues and labour law. Her articles have appeared internationally in publications by LawBusinessResearch, GlobalLegalGroupand World JusticeProject. She has also been invited as a speaker for seminars and workshops on litigation, arbitration, dispute settlement alternatives and insolvency.

Alexandra GerunganMakarim & Taira S.Summitmas I, 16th–17th FloorsJl. Jenderal Sudirman Kav. 61–62Jakarta 12190Indonesia

Tel: +62 21 5080 8300 / 252 1272Email: [email protected]: www.makarim.com

Hendrik is an Associate in the Firm’s Corporate Commercial and Litigation groups. Hendrik has been involved in various general corporate matters including a power project in connection with land acquisitions in Central Java. Hendrik also has extensive experience in assisting clients in litigation and dispute resolution.

HendrikAlfianPasaribuMakarim & Taira S.Summitmas I, 16th–17th FloorsJl. Jenderal Sudirman Kav. 61–62Jakarta 12190Indonesia

Tel: +62 21 5080 8300 / 252 1272Email: [email protected]: www.makarim.com

AcknowledgmentThe authors wish to acknowledge the assistance and contribution of their colleague and co-author, Raditya Anugerah Titus, in the writing of this chapter. Raditya is an Associate in the Firm’s Corporate and Commercial and Litigation and Dispute Resolutions groups. His practice focuses on litigation and dispute resolution, as well as employment and power projects. Tel: +62 21 5080 8300, 252 1272 / Email: [email protected].

approximately IDR490 billion due to the fire in the Defendant’s plantation area. The panel of judges accepted the Plaintiff’s claim partially on the grounds that the total area of the plantation fire claimed by MOE was not correct and therefore the POJ granted the ruling based on their considerations. The POJ instructed PT Jatim Jaya Perkasa to pay approximately IDR7.2 billion in compensation and approximately IDR23 billion for recovery costs. In 2017, the DKI Jakarta High Court ruled on the appeal filed by the MOE. In the ruling, the POJ accepted the Plaintiff’s claim partially and imposed a higher sanction on the Defendant. The POJ instructed PT Jatim Jaya Perkasa to pay IDR119,888,500,000 to the MOE for material compensation and IDR371,137,000,000 for recovery costs of the burning land of 1,000 Ha.



Chapter 14

McCann FitzGerald

Rachel Dolan

Sinéad Martyn

Ireland

The EPA has a national priority sites methodology for determining which licensed sites are an enforcement priority. This new reporting/enforcement tool is principally based on a site’s licence compliance and enforcement history. Priority lists have been used by the OEE for a number of years now in order to focus resources on underperforming sites. The EPA issues notifications to licensed sites when they are on the priority sites list. The national priority sites list is updated by the EPA on a quarterly basis.


Public authorities are obliged by legislative provisions to provide such information to interested parties, and in certain cases, to the public generally. The obligation relating to information on the environment arises pursuant to the European Communities (Access to Information on the Environment) Regulations 2007 (S.I. 133/2007) as amended by the European Communities (Access to Information on the Environment) Regulations 2011 (S.I. 662 of 2011) and the European Communities (Access to Information on the Environment) Regulations 2014 (S.I. 615 of 2014), which transpose Directive 2003/4 EC into Irish law. A public authority has the discretion to refuse a request on certain grounds, including commercial or industrial confidentiality or intellectual property rights. In addition to the above, there exists “freedom of information” legislation, requiring the provision of information generally to the public in relation to activities of public authorities.



The EPA, local authorities and Irish Water will issue permits to persons intending to discharge emissions into the environment during the course of their activities or business. Depending on the nature of the activity and the emission or discharge, a person will make an application for an Industrial Emissions Licence (“IE Licence”), an Integrated Pollution Control Licence (“IPC Licence”), a greenhouse gas emissions permit (“GHG Permit”), a waste licence to the EPA, an application for an air pollution licence or waste permit to the local authority, or a trade effluent discharge licence to Irish Water.



Environmental policy in Ireland is largely driven by, and derived from, EU policy on the environment, and is developed locally by the Department of Communications, Climate Action and Environment and the Department of Housing, Planning and Local Government. Environmental law in Ireland is administered, regulated and enforced mainly by local authorities, such as County Councils, and by the Environmental Protection Agency (“EPA”). Water services functions of local authorities (including prosecutorial powers in respect of certain water services matters) were transferred to Irish Water, a semi-state company established in 2013.Local authorities deal with planning matters, including the grant of permission (also including conditions for minor environmental matters) for day-to-day development, subject to appeal to An Bord Pleanála (“ABP”). More significant development consent applications are made directly to ABP. The EPA licenses major industry (in addition to any other development consents required) purely with regard to environmental discharges, emissions and waste handling.Environmental enforcement in general is undertaken by local authorities and the EPA; however, members of the public (and therefore NGOs) can themselves enforce the legislation (and in many cases do so).


In Ireland, regulatory agencies will act either by way of statutory notice requiring compliance and/or ultimately by prosecution of the offender. In the case of local authorities and Irish Water, they will generally (depending on the legislation in question) issue warning letters followed by enforcement notices which, if not complied with, may then be followed by legal proceedings, including criminal prosecution. Similarly, the EPA, which has a separate enforcement arm called the Office of Environmental Enforcement (“OEE”), will, in the event of non-compliance with environmental laws and depending on the urgency of the matter, issue a warning, followed, if necessary, by enforcement action.


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McCann FitzGerald Ireland

Depending on its nature, a permit can usually be transferred from one person to another. Prior to the transfer of an IE Licence, an IPC Licence, a waste licence or a GHG Permit, the consent/approval of the EPA will be required. It is generally advisable for water, air and waste permit holders to liaise with the relevant regulatory authority informing them of the change of permit details.


A decision of a local authority or Irish Water in relation to water and air pollution permits can be appealed to ABP and can be subject to judicial review. Decisions of a local authority in relation to waste collection permits may be appealed to the District Court, and appeals in relation to certificates of registration and waste facility permits are made to the court of competent jurisdiction. Prior to the granting of an IE Licence, an IPC Licence, GHG Permit or waste licence, the EPA will issue a proposed decision on the permit/licence application and an applicant or other relevant person can make an objection to the EPA within eight weeks. Once a final permit has been granted, the decision of the EPA can be judicially reviewed on points of procedure in the High Court within eight weeks of the decision.


Typically, an ongoing environmental auditing procedure will apply as part of an environmental management system and the monitoring and reporting procedure set out in the conditions of a permit.Under Directive 2011/92/EU (as amended by Directive 2014/52/EU), and Ireland’s planning legislation generally, an environmental impact assessment (an “EIA”) is required at the development stage of all projects that are likely to have a significant impact on the environment. In addition, an appropriate assessment pursuant to the Habitats Directive may be required where a project is likely to have a significant effect on a European Site (i.e. special protection area or special area of conservation).Following the decision of the European Court of Justice in Commission v Ireland [case C-50/09], Ireland introduced new sets of Regulations in order to remedy various defects in Ireland’s EIA legislation and EIAs are generally incorporated into specific statutory schemes, e.g. planning, waste and IE Licensing.


Environmental regulators have extensive powers under environmental legislation to take the necessary steps to remedy breaches of environmental permits. A regulator will usually issue a notice in the first instance calling on a non-compliant person to remedy the breach. Failure to comply with a notice is an offence and the regulator can prosecute a person for such failure. The nature of any fine imposed will depend on the breach, but environmental legislation provides for maximum fines of up to €15,000,000 and/or imprisonment of up to 10 years. The regulator can also take steps to remedy a breach itself and seek to recover the cost from the permit holder, or the owner or occupier of the site where the breach

occurred. Where there is a persistent and serious breach of a permit, a regulator can carry out a review or revoke or suspend a permit or licence. See question 1.1 above regarding enforcement by members of the public.

3 Waste


The Waste Management Acts 1996 to 2011 (“WMA”) define waste as any substance or object which the holder discards or intends or is required to discard. The definition excludes various gaseous effluents, unexcavated contaminated soil, certain non-hazardous agricultural and forestry materials. It also excludes uncontaminated soil, which is to be used for the purpose of construction on the site from which it was excavated. By-products are no longer classed as waste and when waste can cease to be waste, having undergone a recovery process, has been clarified. Pursuant to the European Union (Industrial Emissions) Regulations 2013, certain categories of waste activity which fall under the First Schedule are now licensed by the EPA under an IE Licence and are associated with another IE Licensable activity. There are certain categories of waste which involve additional duties or controls, including hazardous waste, waste oils, bio-waste, batteries, tyres, end-of-life vehicles and waste electrical and electronic equipment (“WEEE”).


Certain waste can be stored on a temporary basis for up to six months, provided that a certificate of registration is obtained. The original waste producer or other waste holder must be authorised to dispose of waste and must carry out the treatment of the waste in accordance with the waste hierarchy and so as not to cause or facilitate the abandonment or dumping of waste or the transport, recovery or disposal of that waste in a manner that causes or is likely to cause environmental pollution.


The WMA places a duty on a waste producer/holder to only transfer waste to an “appropriate person”, being a person authorised to undertake the collection, recovery or disposal of the class of waste in question. After the waste is transferred, the person who has taken possession of the waste becomes a waste holder and, as such, there is an unbroken chain of responsibility. Provided that the original waste producer has transferred the waste to another person in accordance with the provisions of the WMA (save where the transfer is for preliminary treatment only), the original waste producer will not retain any residual liability. However, if waste is transferred other than in accordance with the WMA, in accordance with the “polluter pays” principle, the costs of waste management may be borne by the original waste producer, in addition to any other holder of the waste.


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Take-back and recovery obligations are imposed on waste producers (including retailers, importers and manufacturers) of certain streams of waste, including batteries, end-of-life vehicles, tyres, WEEE, packaging waste and farm plastics. There are a number of approved schemes for the collection and recovery of such waste.

4 Liabilities


Where there is a breach of environmental law and/or a permit, liability can arise in both criminal law and/or civil law. A breach of criminal law arises where a person breaches statutory duty, fails to comply with a direction and/or fails to comply with permit conditions. Depending on the nature of the breach, a person may be liable on prosecution for a fine and/or a term of imprisonment and any cost of clean-up and remediation required. Civil liability can arise where there is a claim for damages for breach of statutory duty, negligence, trespass or nuisance and a claim for damages would include a claim for any loss, costs and expenses, including the cost of remediation. See question 1.2 above.Typically, it would be a defence to show that the activity alleged to constitute a breach was carried out in accordance with the permit or licence conditions and/or that a person was not responsible for causing or permitting the breach (including an act of God) and/or they used reasonable care to prevent the breach. Environmental breaches are typically strict liability offences, meaning that proof of the intention of the person is not required. The expression “causing or permitting” is widely defined and if an activity or premises is in the control of a person (being an owner or occupier) and a breach of law or of permit conditions occurs, that can be sufficient to render a person liable.


Notwithstanding the permit defence in question 4.1 above, an operator could be liable at common law for the torts of breach of statutory duty, negligence, trespass and nuisance, regardless of the fact that the polluting activity is operated within the permit limits. An operator can also be liable under the European Communities (Environmental Liability) Regulations 2008 to 2015 (the “Environmental Liability Regulations”), where it fails to comply with a direction from the EPA to remedy or prevent an imminent threat of environmental damage.


Yes, although usually it would have to be shown that the director or officer was in control of and/or had knowledge of the breach and it arose due to an act or omission on their part. It is possible for directors to get insurance cover against civil liabilities but not against criminal liabilities. See Section 11 below.


In a share sale, all of the liabilities, both past and present, transfer on closing. In an asset purchase, only the asset transfers. Therefore, in an asset transfer, the liability for environmental issues is limited to those that relate specifically to the asset transferred and this, of course, could carry a risk of future liability for the cost of the clean-up and remediation of a contaminated site.


The law in relation to lender liability in Ireland is unclear. However, there is a risk that if a lender (in enforcing its security) has control over or participates in the activity and decision-making which causes or permits a breach of environmental law, it may incur liability.

5 Contaminated Land


The law in Ireland is fragmented and there is no specific legislation which addresses contaminated land. In general, the liability for contamination to land lies with the owner or occupier of the land. The “polluter pays” principle applies to water and air where liability lies with the person who caused or permitted the pollution. Liability for waste management lies with the original waste producer, and the current and/or previous waste holders. Environmental clean-up is mandatory where a party breaches the provisions of the Environmental Protection Agency Acts 1992 to 2011 (“EPA Acts”), the WMA and the Water Services Act, 2007 to 2014 (“Water Services Act”). Sections 55 to 58 of the WMA are particularly relevant and may require that a person who is holding, recovering or disposing of waste be liable for the costs of clean-up and any costs incurred by the relevant regulatory authority in investigating an incident. A person found guilty of an offence under the WMA, the EPA Acts or the Water Services Act may face criminal prosecution (see questions 1.2 and 2.4 above). In addition to the common law obligations, there is a statutory civil liability where water or air contamination causes injury, loss or damage to a person or a person’s property. Larger installations are likely to be subject to the IE licensing regime. Where a development is proposed on contaminated land, the regulatory authority may make remediation of the site a condition to the grant of planning permission, licence or permit. There are also powers under legislation regarding derelict sites. With regard to historic contamination of soil, unless the contamination is at risk of moving off-site and causing a threat to the environment, there would generally be no obligation to disclose such contamination or to do anything with the site in that respect.


Where there is more than one person responsible, they will be jointly and severally liable and any decision of the courts may be enforced in full against any of those found to be responsible.


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A regulator could come back and require additional works. This would arise in the context of any agreement and they would reserve their rights to do so. An agreement could be deemed to constitute an act or decision by the authority which could be judicially reviewed. Where a review is sought, the courts will review the decision-making process and not the merits of the decision.


The general rule in property transactions is “caveat emptor” (buyer beware). The purchaser must satisfy itself as to the condition of the property and is not entitled to any redress from the seller unless it can show a misrepresentation or a breach of any agreed warranty. The authorities may still pursue the previous owner for any offences it committed during its period of ownership, subject to any limitation periods.


The relevant authorities are entitled to claim general damages. The courts may also impose fines. The definition of environmental damage has been expanded under the Environmental Liability Directive, which has been transposed into Irish law.



Under environmental legislation in Ireland, regulators have extensive powers to issue notices, make directions, order the production of documents, take samples, conduct site inspections and carry out investigations into breaches of the statutory code.



Environmental legislation specifically provides that a person must disclose pollution to an environmental regulator when it is migrating off-site. Specific reporting provisions are set out under the IE and IPC licensing regime, water pollution and waste legislation. An operator is also obliged under the Environmental Liability Regulations to notify the EPA where there is an imminent threat of environmental damage.


A person has an affirmative obligation to investigate land for contamination where there is an imminent threat of environmental damage. If there was a risk that land contamination was migrating off-site and/or polluting groundwater, there could be a threat of environmental damage. Even if there was historical contamination but no threat of environmental damage exists, there is no obligation to investigate for land contamination.


There are no specific statutory provisions that require the disclosure of environmental problems by a seller to a purchaser. A purchaser typically raises pre-contract enquiries, requisitions on title and carries out a due diligence exercise which assists in identifying any environmental problems. Subsequent disclosure and negotiation of warranties may also identify environmental issues.

8 General


The use of environmental indemnities is possible and is often used in commercial transactions such as mergers or acquisitions in order to limit exposure for environmental liabilities. However, payment under such an indemnity would not prevent criminal sanction following prosecution by regulatory authorities as those authorities would not (and could not) be bound by the indemnity. With regard to other third parties, they would be free to pursue either or both parties for environmental damage.


Although it is possible to hold contaminated land or a manufacturing site in a separate corporate entity, this will not necessarily achieve the desired result, as the directors and officers of that entity may well have personal criminal liability in respect of the environmental liabilities. See question 4.3 above. It is not possible to transfer a waste licence granted to an operator under the WMA by private arrangement as that licence is personal to the licensee and is not transferable. Subject to the above comments, particularly in relation to liability of directors, officers and possibly others in a company, the dissolution of a company holding a polluting asset could result in environmental liability being borne by the State. However, depending on the precise circumstances of the case, if contamination by waste materials was involved (the most common situation) and if the directors or indeed shareholders of the dissolved company were themselves responsible for the polluting activities, then aside from criminal prosecution, they could possibly be held responsible for remediation costs in civil law.


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Although highly unlikely in normal circumstances, under Ireland’s legislative regime on waste and, in particular, Section 9(2) of the WMA, a company shareholder can (in limited situations) be held liable for the pollution caused by the company. This could arise in circumstances where the shareholder was in effective control of the company’s non-compliant actions.There is no provision of Irish law expressly permitting a parent company to be pursued in respect of pollution caused by its foreign subsidiary or affiliate. However, if the parent company has provided a parent company guarantee in respect of the environmental obligations of the subsidiary, the parent company will have an obligation under that instrument to either pay or remedy damage and could be sued on foot of it.


Yes, the Protected Disclosures Act, 2014 (the “2014 Act”) came into law in July 2014. The objective of the 2014 Act is to enable employees and contractors to make disclosures which are in the public interest without the fear of being identified. The 2014 Act also provides “whistle-blowers” with protection from victimisation and most civil proceedings.


There are certain types of “class action” available in this jurisdiction. However, they are so limited as to be virtually useless. There is very limited provision for exemplary or penal damages in Irish law. While there have been very few awards of exemplary or “punitive” damages by the Irish courts, they have shown themselves willing to make such awards if the circumstances demand it.


Generally, the costs of proceedings are at the discretion of the court and usually costs are said to “follow the event” – i.e. the losing side is liable to pay the costs of the other side. However, judicial discretion in judicial review cases concerned with specific environmental matters has been limited by the introduction of Section 50B of the Planning and Development Acts 2000 to 2017 (the “Planning Acts”) and further amended by s. 21 of the Environment (Miscellaneous Provisions) Act, 2011 (the “2011 Act”) whereby in certain circumstances each party to the proceedings must bear its own costs. The court may award costs to an applicant to the extent that it is successful in its application. The court may order costs against a party (including an applicant) where a claim is vexatious, the party mis-conducted itself or is in contempt. In addition, the court is entitled to award costs in favour of a party in a matter of exceptional public importance and where it is in the interests of justice to do so. This favours NGOs or those challenging decisions in circumstances where they would not otherwise have been entitled to recovery of their costs.



Ireland is part of the EU Emissions Trading Scheme (“ETS”). The ETS covers various types of high emission stationary installations, including power stations, combustion plants and oil refineries. The aim of the ETS is to help EU Member States achieve their commitments to limit or reduce greenhouse gas emissions in a cost-effective way. In 2012, the ETS was extended to include certain aircraft flying from, to or within the EU. The national emission trading registry is required to be maintained and this is done by the EPA. The ETS was launched on 1 January 2005 and has now entered its third phase, which will run from 2013 until 2020. The main changes in the third phase include: (i) a single, EU-wide cap on emissions, in place of 27 national caps; (ii) auctioning free allocation, now being the default method for allocating allowances; (iii) for those allowances still given away for free, new harmonised allocation rules will apply; and (iv) additional sectors and gases are included in the third phase.


GHG Permits are regulated in Ireland under the European Communities (Greenhouse Gas Emissions Trading) Regulations 2012, as amended (the “2012 Regulations”). The 2012 Regulations implement the ETS in Ireland.Aside from obligations arising under the ETS, domestic legislation, in particular the EPA Acts and the Air Pollution Acts 1987 and 2011 (the “Air Pollution Acts”), provide certain requirements to monitor and report emissions (i.e. an emission of a pollutant into the atmosphere). Under the EPA Acts, IE and IPC Licences are required for, but not limited to, any activity which releases emissions. The EPA will not grant an IE Licence or an IPC Licence unless it is satisfied that the emissions released will not contravene a relevant standard or cause significant environmental pollution. Conditions can be attached to these licences, which may include specifying the means of controlling and monitoring the emissions. Under the Air Pollution Acts, a local authority has the power to grant a licence to operate an industrial plant and such a licence will only be granted if, amongst other things, the emissions from that plant will comply with any relevant emission limit value, which will be specified by the local authority dependent on the class of emission. In addition, the local authorities have the power to carry out monitoring of air quality and the nature and effect of emissions as they deem necessary, or as directed by the Minister for Housing, Planning and Local Government. The Air Pollution Acts also require the EPA to establish a fuels register of persons who produce, treat, import, place on the market, distribute, store or sell fuel of any type or description, or who carry on any combination of those activities.


The Climate Action and Low Carbon Development Act was enacted in December 2015 (the “Climate Act”). The Act provides for the


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establishment of a national framework with the aim of achieving a low carbon, climate resilient and environmentally sustainable economy by 2050 through mitigation plans and national adaptation frameworks. In carrying out their frameworks, ‘Public Bodies’ have a duty to have regard to the Climate Act in carrying out their functions. At EU level, Ireland has committed to the reduction of greenhouse gas emissions by 20% (of 1990 levels) by 2020.In addition to the above, domestic legislation such as the Energy (Biofuel Obligation and Miscellaneous Provisions) Act, 2010, as amended by the Energy (Miscellaneous Provisions) Act, 2012, the Electricity Regulation (Amendment) (Carbon Revenue Levy) Act, 2010 and the Natural Gas Carbon Tax Regulations 2010 have been implemented to assist Ireland in reducing its carbon emissions.

10 Asbestos


While Ireland has had some asbestos-related litigation, it has not been widespread due to the lack of any real exposure to asbestos. In Ireland, asbestos litigation has centred on more controversial claims for damages from the fear of contracting an asbestos-related disease, as opposed to damages resulting from an actual physical injury or psychiatric illness. This jurisdiction does not allow the recovery by plaintiffs of damages for psychiatric injury resulting from an irrational fear of contracting a disease because of their negligent exposure to health risks by their employers, where the risk is characterised by their medical advisors as very remote. This is sometimes referred to as the “fear of disease” and was confirmed in the recent case of B v C [2011]. The court confirmed that it was well established that proof of damage was an essential component of recovery in negligence, citing the UK case of Rothwell v Chemical & Insulating Co Ltd [2008]. To date, there are no proposals to follow the example of Northern Ireland or Scotland, which have introduced specific legislation to counteract the Rothwell decision. Therefore, in order to succeed, a plaintiff must suffer from an actual physical injury or recognisable psychiatric illness as a result of the exposure to asbestos.


The law in Ireland does not specifically target owners/occupiers, but focuses on duties of employers to employees. Asbestos is classed as hazardous waste and, as such, those who handle it must be licensed to do so. The Safety, Health and Welfare at Work (Exposure to Asbestos) Regulations 2006 to 2010 (the “Asbestos Regulations”) apply to activities in which employees are likely to be exposed to dust arising from either, or both, asbestos and materials containing asbestos during their work. Employers and occupiers also have duties in respect of workplaces and premises under the common law.If its employees are “likely to be exposed”, an employer is required to assess the risk to its employees’ health and safety. Employers must take all necessary steps to identify presumed asbestos-containing materials at a premises or place of work before commencing any demolition, removal or maintenance work at the premises or place of work.



Environmental insurance is available in Ireland but is usually placed through the London market or other major insurance markets. The insurance types available include those covering environmental risks in the professional indemnity policies of engineers or architects, those contained in typical construction policies (which tend to exclude all but pollution from “one-off” accidents), and specific environmental insurance cover in relation to particular risks arising from known or suspected pollution. Environmental insurance does not play a very significant role in Ireland but like all insurance, its absence could become very regrettable should relevant contamination occur.


Due to a lack of reported cases, there is no readily available claims experience in Ireland. Claims, where they arise, tend to be substantial, but we think that exposure of insurers tends to be limited by the care that they exercise in assessing the risk involved and in drafting the relevant policies (in particular the exclusion clauses).

12 Updates


Daly v Kilronan [2017] IEHC 308 concerned a local landowner who challenged works to connect a wind farm to the national grid by way of an injunction under Section 160 of the Planning Acts. The wind farm had been subject to an EIA prior to consent being granted, but the grid connection works were not subject to an EIA and were being carried out as exempted development. The High Court held that, as the grid works were part of an overall project, and an EIA was required for the overall project, an environment assessment must be carried out of the entire project. On that basis, no part of the project could be treated as a standalone element or could be exempt from planning. The Court granted an order prohibiting the continuation of the grid construction works (they were 70% complete at the time of the decision) but made no order requiring that the works already undertaken be removed.The case of Merriman v Fingal County Council [2017] IEHC 695 is significant for the obiter comments of the High Court which establish, for the first time, a constitutional right to the environment pursuant to Article 40.3.1 of the Irish Constitution. The High Court acknowledged the “personal constitutional right to an environment that is consistent with the human dignity and well-being of citizens at large and upon which those duties and responsibilities will be constructed”.Some recent legislation:■ Minerals Development Act 2017.■ Petroleum and Other Minerals Development (Prohibition of

Onshore Hydraulic Fracturing) Act 2017.


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■ Planning and Development Act 2000 (Designation of Strategic Development Zone: Ireland West Airport Knock) Order 2017.

■ European Communities (Marine Strategy Framework) (Amendment) Regulations 2017.

■ Planning and Development (Strategic Housing Development) Regulations 2017.

■ Waste Management (Tyres and Waste Tyres) Regulations 2017.

■ European Communities (Environmental Impact Assessment) (Agriculture) (Amendment) Regulations 2017.

■ European Union (Drinking Water) Amendment Regulations 2017.

■ Forestry (Amendment) Regulations 2017.■ Waste Water Discharge (Authorisation) (Environmental

Impact Assessment) Regulations 2016.

IrelandMcCann FitzGerald

■ Planning and Development (Amendment) Act 2017.■ Water Services Act 2017.■ Sea-Fisheries (Conservation and Rational Exploitation of

Deep-Sea Species) Regulations 2017.■ European Union (Restriction of Certain Hazardous

Substances in Electrical and Electronic Equipment) (Amendment) Regulations 2017.

■ Sea Pollution (Prevention of Air Pollution from Ships) (Amendment) Regulations 2017.

■ European Communities (Control of Organisms Harmful to Plants and Plant Products) (Amendment) Regulations 2017.

■ Water Services Act 2014 (Extension of Suspension of Domestic Water Charges) Order 2017.

■ European Communities (Wildlife Act, 1976) (Amendment) Regulations 2017.

McCann FitzGerald is one of Ireland’s premier law firms with 75 partners, and 400 lawyers and professional staff.

The firm is consistently recognised as being the market leader in many practice areas and its pre-eminence is endorsed by clients and market commentators alike. Our principal office is located in Dublin and we have overseas offices in London, New York and Brussels.

The firm is divided broadly into four main groupings of corporate, banking & financial services, dispute resolution and litigation and real estate (including construction, environment and planning). We also operate industry sector and specialist practice groups which comprise professionals from different groupings. In this way, we provide advice and representation on a basis of what is best for clients and their requirements.

Our clients include international corporations, major domestic businesses and emerging Irish companies. We also have many clients in the State and semi-State sector.

Rachel Dolan is a Senior Associate in the firm’s Environmental and Planning Group. Rachel first qualified in environmental geochemistry, which included the study of natural resource use and environmental management policies. Rachel specialises in planning and environmental law, advising on a wide range of planning and environmental projects, including numerous renewable energy, real estate and construction projects. Rachel advises ongoing and new clients in relation to specific environmental and planning queries and Rachel also advises on environmental and planning disputes and has represented clients at all levels of court.

Rachel is a member of the Irish Environmental Law Association and is a lecturer as part of the Professional Certificate in Environmental Management, the Masters in Safety, Health and Environmental Management and the Masters in Sustainability in UCD.

Rachel DolanMcCann FitzGeraldRiverside OneSir John Rogerson’s QuayDublin 2Ireland

Tel: +353 1 511 1533Fax: +353 1 829 0010Email: [email protected]: www.mccannfitzgerald.com

Sinéad Martyn is an Associate in the firm’s Planning and Environmental Group. Prior to joining McCann FitzGerald, Sinéad completed an MPhil in Environmental Policy at the University of Cambridge.

Sinéad has significant experience in non-contentious work such as due diligence in M&A and re-financing transactions. Sinéad assists in advising on the preparation of planning applications, which includes the review of specialist documents such as the Natura Impact Statement (“NIS”) and the Environmental Impact Assessment Report (previously known as an EIS). Sinéad also advises on environmental and planning disputes.

Sinéad completed a secondment with the Major Projects division of Ervia from 2016 to 2017 where she provided environmental and planning advice on strategic water and wastewater infrastructure projects.

Sinéad is a Council member and the current Treasurer of the Irish Environmental Law Association. Sinéad lectures on the Law Society’s Diploma in Environmental and Planning Law.

Sinéad MartynMcCann FitzGeraldRiverside OneSir John Rogerson’s QuayDublin 2Ireland

Tel: +353 1 607 1374Fax: +353 1 829 0010Email: [email protected]: www.mccannfitzgerald.com


Chapter 15

Kanagawa International Law Office Hajime Kanagawa

Japan

(iv) incentivising certain acts through tax benefits or subsidies, or discouraging certain acts through tax disadvantages or additional fees; and

(v) influencing public opinion by providing information such as public announcements about exemplary companies or companies that have breached environmental laws.


Government authorities are required to proactively make public certain environment-related information, including publishing environmental policies and plans under the BEL and notifying the public about environmental standards and pollution measurement results under certain laws (e.g. the Air Pollution Prevention Act).The government is also required to collect information from non-governmental entities and to notify the public about such information. Such requirements include the Law Concerning Pollutant Release and Transfer Register, which was enacted based on the recommendations of the OECD, and the Greenhouse Effect Gas Measurement Enhancement Act. The national government is also statutorily required to disclose information under the Act on Access to Information Held by Administrative Organs (similar to the Freedom of Information Act in the United States). Under this act, national governmental organizations must disclose information upon specific requests from any person, unless the requested information is non-disclosable information (such as personally identifiable information, information where disclosure would have a harmful influence on the operation of the government, information having a negative impact on the competitive position of a private person (corporation), etc.). Almost all local governments have similar ordinances.



Generally, environmental permits are required when a person conducts certain designated businesses or development work having substantial environmental impact, or constructs or operates plants having certain kinds of environmental impact.



The basis of Japanese national environmental policy is the Basic Environment Law of 1993 (“BEL”). In addition, various national laws provide specific regulations that, together with the general policy declared in the BEL, form the system of Japanese environmental law.. These laws include: (i) laws covering general environmental policy, including the Environment Impact Assessment Act (1997) (“EIA”); (ii) laws addressing specific environmental issues, such as (a) laws concerning global environmental issues, (b) laws preventing public nuisance and pollution, (c) laws restricting polluting substances, and (d) laws protecting or preserving natural resources; (iii) laws concerning who bears the burden of expenses necessary for the protection of the environment; (iv) laws providing judicial or administrative solutions for pollution or other environmental issues; and (v) laws concerning environmental administrative organs. In addition, there are other environment-related laws governing nuclear facilities and radiation, regulation of urban development and protection of cultural assets, which are not necessary covered by the legal system under the BEL. Japanese environmental policy is also realised through various local ordinances and regulations enacted by each local government. In addition to the local ordinances introduced for the purposes of enforcing national laws considering the characteristics of local areas, local governments may also enact their own local environmental ordinances (i) regulating those legal areas not covered by national laws, or (ii) expanding the scope of regulations or providing more stringent rules than national laws. The national governmental body in charge of administering and enforcing environmental laws is the Ministry of the Environment. Local governments also have a role in administering and enforcing environmental law, as further explained in this section.


Governmental bodies mainly enforce environmental law by:(i) setting quantitative standards;(ii) prohibiting certain acts and providing penalties;(iii) seeking agreements with potential polluters to mitigate or

avoid pollution;


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The Environment Impact Assessment Act (“EIA”) requires mandatory environmental assessment process (or screening process) before beginning certain types of construction and development activities, including the construction of highways, airports, waste disposal plants and certain types of power plants, if (i) the size exceeds certain prescribed thresholds, and (ii) additional statutory requirements (e.g. a permit is required pursuant to certain prescribed law) are satisfied. Many prefectural governments also have their own assessment requirements for certain development plans that are not covered under the EIA.There are additional statutory audit requirements for recording and reporting obligations depending on the type of pollution (e.g. the Air Pollution Prevention Act and the Water Pollution Control Act).


The initial actions taken by the environmental regulator are often making inquiries with potential violators and/or providing guidance or amenable instructions to potential violators to voluntarily correct any inappropriate conduct, within the scope permitted by law. Such inquiries are not compulsory, and the regulator is prohibited from unreasonably treating a private person unfavourably due to noncompliance with such inquiries or guidance.The regulator may monitor compliance or investigate as to whether the violation has occurred, and it has statutory authority to investigate any violation of relevant statutes (please also see section 6 herein for more information on investigatory powers).Once a violation is identified, the regulator may issue an order to suspend permitted business or to correct operations, and if such order is not duly complied with, then criminal charges such as fines or administrative measures such as cancellation of permits may follow. Certain permits trigger criminal charges directly upon violation (e.g. a person who produces certain specified poisonous substances without a permit). The process for a criminal charge may be initiated by the police independently from the regulator, or the regulator may make a formal request to the police to commence a criminal investigation process.

3 Waste


(a) Definition of Waste“Waste” is defined under Article 2 of the Waste Management and Cleaning Act (“WMCA”), and generally includes any “filthy and unnecessary matter” other than radioactive waste. Under the WMCA, in general, waste is divided into two main categories: “General Waste” and “Industrial Waste”.General Waste means any waste that is not Industrial Waste. Industrial Waste encompasses certain types of waste produced from business activities, such as cinders, sludge, waste oil, waste acid, waste alkali, waste plastic, and certain kinds of imported waste.Within the categories of General Waste and Industrial Waste, any waste that is explosive, poisonous or infectious is sub-categorised as “Specially Managed General Waste” or “Specially Managed Industrial Waste”, respectively.

For example, the Waste Management and Cleaning Act (“WMCA”) requires business owners to obtain business permits from relevant local governments before conducting business involving the collection, transportation, and/or disposal of waste. Also, the Act on Evaluation of Chemical Substances and Regulation of Manufacture, etc. (“CSEA”) requires any person intending to conduct business that will produce certain specified hazardous chemicals to obtain a permit from the national government. Other statutes impose requirements for persons who construct and/or operate plants having certain kinds of environmental impact. For example, the WMCA requires a permit for building and operating a waste treatment plant. Certain statutes controlling chemical substances (including the Poisonous and Deleterious Substances Control Act and the CSEA) require a permit before producing, importing, or constructing production plants of hazardous chemicals and chemicals having potential environmental impact.Various laws also provide “notification” requirements. This is a unilateral action and does not require administrative permits, but it does function as a permit in some sense (i.e. certain parties such as parties holding a certain amount of potentially hazardous materials are obligated to notify the government and the notifying party is subject to certain regulatory obligations carrying administrative and/or criminal sanctions in the case of breach). Local governments also impose a permit system for certain conduct. For example, the Tokyo Municipal Government requires any person planning to construct and operate any factory in Tokyo to obtain a permit.Many environmental permits are not transferrable without further review. For example, permits relating to the operation of businesses or plants are granted based on a review of the operator having the licence, and therefore may not be transferred without another review. However, in case of a succession by operation of law, such as a merger or company split, the requirements for transfer of permission are usually less stringent. Other types of permits remain attached to property irrespective of transfer of ownership (e.g. under the Forest Act, in general, a permit to develop forested land is effective over a transferee of the subject forested land).


Applicants for regulatory permits may challenge the decision of the regulator by filing (i) a complaint under the Administrative Complaint Review Act (“ACRA”) within three months from the day when the applicant becomes aware of the regulator’s decision, or (ii) litigation within six months from the day when the complainant becomes aware of the decision, pursuant to the Administrative Case Litigation Act (which provides special rules based on civil litigation procedural law). ACRA provides the government’s internal process for correcting erroneous or inappropriate administrative decisions. The process under ACRA had often been criticised, claiming that the reviewers in many cases were not neutral, but the process has been moving towards a pro-user approach (for example, a more independent review board system was introduced in 2016). If a claim is successful, the regulator’s decision may be cancelled (and the party may reapply) or, in some cases, the regulator may be ordered to grant a permit. Parties may file litigation at the same time as challenging a decision through ACRA. However, where both processes are pending, the court may suspend the litigation process until the ACRA process is concluded.


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Industrial Waste Producers may have residual liability even after transferring waste to another person under certain circumstances.For example, Industrial Waste Producers may be subject to imprisonment and/or fines if they breach certain outsourcing standards, such as by (i) entering into improper outsourcing agreements with service companies, (ii) improperly monitoring the proper handling of the Industrial Waste through the process chain up until the final disposal, or (iii) outsourcing Industrial Waste management to unlicensed service companies.Also, an Industrial Waste Producer may be ordered to remove Industrial Waste or pay the cost of removal, for example, if: (i) the Industrial Waste Producer outsources the disposal of the Industrial Waste at an unusually low price to someone who then disposes of it illegally, (ii) the Industrial Waste Producer becomes aware that one of its outsourcees has been illegally dumping or storing Industrial Waste, but the Industrial Waste Producer continues to outsource to such outsourcee, (iii) an outsourcee illegally dumps Industrial Waste and the Industrial Waste Producer does not properly notify authorities or otherwise remedy the situation, (iv) an outsourcee’s licence is revoked, or (v) an outsourcee becomes bankrupt.


This is answered under question 3.3.

4 Liabilities


Breaches of environmental laws and/or permits are subject to criminal charges, administrative measures, and civil liability. In certain cases, a breach would directly trigger criminal sanctions (including imprisonment and fines), and, in other cases, criminal sanctions would be brought only after a party did not comply with administrative orders. As for administrative measures, a regulator may make corrective orders or suspension orders or cancel permits, and may also take remedial steps or seek to recover costs from a breaching party. Civil liability for breach of environmental laws would typically be a tort claim. If a contract requires compliance with environmental laws, a breaching party may be subject to contractual sanctions as well.Typical defences relating to criminal, administrative and civil claims include (i) lack or limitation of the actual impact of the breach against human life/body/property, (ii) an assertion that the party has made reasonable efforts to prevent breach, and (iii) an assertion that the party has taken remedial measures promptly after discovering the breach. These defences influence the degree of the criminal offence, the necessity of taking severe administrative measures, and the amount of damages to be compensated in related civil liability cases.

(b) Responsible parties for management of WasteLocal governments are basically responsible for the management of General Waste (including Specially Managed General Waste).Business operators who produce Industrial Waste (“Industrial Waste Producers”) are responsible for the management of Industrial Waste and should bear the costs of managing it. However, Industrial Waste Producers may outsource their management of Industrial Waste to licensed service companies and, under certain circumstances, a local government may manage the Industrial Waste.(c) Duties and controls over the Industrial WasteThe standards of storage, collection, transportation, and disposal of Industrial Waste and the standards of outsourcing for licensed service companies are prescribed in detail under the WMCA and related regulations, and there are also regulations on outsourcing agreements for the purpose of clarifying the responsibility of Industrial Waste Producers. Those regulations include: (i) outsourcing agreements must be documented, and only certain prescribed eligible persons, such as licensed service companies, can manage Industrial Waste, and (ii) re-outsourcing by licensed service companies is basically prohibited unless a Industrial Waste Producer approves it. Moreover, Industrial Waste Producers must enter into contracts separately with companies that collect and transport Industrial Waste, intermediate processing companies and final disposal companies.When outsourcing the transport or disposal of Industrial Waste, Industrial Waste Producers have a duty to monitor whether the Industrial Waste is properly handled through the process chain up until its final disposal.Industrial Waste Producers must designate a person in charge of Industrial Waste management in each place of business. Also, Industrial Waste Producers who have places of business that produce a great deal of Industrial Waste must make a plan for reducing the amount and disposal of the waste, submit the plan and report the implementation status of the plan to the prefectural governor.The standards for Specially Managed Industrial Waste are similar to the standards for Industrial Waste, but are generally stricter.


Under the WMCA, the storage and disposal of Industrial Waste generally depends on whether it is done by an Industrial Waste Producer itself or outsourced to a third party.When Industrial Waste Producers themselves dispose of Industrial Waste or Specially Managed Industrial Waste, the storage period and the quantity are regulated (e.g. the cap on the storage quantity is, in general, the product of the quantity of the disposal ability per day of the disposal plant multiplied by 14).When Industrial Waste Producers outsource the management of Industrial Waste or Specially Managed Industrial Waste, Industrial Waste Producers must store such waste so as not to interfere with the local environment until the waste is removed.On the other hand, there is no specifically prescribed cap on the storage quantity and length of the period for which Industrial Waste Producers can store General Waste under the WMCA.



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5 Contaminated Land


Contamination of soil or groundwater is mainly governed under the Water Pollution Prevention Act (“WPPA”) and the Soil Contamination Countermeasures Act (“SCCA”).The WPPA identifies and regulates factories that produce harmful substances, imposes a limit on emission of pollution, and authorises the government to order persons responsible for the factories to remediate pollution to groundwater if water containing harmful substances affects groundwater.The SCCA provides for inspection of land having facilities likely to contaminate soil or where contamination has been discovered. Contaminated areas are designated according to whether there is any suspected threat of health hazards based on the results of the inspections. The land owner or occupant may be ordered to take measures to remove contamination. The transportation of contaminated soil is also regulated.


If the persons who caused the contamination are identified, then they are severally liable under the SCCA. Each of the polluters will be ordered to take measures to remove the contamination that they are determined to have individually caused.However, if the persons who caused the contamination are not identified, then the land owners or occupants are liable for any contamination.


There is currently no system for “agreement” with environmental regulators about a programme of environmental remediation.However, under new legislation that will be enforced within two years from May 19th, 2017, if environmental remediation has been ordered by a regulator, the regulator may order submission of the measurement plan for contamination removal and amendment of the plan if it does not fulfil the technical standards.


A land owner may have the right to seek compensation for damages caused by contamination by the previous landowner or occupier. For example, under the SCCA, if the current owner is ordered to take measures to remove contamination or to pay the costs of removal, the current owner may be able to claim such costs from the previous owner or occupier who caused contamination by way of torts or other legal grounds.

One possible defence in criminal charges is that a breach was not intentional. However, such a defence is rarely successful because, in most cases, mere knowledge of the situation where a breach occurs would be sufficient as an intentional breach of the regulatory laws.


Yes, notwithstanding compliance with regulatory permit limits, an operator may be liable for environmental damages to the extent that such pollution resulted from the intentional action or the negligence of the polluter. Compliance with the regulatory permit limit is one of the major considerations in assessing the existence and scope of liability but it is not a complete safe harbour. In certain cases, the regulatory body setting such a limit may also be liable for not taking a more prudent approach.


Directors and officers may personally be liable under civil tort theory and the Company Code if they have directly caused environmental wrongdoings or have failed to properly prevent their personnel or other directors from doing so. Administrative sanctions may not be imposed on directors or officers unless the director or officer has personal regulatory obligations. Criminal charges may be imposed on directors or officers if the wrongdoing is extremely harmful and results in death or injury, regardless of whether the wrongdoing was done in the name of a company instead of its directors or officers. Insurance policies are available to cover liability of the directors arising from a company’s misconduct (i.e. D&O insurance) but such policies are subject to maximum payment amounts and various conditions.


A purchaser of shares cannot carve out specific risk or liability of a company. However, liability of a shareholder is generally indirect in that administrative/criminal sanctions are not imposed on shareholders solely because of their shareholding, and shareholders are usually not liable for damages caused by the company (please see section 8 below).A purchaser of assets of a company will bear the environmental liability of such assets. However, any administrative or criminal charges already imposed on the seller related to such assets will not, in principle, be transferred to the purchaser of such assets.


Lenders are not liable, in principle, for how a borrower uses borrowed funds. In theory, if a lender was aware that borrowed funds would be used for environmental contamination, such lender may be deemed to be a joint offender, but we are not aware of any such precedent related to environmental wrongdoing and/or contamination. It has been argued that banks should bear social (not legal) liability as to how loaned funds are used, and Japanese banks may hesitate to lend money to entities holding potential serious environmental risks.



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On the other hand, these liability risks may transfer from the seller to the purchaser (but not vis-à-vis any other third parties) if they agree that the seller sells the land “as is”.


The Supreme Court of Japan has expressed a view that aesthetic harm (in this case, harm to a scenic view caused by a large building) may be worthy of legal protection. Accordingly, theoretically speaking, the government may have authority to obtain monetary damages for pollution that causes aesthetic harm depending on ongoing developments in case law.



Environmental regulators have the power to investigate as provided by specific regulatory statutes. These powers include on-site inspections and requests to provide reports and other information. In most cases, unreasonable rejection of these investigations or provision of false information is subject to criminal sanctions (including imprisonment and fines) or civil sanctions (such as cancellation of permits).



In cases where any soil contamination is identified due to the statutorily required investigation under the SCCA, such investigation results shall be reported to the relevant authority. On the other hand, the SCCA also provides for a voluntary notification system when anyone discovers any soil contamination through their voluntary investigation, but there is no legal obligation requiring such notification, nor is there any penalty for non-compliance. In this way, the regulatory regime is relatively lenient towards pollution inadvertently found on a site.


The SCCA requires owners and occupiers of land to investigate and report on soil contamination in certain cases; i.e. (i) when certain hazardous factories or other designated sites have ceased operations on the land, (ii) when the local governor considers that there is a possibility that the site could be hazardous to human health due to contamination, and (iii) when the local governor considers that there is a possibility that the site could be hazardous to human health when the owners give notification of the change of the shape or quality of the land of a certain size (i.e. 3,000m2 or more).


In a private sale, a purchaser may cancel or request a decrease in price when contamination is discovered by the purchaser after the sale. There are some court precedents for requiring sellers to disclose known contamination or any history or manner of use that may potentially result in contamination. Also, if the seller intentionally conceals the fact of material contamination of the sold assets upon the sale, depending on the situation, the seller may be deemed to have committed a criminal offence (i.e. fraud). Further, professional brokers of land are obligated, under the regulations applicable to them, to disclose to the purchaser any items that may have a materially adverse effect on the purchaser, which includes possible soil contamination and the fact that the subject land is designated as contaminated land under the SCCA.

8 General


Indemnity and limitation of liability are commonly used in contracts, though it is also common to impose unlimited liability if damages are caused through a party’s wilful misconduct or gross negligence. In general, liability under statutory regulations, including administrative sanctions or criminal charges, cannot be eliminated or mitigated by an indemnity payment; however, the fact that the indemnifier has taken remedial measures (including the indemnity payment to the victim) may influence the degree of the criminal offence and the necessity of taking severe administrative measures. For example, if damages are compensated to the victims themselves, regulators and prosecutors may consider such arrangements as a sign of possible improvement in the future, and possibly mitigate the punishment. Also in civil cases, the amount of damages ordered by the court will be decreased by the amount voluntarily paid to the claimants.


In order to shelter environmental liabilities, it may be possible to transfer polluted assets to a subsidiary and, thereafter, dissolve the subsidiary. However, in most cases, it is difficult for the parent to completely escape liability arising from polluted assets. For example, assuming that the parent is the original polluter, it will continue to be liable as the original polluter and could be subject to tort claims. In addition, if the environmental liabilities have actually accrued before transferring polluted assets to the subsidiary, regardless of whether those liabilities are actually claimed or not, it is legally impossible to be released from those liabilities by transferring them to the subsidiary without obtaining consent from the counter parties having actual or potential claims against the parent.


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In general, a parent company does not owe any “legal” obligation in connection with a subsidiary’s environmental liability. However, there are exceptional cases where (i) the corporate veil may be pierced because of deceptive incorporation without substance and/or wilful intent to evade liability, or (ii) the parent has a fully-controlled subsidiary in connection with the relevant breaches and/or pollution such that the parent can be deemed a joint tort-feasor with the subsidiary. This applies whether or not the subsidiary is overseas.


The Whistle-blowers Protection Act designates certain statutes including environmental laws and protects whistle-blowers who report the breach of such designated statutes from punishment or unfavourable treatment in retaliation for whistle-blowing. This Act, however, requires the whistle-blowing to be made in relation to certain specified criminal offences, and certain other requirements must be met in order for whistle-blowers to gain protection under this Act.


Japan does not have a general class action scheme. Recently, a new law was enacted to introduce a kind of class action scheme, but this law only covers monetary claims accrued in connection with consumer-related contracts, and does not include compensation for death or personal injury or claims arising from pollution.When a lawsuit involves a large number of complainants, the complainants often unite in filing the lawsuit, but the complainants are in theory only a de facto unity of individual parties and actually must still each establish the damages that they have individually suffered. Punitive damages are not available in Japan.


There is no system for exemption from such liability.



Currently, there is an emissions trading scheme at the national level called the J-Credit Scheme, whereby the government certifies the amount of greenhouse gas (“GHG”) emissions reduced or removed through efforts by project participants who introduce energy-saving devices and/or manage forests as “credit”. “Credit” is freely sold between project participants and users of “credit”. The government does not intervene in transactions and the price of “credit” is not fixed.

Purchased “credit” can be utilised, for example, to adjust emission amounts under the GHG emissions reporting system based on the Act on Promotion of Global Warming Countermeasures (“APGWC”). The J-Credit Scheme was created in 2013 by integrating the Domestic Clean Development Mechanism and the Offset Credit (J-VER; Japan’s verified emissions reduction) Scheme and was designed to integrate the strengths of both schemes.In Tokyo, mandatory reductions of the amount of GHG emissions from large-scale business places and an emissions trading scheme were introduced in 2008. The number of large-scale business places that must reduce the amount of GHG emissions is about 1,300, and the amount of GHG emissions to be reduced is about 20% of the total amount of GHG emissions in Tokyo.


In the APGWC, there is a requirement for the calculation and reporting of GHG emissions, whereby business operators who emit large amounts of GHG must calculate the amount of GHG emissions every fiscal year and report to the government.


The APGWC has a reporting requirement as described in question 9.2. The reports from the business operators are disclosed to the public. The purpose is to achieve a reduction in the emission of GHG, especially from business operators who emit a great deal of GHG, by making such business operators (and also citizens) realise the importance of efforts toward a reduction in the emission of GHG and also encouraging them to take reduction measurements themselves.Moreover, the APGWC was revised in 2016 with the aim of promoting the achievement of certain goals on the basis of the Paris Agreement.

10 Asbestos


Asbestos litigation has been filed against both the government and companies that use or manufacture asbestos.Compensation claims to the government for damages due to health hazards or death have been filed by former workers who were engaged in jobs where they directly dealt with asbestos in asbestos production plants or in the construction industries, and also by people living near the plants as well as their bereaved. They have claimed that the government did not properly exercise certain regulatory power, such as the requirement to wear dust respirators or the requirement to install local exhaust ventilation systems.In an action appealed by former workers and people living near asbestos production plants in the Konan area in southern Osaka Prefecture and their bereaved, the Supreme Court affirmed in 2014 the illegality of the inaction of the government to use its regulatory power to require the instalment of local exhaust ventilation systems in relation to former workers and their bereaved.


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(iii) medical waste producer liability insurance protects against liability for health hazards caused by dumped waste and the costs for removal of waste or for purification of contaminated soil where waste from a medical institution is illegally dumped and the medical institution is ordered to take measures or pay removal costs in accordance with the Waste Management and Cleaning Act (“WMCA”) and related regulations; and

(iv) industrial waste producer liability insurance protects against the liability for health hazards caused by dumped waste and the costs for removal of waste or for purification of contaminated soil where waste from producers is illegally dumped, despite efforts made by producers to prevent illegal dumping, and where they are further ordered to take measures or pay removal costs in accordance with the WMCA and related regulations.

These types of insurance are not widespread so far, and it is hard to say if they are playing a big role in Japan.


The number of environmental insurance claims seems to be small. However, information about these claims is kept confidential by insurance companies and is rarely publicly available.

12 Updates


One of the most important recent topics in environmental law in Japan is nuclear power. After the Fukushima nuclear power plant accident in March 2011 (“2011 Fukushima Accident”), all nuclear power plants in Japan temporarily stopped operations. Many injunction cases (including preliminary ones) have been filed to prevent the plants from restarting. However, the judgments of the courts have differed. Though there has been no Supreme Court judgment on this issue since the 2011 Fukushima Accident, it seems that the difference between the results of these judgments is whether the courts gave weight to the fact that administrative agencies “reasonably” concluded that the safety of the nuclear power plants satisfied the new standards introduced after the 2011 Fukushima Accident by taking into account various “lessons” learned through the 2011 Fukushima Accident, or, even admitting that, whether the courts considered in detail the possibility (though it may be very slim) of the reoccurrence of a nuclear disaster given the possible magnitude of the damages, harm and losses which may be suffered by citizens.

AcknowledgmentThe author would like to acknowledge the assistance of his colleagues Yoshiko Nakayama, Sho Nakamura and Brian Baker in the preparation of this chapter. Yoshiko Nakayama is Counsel of the Kanagawa International Law Office. She has broad experience in regulatory practice and has in-depth knowledge about environmental regulations.Tel: +81 3 6206 6458 / Email: [email protected]. Sho Nakamura is an Associate in the Kanagawa International Law Office. Tel: +81 3 6206 6815 / Email: [email protected] Baker is an Advisor in the Kanagawa International Law Office. Tel: +81 3 6206 6816 / Email: [email protected].

Plaintiffs have also claimed compensation from employers based on a failure to maintain employee safety and from companies that produced or sold asbestos-containing building materials based on tort liability. There have been judgments that affirm such employers’ liability.


Owners and occupiers have the duty to meet the regulatory standards for asbestos levels in the atmosphere and to prevent exposure to asbestos, including dispersal of asbestos into the environment.In the Air Pollution Control Act (“APCA”), asbestos is specially regulated as “Specified Particulates,” as distinguished from “Ordinary Particulates”.The facilities of nine types of machines over a certain scale are defined as “Facilities That Generate Specified Particulates” and the standard of production to be complied with (regulations of concentration) is prescribed in the ordinance.Specifically, the regulatory standard is 10 fibres of asbestos per litre in the atmosphere at the site boundaries of a factory or workplace.However, asbestos is sometimes emitted or used other than in Facilities That Generate Specified Particulates. A typical example is a building that contains asbestos-containing material. When such buildings are demolished, unless this demolition is properly managed, asbestos is dispersed widely and this may cause a health hazard. For example, at the time of the Great Hanshin-Awaji Earthquake of 1995, dispersal of asbestos became a serious problem.Therefore, under the APCA, building materials that contain asbestos are designated as “Specified Building Material”, and activities involving the demolition, alteration, or repair of buildings or factories that use them are defined as “Activities That Emit, etc. Specified Particulates”. Furthermore, a person who wishes to undertake construction work associated with such activities must submit a notification to the prefectural governor and show compliance with the standards of activity. The prefectural governor has the power to make supervisory dispositions to the persons undertaking such construction work.Moreover, the Ministry of Health, Labour and Welfare established the Ordinance on Prevention of Health Impairment due to Asbestos in 2005. It prescribes prevention measures against exposure to asbestos in activities involving the demolition of such a building. The Ministry of Health, Labour and Welfare has continued to review the regulations to enhance prevention measures against exposure to asbestos.



The types of environmental insurance available are (i) environmental contamination liability insurance, (ii) soil contamination purification costs insurance, (iii) medical waste producer liability insurance and (iv) industrial waste producer liability insurance:(i) insurance for environmental contamination liability protects

against liability of damages arising from environmental contamination produced by the facilities owned, used or managed by policyholders;

(ii) insurance for soil contamination purification costs protects against costs where policyholders pay such costs under indemnification clauses in land sale contracts;

ICLG TO: ENVIRONMENT & CLIMATE CHANGE LAW 2018 111WWW.ICLG.COM

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Kanagawa International Law Office is a globally-minded law firm offering specialised knowledge and experience in international legal matters, headed by Mr. Hajime Kanagawa.

Hajime Kanagawa is the founding partner of the Kanagawa International Law Office. He represents Japanese and multinational clients in a broad range of corporate and financial matters, including mergers and acquisitions, project finance transactions, acquisition finance transactions and corporate finance transactions. He also has extensive experience in acquisition and financing of multiple renewable power projects under the feed-in-tariff regime in Japan.

Education:

■ The University of Tokyo (LL.B., 1995).

■ University of Southern California (LL.M., 2004).

Bar Admissions: Japan and New York.

HajimeKanagawaKanagawa International Law Office 7F, Urban Toranomon Bldg.1-16-4 Toranomon Minato-kuTokyo, 105-0001 Japan

Tel: +81 3 6206 6651 Email:[email protected]: www.k-ilo.com

Kanagawa International Law Office


Chapter 16

GANADO Advocates

Dr. Jotham Scerri-Diacono

Dr. Lara Pace

Malta

responsibility for building and sanitary matters, while environmental protection, previously the responsibility of the Environment Directorate within MEPA, is now assigned to a newly established autonomous entity, namely, the Environment and Resources Authority (the “ERA”) (Article 7(2)(a) of the Development Planning Act, 2016 et seq. Vide Parliamentary Secretary for Planning and Simplification of Administrative Process: For an Efficient Planning System – A Consultation Document (2014)). Reflecting this, the New Planning Act is concerned solely with land use while the New Environment Protection Act deals primarily with the management of the environment and natural resources. Simply put, the responsibilities previously undertaken by a sole authority, MEPA, are, as from 4 April 2016, being assumed by two (2) distinct authorities that are to function independently from each other.The new law also provides for the setting up of an Environment and Planning Review Tribunal with a mandate to hear and determine appeals from decisions taken by either of the two (2) Authorities. Other entities that have emerged as a result of the recent demerger of MEPA are the Regulator for Energy and Water Services (the “REWS”) which to a degree takes over the functions of the Malta Resources Authority (the “MRA”) and Energy and Water Agency, which is a Government Agency established via Legal Notice 340/2016 within the Ministry for Energy and Water Management. The Energy and Water Agency is tasked with formulating and implementing the Government’s national policies in the energy and water sectors, aimed at ensuring security, sustainability and affordability of energy and water in Malta. The planning and environmental duties of the Government of Malta previously provided for in the EDPA have been generally mirrored in the new legislation. Like the EDPA, the New Environment Protection Act states that it is the duty of everyone together with the Government to protect the environment and to assist in the taking of preventive and remedial measures to protect the environment and manage natural resources in a sustainable manner. The New Environment Protection Act also enshrines the principle that it is the Government’s duty to protect the environment for the benefit of present and future generations.The ERA is a statutory authority, independent of the Government. It is active in matters concerning the protection of the environment and as such has the leading role. Invariably, enforcement of environmental law is principally carried out by the ERA through the hand of its enforcement officers. The stated mission of the ERA is “to safeguard the environment for a sustainable quality of life”. Various aspects of environmental law enforcement, however, fall (occasionally, jointly with the ERA) within the portfolio of other State entities, such as the Authority for Transport in Malta, the Executive Police and the local wardens.



Up to April 2016, the main source of environmental law in Malta was the Environment and Development Planning Act, Chapter 504 (“EDPA”) making it the duty of the Government of Malta and every person to protect the environment (Article 3, EDPA. As a matter of interest, we point out that whereas the duty of every person, including MFTL, to protect the environment as provided in the EDPA is not, stricto jure, enforceable). The Malta Environment and Planning Authority (“MEPA”) was established by virtue of Article 6 of the EDPA. In terms of Article 7(1)(a) of the EDPA, “the Authority shall be the principal means whereby the Government shall implement its duties under this Act”. The functions of MEPA included the provision of advice to the minister in the formulation and implementation of policies relating to the promotion of sustainable development, protection and management of the environment and the sustainable management of natural resources, and on such other matters as may be necessary for the better carrying out of the provisions of the EDPA. MEPA was also responsible for environmental audits, assessments and policies, training awareness programmes relating to environmental protection, advisory services for government and local authorities on environmental matters and other ancillary functions related to the enforcement of the terms of the EDPA (Articles 8(4)(a)-(g), EDPA). MEPA was empowered to “issue any license or permit that may be required by or under this Act under such conditions as it may, subject to any other provision of this or any other law, deem necessary to control and manage activities having an impact on the environment” (Article 8(3)(d), EDPA).In 2016, new law was enacted that effectively replaced the EDPA. Three (3) Acts of Parliament have been passed, namely:i. the Development Planning Act, 2016 (“New Planning Act”);ii. the Environment Protection Act, 2016 (“New Environment

Protection Act”); and iii. the Environment and Planning Review Tribunal Act, 2016

(“New Review Tribunal Act”).Insofar as environmental law is concerned, the new law did not bring major changes to the applicable substantive law that continues to be regulated by the various regulations that were previously promulgated under the EDPA. Essentially, what the new law does is provide for a ‘demerger’ of MEPA such that the ‘planning regime’ is now administered by a new Planning Authority (the “PA”) with


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GANADO Advocates Malta

Following Malta’s accession to the EU in 2004, Malta has transposed EU environmental legislation and community environmental law is a further source of Maltese environmental law and policy. The Strategic Plan for the Environment and Development (“SPED”), which was approved by Parliament in July 2015, is the official recognised document which addresses the spatial issues for the Maltese Islands in the coming years. The SPED, which has replaced the 1990 Structure Plan for the Maltese Islands, is based on an integrated planning system that regulates the sustainable use and management of land and sea resources. This is a shift in the way strategic planning is carried out in the Maltese Islands from traditional land use planning to a more holistic spatial planning approach. The Plan provides a strategic spatial policy framework for both the environment and development up to 2020, complementing the Government’s social, economic and environmental objectives direction for the same period. The SPED is based on an integrated planning system which: (i) ensures the sustainable management of land and sea resources together with the protection of the environment; and (ii) guides the development and use of land and sea space. One must always remember that Malta is one of the most densely populated countries in the world and the sustainable use of land is one of its most pressing priorities. The basic objective of environmental and planning law in Malta is that of optimising the physical use and development of land which respects the environment and, at the same time, ensuring that the basic social needs of the community are, as far as is practical, satisfied. The Malta Resources Authority is a public corporate body set up in 2000 through the Malta Resources Act to regulate water, energy and mineral resources, to promote energy efficiency and renewables, and with responsibilities in oil exploration and climate change. The Regulator for Energy and Water Services Act, 2015, changed the MRA’s responsibilities mainly to registration and metering of boreholes, mineral resource regulation and climate change reporting and operation of the emission trading scheme.Grant schemes, swimming pool licences and energy and water services licences are among the functions of the new regulator established under the Regulator for energy and water services – REWS.The Malta Competition and Consumer Affairs Authority Act is also relevant as it is the basis on which (among other things) registration, evaluation, authorisation and restriction of chemicals (REACH as per EC Directive 1907/2006) is administered in Malta through the Technical Regulations Division of the Malta Competition and Consumer Affairs Authority (“MCCAA”).Other relevant bodies within the context of Maltese environmental law and policy include the Ministry for Sustainable Development, the Environment and Climate Change (“the Ministry”), which is responsible for, inter alia, sustainable development, climate change policy, environmental policy, waste management strategy, national parks, afforestation and the countryside, rural development, agriculture and horticulture amongst other things. The Authority for Transport in Malta seeks to promote and develop the transport sector in Malta by means of proper regulation and by the promotion and development of related services, businesses and other interests both locally and internationally. The newly enacted Authority for Transport in Malta Act, which came into force on 1 January 2010, divides the Authority into various “directorates”. The Ports and Yachting Directorate is responsible, inter alia, for the prevention and control of marine pollution. There are other bodies with specific tasks such as the Parks, Afforestation and Rural Conservation Department (“PARK”). The Directorate is responsible for afforestation and the management of various afforestation and recreational sites in Malta. The Directorate

runs the 34U Campaign (tree adoption scheme), educational programmes and organises tree planting activities for the promotion of public awareness on the importance of indigenous trees and flora.The Strategic Environmental Assessment Focal Point has also replaced what used to be the Strategic Environment Assessment Audit Team (LN497/2010) and took on its function of overseeing the implementation of the new SEA regulations of 2010, which implements the EU SEA Directive (Directive 2001/42/EC). The SEA Focal Point is the Competent Authority for the Strategic Environmental Regulations 2010, which replaced the old 2005 SEA Regulations. The purpose of these Regulations is to provide as much information as possible to keep all interested parties up to date with the progress registered on plans and programmes which have been referred to the SEA Focal Point and for which a decision as to whether a SEA is required or has not been taken. WasteServe Malta Ltd. is responsible for providing waste management infrastructure, which it administers at a national level.


In a country such as Malta with a high population density, decades of environmental inaction and a high dependence on tourism, the need to ameliorate environmental awareness, protection and enforcement is paramount. The authorities are fully aware of this. Within the last decade we have seen a notable increase in enforcement with some difficult decisions needing to be taken between the protection of the environment on the one hand and the need, on the other hand, to ensure that development is sustained and that the requirements of the country are not stifled. Although the general perception is that environmental enforcement still has a long way to go, a more objective analysis is that in recent years, progress has been achieved and enforcement has indeed been strengthened. Enforcement of environmental law in Malta remains a highly contentious subject – not least given Malta’s population density. Environmental authorities frequently organise campaigns intended to dissipate information that demonstrates the benefits of environmental protection and serves to sensitise the population to various environmental issues.


Malta ratified on the 23 April 2002 the UNECE Aarhus Convention on access to information, public participation in decision-making and access to justice in environmental matters. Following accession to the EU, Malta transposed Directive 2003/4/EC of the European Parliament and the Council on public access to environmental information. Maltese legislation, in force since 17 May 2005 (SL549.39), guarantees the right of access to environmental information held by or for public authorities. The legislation also ensures that environmental information is progressively made available and disseminated to the public in order to achieve the widest possible systematic availability and dissemination. The authorities may refuse to provide the requested environmental information if the request is: unreasonable; too general; concerns internal communications or concerns material in the course of completion; or unfinished documents or data. The authority may also refuse to provide environmental information if disclosure of the information would adversely affect: (a) confidentiality; (b) international relations, public security or national defence;


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(c) the course of justice;(d) intellectual property rights; (e) the interests or protection of any person who supplied the

information requested on a voluntary basis without being under, or capable of being put under, a legal obligation to do so, unless that person has consented to the release of the information concerned; or

(f) the protection of the environment to which such information relates, such as the location of rare species.

As part of its commitment towards regular publication of environmental information in a form that is easily accessible and user-friendly, MEPA (ERA’s predecessor) published regular ‘state of the environment’ reports (which are also available online), fulfilling its obligation under Maltese law that requires it to publish a “state of the environment” report every four years. ERA will continue in MEPA’s footsteps. In the past, MEPA went beyond this requirement by also publishing annual updates of the key environmental indicators used in the report. The annual reports allowed the public to keep abreast of environmental trends, while having access to more long-term, detailed information and analysis in the tri-annual ‘state of the environment’ reports. Interestingly, legislation is now moving away from the right to obtain information towards the right to be informed. Recent legislation imposes an obligation on the environmental authorities to ensure that the public is given early and effective opportunities to participate in the preparation and modification or review of certain plans or programmes that have environmental repercussions; the Integrated Pollution Prevention and Control (IPPC) Regulations, (SL549.77); the Control of Major Accident Hazard Regulations, (SL424.19); the Environmental Impact Assessment Regulations, 2007 (LN 114/07); the European Pollutant Release and Transfer Register Reporting Obligations Regulations, (SL549.47); and the Strategic Environmental Assessment Regulations (SL549.61); the Plans and Programmes (Public Participation) Regulations, 2006 (SL549.41) that implements the provisions of article 2 of Directive 2003/35/EC of the European Parliament and of the Council of 26 May 2003 and the Water Policy Framework Regulations (SL549.100) also provide for specific public participation mechanisms in environment-related matters.



The Environment and Resource Authority (“ERA”) regulates the environmental impact of enterprises through two key mechanisms. Smaller scale activities are regulated through a set of General Binding Rules (“GBRs”) which apply to all enterprises within a common group (e.g. Hotels and Restaurant Group). Larger scale activities are regulated through an Environmental Permit issued on an individual basis by the ERA. Certain enterprises of limited environmental significance (e.g. insurance companies) are exempt from control through a GBR or Permit.Whereas environmental permits are intended to regulate generally medium to large scale enterprises or smaller enterprises with significant environmental risk, GBRs are intended to regulate small and micro-scale enterprises through a standard set of environmental conditions related to waste management, emissions to atmosphere, effluent discharges and storage of materials and chemicals.

There are various instances where certain legislation provides for specific permits. For example, industrial activities and installations of a certain entity or impact would require an IPPC permit from PA in line with EU Directive 96/61/EC (SL549.77). Other installations operating may also require a greenhouse gas emissions permit under the Greenhouse Gas Emissions Regulations depending on their operations. Management of waste, particularly hazardous waste, will also require a specific permit (SL549.17: Waste Framework Directive 75/442 and Hazardous Waste Directive 91/689; see section 3 below). Discharge of trade effluent into the public sewage system will likewise require a licence (SL545.08, Reg.4 et seq.). Environmental permits are also required for volatile organic compounds (SL549.79). Permits are required in case of discharges into or extracting of the groundwater. When granting licences, the governmental authorities may impose conditions. The authorities must give reasons if a request for a licence is refused or if particular conditions are imposed. Malta is a party to the “Convention on International Trade on Endangered Species of Wild Flora and Fauna” (“CITES”), and regulates international exports and imports of specimens of species of live and dead animals and plants and their parts and derivatives. This is based on a system of permits and certificates that can be issued if the requirements needed are met.Land and property development, including change of use, likewise requires development permission from PA. For the reasons stated above (principally over-population), it is mainly here that much debate and hotly contested disputes arise.As a general rule, in cases of land and property development, permits or licences attach to the particular development being licensed and may, in most cases, be transferred from one person to another provided that the licensed development remains the same. However, insofar as other permits not concerning land development are concerned, there are a substantial number of exceptions to this general rule.


As a general rule of thumb, appeals from such decisions are permitted. For example, in the case of development permits concerning land or property, if an applicant considers that the conditions imposed upon development permission, or the refusal of such permission, are unreasonable, he may appeal with the Environment and Planning Review Tribunal. A further and final appeal may be lodged with the Court of Appeal. In the latter case, appeals are restricted to points of law. Appeals from refusals of (or from the imposition of conditions on) environment protection-related or other such permits emulate, more often than not, the same structure as for development permit appeals.


Indeed, certain developments, because of their nature, extent and location or on account of other environmental considerations, will require an EIA before a decision on development permission is taken. Projects that may qualify for an EIA include infrastructure projects, land use and built development projects, development on the coast, extractive industry, livestock, energy industry, industrial developments and operations. The categories of projects that


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require an EIA are outlined in the relative legislation that transposes Directive 2011/92/EU of 13 December 2011. Directive 2011/92/EU has been amended in 2014 through Directive 2014/52/EU. The EIA Directive is transposed through the Environmental Impact Assessment Regulations (SL549.46). The EIA is a systematic process that identifies, assesses and predicts the likely significant environmental impacts of a proposed development or action. It is a tool to achieve environmentally sound and sustainable development proposals and activities. As a decision-making tool, EIA provides information to decision-makers, regulators and authorising bodies, stakeholders and the public about the likely significant effects of certain proposals on the environment. The EIA itself is not the licence but part of the process leading to it.Since 30 December 2005, a further level of assessment has been introduced: governmental plans and programmes that are “likely to have a significant effect on the environment” are subject to a “strategic environmental assessment” (“SEA”) – vide the Strategic Environmental Assessment Regulations, 2010 (SL564.61). These regulations streamline the SEA process in Malta. The Regulations on Strategic Environmental Assessment (SL549.61) provide for the protection of primarily, but not exclusively, the environment. The protection is afforded at high level, that is to say, at planning stage. The Regulations strive to promote the integration of environment and health considerations into the preparation of plans and programmes, with a view to promoting sustainable development by ensuring that a strategic environmental assessment is carried out on plans and programmes which are likely to have a significant effect on the environment.


The general rule is that a person who carries out an activity, of whatever nature, for which a licence is required or acts in breach of any condition attached to such a licence, will be guilty of a criminal offence. In practice, sanctions can be light (such as warnings to the operators) but in other cases, sanctions can be substantial (such as the imposition of hefty fines). In those cases where the environmental wrongdoing amounts to a criminal offence, imprisonment or revocation (or both) of licences or permits are envisaged in the law.The ERA, as the primary environmental authority, enjoys enforcement powers against offenders – officers from the ERA are empowered to enter upon any land and inspect, survey or verify whether illegal activity is taking or has taken place. The ERA may, for such purpose, request the assistance of the police force, any local council, any department of the Government or any agency of the Government.

3 Waste


The New Environment Protection Act defines “waste” as any thing, substance or object which the holder discards or intends to discard, or is required to keep in order to discard and includes such other thing, substance or object as the Minister for the Environment may prescribe (EPA, s.2). There are various categories of waste. Certain categories involve more onerous duties and controls. A typical example would be specific approval from the competent authorities

would be required in the case of radioactive waste, whether this is intended to be disposed of in Malta or shipped out of Malta (SL549.51).Another category of waste that involves additional duties and control is vehicles for scrap, i.e., vehicles that have reached the end of their usable life. A specific legal regime applies here (SL549.36, adopting Directive 2000/53/EC). Specific rules also apply to electrical and electronic equipment (SL549.89 transposing 2002/96/EC as amended (“WEEE”)). The same can be said for packaging and packaging waste, legislatively dealt with in Malta in accordance with the Council Directive 94/62/EC as amended on Packaging and Packaging Waste (SL549.43). Producers of packaging waste are specifically obliged to recover and recycle such waste (Regulation 8 et seq.). This legislation is aimed at, as a first priority, preventing the production of excess packaging waste, but also promotes the re-use of packaging and the recycling and other forms of recovering packaging waste to reduce the final disposal of such waste. The regulations are intended to address all sorts of packaging waste, whether it is used or released at industrial, commercial, office, shop, service, household or any other level, regardless of the material used.Other categories of waste that involve additional controls and duties are: (i) waste batteries and accumulators (SL549.54), bringing into effect Directive 2006/66/EC; (ii) waste from extractive industries and backfilling (SL549.50), transposing Directive 2006/21/EC; and (iii) Polychlorinated Biphenyls and Polychlorinated Terphenyls (SL549.28).


Management of waste (and this includes, inter alia, the storage and sorting, etc. of waste) and in certain cases even production of waste, require a permit and are activities specifically regulated by law (SL549.63). A producer of waste would, therefore, have to obtain a permit if he intends to store or dispose of, on site, the waste that he produces. Waste must be handled, stored and managed in accordance with the applicable regulations and the permit. Producers of waste, amongst other things, are duty-bound to ensure that such waste is safely contained. The generation and management (including the storage) of household waste by the householder generating that waste is exempted from the requirement of obtaining a permit. Exemptions likewise apply to small operators.


The departure point here is the principle that once waste is collected or accepted by a third party (transferee/ultimate disposer), no residual liability remains with the transferor. However, there are a few exceptions – the producer of waste will remain liable if the waste that he has handed over to the transferee or ultimate disposer is contaminated or consists of rubble mixed with waste or hazardous waste (SL549.07, Reg.20). In such situations, the person who produced that waste remains liable and could be guilty of a criminal offence. The fact that such waste would have been transferred to a third party would not exonerate the person who was responsible for producing that waste. Likewise, producers of waste remain responsible for their actions if they mixed different categories of hazardous waste together or if they mixed hazardous waste with


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non-hazardous waste – transferring such waste to the ultimate disposer does not exclude the liability of the former (SL549.63).Apart from such cases of liability, as a rule, there are no instances where a person (the transferor) is vicariously responsible with another (the transferee or ultimate disposer) for the actions or failures of the latter, the former not having control over the actions of the latter. The “cradle to grave” concept evident in other jurisdictions is not otherwise familiar within the Maltese context unless specifically imposed administratively by the authorities.


In Malta, the legal regime that provides for such obligations is commonly referred to as “producer responsibility”. This regime is aimed at ensuring that businesses/producers who manufacture and/or import products and place these products on the market assume responsibility for those products. Based on the polluter pays principle, the regime imposes the obligation of bearing some of the waste management costs of collection, sorting or treatment and recycling and/or recovery. Ultimately, the law aims to reduce the overall impact of such waste on human health and the environment. This regime, insofar as take-back or recovery is concerned, is limited to certain categories of waste, namely: packaging waste is legislatively dealt with in Malta in accordance with Council Directive 94/62/EC on Packaging and Packaging Waste (SL549.43). Producers of packaging waste are specifically obliged to recover and recycle such waste (SL549.43, Reg.8 et seq.). Car producers and importers also have onerous duties in regard to end-of-life vehicles that are manufactured or imported by them (SL549.36, adopting the End-of-Life Vehicles Directive, 2000/53/EC as amended). Take-back rules also apply with regard to electrical and electronic equipment (SL549.89, transposing 2002/96/EC as amended (WEEE)), and likewise with regard to batteries and accumulators. In the latter case, Maltese law (SL549.54) emulates Directive 2006/66/EC, imposing collection and take-back mechanisms.

4 Liabilities


Liability arising from a breach of environmental laws can be placed into two categories – civil liability (private law) on the one hand and criminal liability (public law) on the other hand. The civil law contemplates civil liability in situations where the tortfeasor (that is, the person causing harm, or the offender) is responsible for damages caused towards the person who actually suffered the relative loss. Under our legal system, only material (or real) damages, including loss of future profits, may be claimed by the person who suffers the harm. Moral, psychological or penal damages are not permitted in such cases.Violation of a substantial number of environmental rules and regulations would also give rise to criminal liability, in which case a person found guilty by a court of law can be sentenced, in some of the more serious cases, to imprisonment, and in less serious cases to a penalty or possibly to both imprisonment and penalties.The Prevention and Remedying of Environmental Law Regulations, 2015 (SL549.97 implements EU law) hereinafter the “Environmental Damage Regulations”) apply to ‘environmental damage’ caused by certain defined occupational activities (Schedule

III) and to any imminent threat of such damage occurring by reason of any of those activities. With regard to protected species and natural habitats, the regulations apply to damage caused by any occupational activity and to imminent threat of such damage therefrom in cases where the operator is at fault or negligent. Standard defences can be raised by the wrongdoer in opposition of claims levied against him whether in civil or in criminal law. In civil actions, for example, the defence that the damage is not a direct consequence of the breach (lack of “causal nexus”) or the defence that no law, regulation or permit was breached would be available. With regard to responsibility arising under the Environmental Damages Regulations, Malta had opted, when transposing the relative Directive, to include both the so-called “Permit Defence” and the so-called “State-of-the Art Defence” into the local regulatory framework.


As a general rule, it can be said that pollution caused by an operator does not attract liability for environmental damage if the action (or inaction) that gives rise to the pollution falls safely and squarely within the confines of the law (i.e. there is no violation of any law or regulation, no negligence and no intention to cause harm or the pollution is attributed to a fortuitous event or is a consequence of an irresistible force s.1029, Civil Code) and within the limits of the permit. In such cases, ‘fault’ or an ‘intention to harm’ cannot be attributed to the operator and for this reason claims for damages will not arise. One finds, in Maltese jurisprudence, the concept that one may be held responsible for damages even if one acts within the limits of the law and in accordance with the related permit, if one ‘abuses’ one’s rights. Applied to a case of environmental damage caused by an operator to another person, the latter will have to prove that, although the former was “within his rights”, he acted “abusively” and as a result the harm was caused. In cases falling with the ambit of the Environmental Damages Regulations, an operator can rely on the Permit Defence to exonerate himself from the costs of remedial action, provided that no fault or negligence is attributable to the latter.


Certain environmental wrongdoing gives rise to a criminal offence. If it is established that the environmental wrongdoing giving rise to a criminal offence has been committed by a body corporate, the punishment levied for that offence will be attributed to the person who, at the time of the commission of the offence, was a director, manager, secretary or other similar officer, or was purporting to act in any such capacity, unless that person manages to prove in court that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of the offence (Interpretation Act, Chapter 249, s.13). If the offence arising from the environmental wrong is deemed not to be a corporate wrongdoing but to have been committed by the director or officers personally, then the latter would be liable for their wrongdoing in accordance with general principles of law. As a matter of public policy, it would not be possible to obtain insurance to cover directors and officers against punishments that follow as a consequence of a serious crime committed by them, and for this reason they cannot rely thereon.


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In civil matters, responsibility always lies with the person who is at fault. If it is the Company that committed the environmental wrong that is at fault, liability cannot be attributed to the director or the officer that is simply carrying out ‘superior orders’. If it is the director or officer personally who is at fault (disobeying orders, carrying out orders incompetently, etc.), it will be the latter who is liable (s.1038, Civil Code). The Company would be liable if it employed an incompetent person culpa in elegendo (s.1037, Civil Code) or if it failed to assign or oversee tasks competently culpa in vigilando. Directors and officers can obtain and rely on insurance to cover the risk of liability being attributed to them on account of their negligence or incompetence.


If a company commits an environmental wrongdoing, the shareholders cannot be held liable unless they personally participated in that wrongdoing. In other words, the liability of the company cannot be ‘passed on’ to the company’s shareholders unless the action in question falls within a very limited category of cases where the piercing of the corporate veil is specifically allowed by law. Such cases are very limited and, generally speaking, occur when fraud is proven and will, therefore, not normally apply in an environmental sphere. Hence, a purchaser of shares does not take on, personally, the environmental liability of the company the shares of which are being purchased – any liability would remain burdening the company as distinct from its shareholders. If the company is environmentally liable in some fashion, that liability of the company itself is not cancelled out through a share sale. Thus, if all the shares in the company are sold, the new shareholders will acquire the company as burdened by its environmental liability. Where an asset is purchased, although the new owner will not be held responsible for any environmental wrongdoing caused by the previous owner prior to the acquisition of the asset, the environmental permit attached to the holding or operation of that asset may be revoked when that wrongdoing is discovered by the authorities, and it will be no legitimate excuse for the new owner to argue that the wrongdoing was caused at a stage when he was not the owner. The acquirer may also lose control over that asset once environmental officers impound it and operations are brought to a halt. Therefore, even though the new owner may not be held responsible for the actions of the previous owner, the former has an interest in ensuring, prior to purchase, that all is in order even from an environmental point of view.


Unless the lender’s collusion with the wrongdoer is actually proven or unless fault or negligence is directly attributable to the lender, liability of the latter for environmental wrongdoing does not arise. The concept, evident in some jurisdictions, of deeming the lender to be an accomplice with the borrower in committing an environmental offence, attributing in that way liability to the lender for the wrongdoing of the borrower, is as yet completely alien to Maltese law. However, commercially speaking, there are reputation issues that lenders will want to consider independently from issues of strict law. Additionally, in the case of Lenders that grant loans for the acquisition of vessels and secure their loan with a mortgage over the vessel, the position is different; in such situations, lenders can ‘take possession’ of the vessels giving them effective control thereover. In such cases, Lenders will be responsible for the vessel and any pollution that she

may cause. Lenders will be obliged to take preventive or remedial action to avoid environmental harm if assets (granted by the borrower to the Lender as security for the loan) acquired by the Lender from the borrower (in enforcement of its security rights) are plagued with environmental problems that require containment.

5 Contaminated Land


Insofar as groundwater is concerned, a water policy framework emulating Directive 2000/60/EC has been established (SL549.100), by virtue of which the Ministry for Energy and Health is designed as the competent authority insofar as inland water is concerned and the Environment and Resources Authority is designated as the competent authority insofar as coastal water is concerned. The competent authority is empowered to take the necessary remedial action even if the pollution occurred prior to the acquisition of the land by the present owner, operator or permit holder. However, as a rule of thumb, present owners, operators or permit holders cannot be held liable for damages pollution not caused by them and this rule will apply to historic contamination.


There are no special rules specifically regulating contamination. Liability would, therefore, be shared between the responsible parties in accordance with ordinary principles of law. Under general principles, each party would be responsible for the damage caused by his or her action, up to that degree and no more. Under Maltese law, joint and several liability cannot be presumed, so much so that unless it is specifically provided for, it does not apply (s.1089 Civil Code). Although Maltese law does not provide for joint and several (or in solidum) liability in contamination cases, under general principles of law, where two or more persons cause damage maliciously (wilful misconduct or “dolus”), their liability to make good the damage will indeed be joint and several. This general rule will naturally apply in contamination cases. If some of the offenders acted with “dolus” and others without, the liability of the former will be joint and several, whilst the latter will only be liable for such part of the damages as he or she may have caused (s.1049 Civil Code). Otherwise, in cases where the part of the damage that has been caused cannot be ascertained, the injured party is entitled to claim that the whole damage be made good by any one of the tortfeasors (offenders), even though none or only some of the tortfeasors would have acted with malice. If the injured party, in such cases, decides to institute proceedings against only one of the tortfeasors, the defendant in those proceedings will be entitled to demand that all the persons causing the damage be joined in those proceedings. The court may apportion among them the sum fixed by way of damages, in equal or unequal shares, according to the circumstances. This exercise will not, however, prejudice the right of the injured party to insist not only that he be awarded the whole sum, but also that the sum awarded be recoverable from any one of the persons concerned. In other words, in such circumstances, the tortfeasors remain jointly and severally liable towards the injured party (s.1050 Civil Code).The Environmental Damage Regulations do not specifically provide for “cost allocation in cases of multiple-party causation” and instead refer such cases to “other relevant legislation” (Reg.10).


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The environmental regulator is free to enter into agreements incorporating a programme of remediation. Once agreement is reached, the regulator cannot come back and require additional works, unless such a possibility is specifically catered for in the agreement. A third party (i.e. a person who is not a party to the agreement) would not be privy to an arrangement for remediation and, as such, that contract would be a res inter alios acta with regard to him (or her). A third party would, thus, not be legally entitled to challenge such a contract. It would be a different matter if the programme agreed upon were, in some way or other, prejudicing that third party. In such cases, the third party would be able to seek compensation from the regulator provided he can demonstrate that he actually suffered a loss as a direct consequence of the programme. If those cases where remediation is a condition imposed on a developer in a development permit, third parties are allowed to appeal from the permit and through the appeal process, can influence the remediation programme. In such cases, the appellant can argue, for instance, that the permit should not be issued unless the remediation programme is more thorough or comprehensive. Elsewhere, third parties would also be entitled to voice their concern in public consultation processes, when such occasions arise. In certain limited circumstances, where a third party is being prejudiced by decisions taken administratively, an alternative possibility could arise, namely that of lodging a complaint with the Ombudsman or having the decision reviewed by the Courts.


Under general principles of law, a purchaser of land will have a right of action to seek compensation from his seller if the purchaser can demonstrate that the contamination in whole or in part:■ amounts to a breach of warranty or of a condition, express or

implied, in the contract of acquisition; ■ renders the land not fit for its intended use, as per the contract

of acquisition, provided that the buyer was not aware of the contamination prior to the acquisition; or

■ causes the purchaser to suffer a substantial diminution in the quality of the land, provided that the present owner was not aware of the contamination prior to the acquisition.

As is evident from the above, the present owner’s potential right of recourse, whether ex contractu or ex lege, is restricted to an action against his seller specifically deriving from and dependent on the sale contract. Apart from this, in the given circumstances, no right of action against other predecessors in title or against previous occupiers of the land would arise.It is not possible for the polluter-seller to transfer, in the contract of sale, ‘risks’ of contamination since it is a general principle of Maltese law that liabilities can only be transferred with the consent of the person or entity to whom they are owed. The liability or the risk of future liability arising as a consequence of actions that occurred prior to the sale remains squarely the responsibility of the polluter-seller who would have committed those actions. Invariably, however, the acquirer, upon taking control and possession of the land, would be duty-bound to take preventive or mitigating action.


General legal principles will apply here and the government will be entitled to recover from the wrongdoer the damages suffered to publicly-owned assets. Additionally, the Environmental Damages Regulations (SL549.97) provide that operators shall bear the costs for the preventive and remedial actions taken in terms of the Regulations for preventing or remedying environmental damages. The ERA may recover from the operator causing the damage or causing the imminent threat of damage the costs the ERA may have incurred in relation to the preventive or remedial actions taken pursuant to these regulations. These Regulations also provide for the notion of compensatory remediation in the case of environmental damage in relation to water or protected species or natural habitats and is aimed at the restoration of the environment to its baseline condition. The idea is to compensate for the interim loss of natural resources pending recovery. This compensation consists of additional improvements to protected natural habitats and species or water at either the damaged site or at an alternative site. It does not consist of financial compensation to members of the public. This type of compensatory remediation is applicable.



The powers granted by law to environmental regulators are reasonably generous. In general, it may be said that, in connection with the enforcement of environmental law, the authorities (ERA and PA) have the following powers:(i) to enter any premises, public or private, at all reasonable

times, and in the case of a dwelling house after giving previous notice, and inspect or survey any land, or verify whether an illegal development or activity is taking or has taken place;

(ii) to examine any article and take such samples as it may deem fit for examination;

(iii) to make plans of any premises, vehicle or vessel and take photographs of the same after entry or boarding; and

(iv) to do anything that is ancillary or consequential thereto.



Under the Prevention and Remedying of Environmental Damage Regulations (SL549.97), a legal obligation to report pollution found on a site has commenced to burden operators. This is apart from the obligation to report that rests upon the person who is responsible for the pollution caused or is responsible for the operation of the trade or industry that has led to the pollution. In the latter case, a duty to report to the competent authorities does come into effect regardless of whether the pollution is migrating off-site or otherwise. Additionally, if the pollution is migrating off-site, a duty


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to disclose the pollution does arise under the general principle of law that prohibits an owner/occupier of a site to allow his property from causing damage or harm to a third-party. Otherwise, in cases where operators discover that pollution is migrating from their facility off-site, reporting obligations do arise as contemplated under the European Pollutant Release and Transfer Register Regulation (EC166/2006 vide Art. 5 et seq. read with SL549.47). Operators of sites that fall within the Control Of Major Accident Hazard Regulations (SL424.19) that transpose European Council Directive 96/82/EC as amended have certain reporting obligations that must be catered for in their safety management systems (Schedule II of the Regulations).


There is no affirmative obligation to investigate land in order to verify whether that land is contaminated or otherwise. An obligation to investigate the land may be imposed on a developer by the Authorities in cases where development permission is being sought.


In the context of mergers and take-overs, it has become the practice in Malta for the merging parties to include in the merger agreement specific environmental warranties. Local experience has shown that such warrants do take up some of the negotiations leading to the merger. In mergers and take-over scenarios, such warrants would be granted to the acquiring company and would cater for potential environmental liabilities. Unless such environmental warranties are specifically agreed upon between the merging parties contractually, they do not arise ex lege. This is being said because, under Maltese law, there is no affirmative duty on the part of the target-company to disclose environmental problems to the acquiring company if such problems are apparent or can be readily ascertained by the acquirer. If an environmental problem is not apparent or ‘latent’, the acquirer can annul the deal claiming the existence of a latent defect in the transaction. Nevertheless, in all cases there is a duty on the part of the target-company to act in good faith. The duty to act in good faith is a general principle of Maltese law and arises automatically, that is ex lege – the parties need not mention it in the contract. The acquiring party will be in a position, therefore, to bring an action against the Seller if the failure on the part of the latter to disclose an environmental problem is deemed to be tantamount to a failure on the part of the target company to act in good faith or, multo magis, tantamount to fraud or deceit. This would be the case if the environmental problem that was not disclosed to the acquiring company is of considerable gravity (as to render the asset of lesser or no value or unfit for its intended purpose) and was intentionally camouflaged by the seller. Ultimately, therefore, it will be in the seller’s interest to disclose environmental problems to a potential purchaser, particularly if such problem impacts the sale in the sense just described.

8 General


There is nothing illicit or contrary to public policy if exposure to actual or potential environmentally-related liability is limited through an environmental indemnity – such an indemnity would be perfectly valid and binding between the parties. The indemnity agreement can be drawn up to cater for the wrongdoer’s responsibility towards private third parties and/or the authorities (referred to supra). As a rule of thumb, the aggrieved third party, or the authorities’ right to seek redress would be vis-à-vis the wrongdoer. In other words, there is no right of recourse directly against the indemnifier, albeit situations could arise where an action directly against the indemnifier would be permitted (actio debitor debitoris mei).The criminal responsibility of an environmental wrongdoer cannot form part of an indemnity agreement – this would violate public policy.


Sheltering environmental liabilities off balance sheet, that is to say placing a problematic property into a separate asset-less company, can be subject to attack if that transfer is done specifically to defeat the possibility of recovery by others (and this could include environmental authorities) of what is legitimately due to them when the debt is a result of transactions that precede the transfer of the asset. The opposite is true for future liabilities: in other words, there is nothing to prevent an asset being owned by a company whilst liabilities relating to the operation and management of that asset are assumed by another company. Exceptions will be made to this rule if the structure is intended to defraud creditors (the Price Club cases) or if the latter company is acting as agent for the former. Although a company can be dissolved, this will not serve to evade environmental liabilities because during the ensuing liquidation process, the liquidator must take account of all the company’s claims (even if not quantified and not yet due) and liabilities. All outstanding claims and liabilities of the company must be paid off from the company’s existing resources (after ranking the creditors according to their respective priority) before the liquidation is concluded and the company is wound up and struck off. Naturally, problems arise when during the company’s liquidation process it becomes evident that the company in liquidation is insolvent, not having sufficient assets to meet all its obligations. In such situations, unpaid creditors will not be able to recover their debts from the company and neither would they be entitled to seek recourse from the company’s shareholders (except for the unpaid part of their shares). In such cases, certain debts will remain unpaid. After the existing assets are liquidated and distributed amongst the debtors according to law, the company is struck off and ceases to exist. In this limited sense, environmental liability (or part thereof) may remain unsettled. Recourse to the assets of the shareholder is only permitted in very limited exceptional cases where fraud is evident.


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For a shareholder to be held liable for pollution caused by the company in which the shareholder holds shares, the corporate veil must be pierced. In this country, a company enjoys a personality that is independent from its shareholders. A claimant will, therefore, be entitled to bring a pollution claim against a company’s shareholders only if the company’s veil is pierced, otherwise the action will fail. Maltese courts will only allow the veil to be pierced on the basis of very limited grounds specifically provided for by law, such as fraudulent trading. If, on the other hand, a foreign court finds a Maltese shareholder responsible, the relative judgment can be enforced in Malta against the shareholders in accordance with the principles regulating the enforcement of foreign judgments in Malta.Assuming that it is not the parent company that causes the wrongdoing, an action against a ‘parent’ based in Malta for pollution caused by an affiliate or foreign subsidiary will not succeed in Malta. This is because there is no rule that imposes vicarious liability between the parent and its affiliate or subsidiary company in environmental matters.


The Civil Code (at s.1627A) provides that no person may take any discriminatory action against any of his officers, employees or agents on the grounds that such officers or employees (having reasonable grounds to suspect corruption) reported in good faith their suspicion to responsible persons or authorities. Any person who may have been the victim of such discriminatory action or sanction has a right to compensation for any damage caused to him by such discriminatory action. In recent years, Malta saw the introduction of the “Protection of the Whistleblower Act” (Chapter 527 of the Laws of Malta) which is aimed at protecting people who flag wrongdoing, ensuring greater transparency and good governance from civil or criminal liability or any other disciplinary proceedings. The Act makes provision for procedures in terms of which employees in both the private sector and the public administration may disclose information regarding improper practices by their employers or other employees in the employ of their employers. The Act includes provisions which protect employees who make said disclosures from detrimental action.


Penal or exemplary damages are not contemplated in Maltese environmental law except for what has been said above with regard to penalties that may be imposed by the ERA in certain instances. US-style group or class actions per se are not provided for under Maltese law. There is nothing, however, to stop a ‘group’ or ‘class’ from instituting a judicial action together, if the parties’ respective actions are connected to the subject matter, or if the decision of one of the actions might affect the decision of the other action or actions and the evidence in support of one action is, generally, the same to be produced for the other action or actions (COCP s.161(3)). In such case, each and every individual claimant would be a party to the suit, standing as plaintiff, i.e. each claimant will have to be specifically

indicated by name in the judicial proceedings. A class or group of persons can avail itself of the procedural opportunity granted by law and pursue an environmental claim on this basis, assuming they prove that they have a juridical interest to bring the action.


Individuals or public interest groups instituting environmental law actions do not benefit from any exemptions from the payment of legal costs.



Malta’s obligations have been closely associated with those of the European Union, particularly in terms of Directive 2003/87/EC, as amended transposed via SL423.50 which, among other things, requires that each Member State prepares a national allocation plan (“NAP”) for a given ‘trading period’. Operators of certain installations that fall within the scope of the Regulations such as energy plants or those involved in the production and processing of ferrous metals, mineral industries or those relating to timber are required to apply and obtain a greenhouse gas emissions permit for each of their installation. The Regulations also require operators to ensure proper monitoring and reporting of emissions. The allocation of allowances to stationary installations for the first two periods of the EU ETS, 2005–2007 and 2008–2012 was free of charge. For each of these periods Malta had to prepare a National Allocation Plan in which it determined the total quantity of allowances to be allocated to local installations operating within the scheme and then distributed the allowances among the installations. The NAPs, drawn up based on the criteria set out in the Directive and other relevant Commission guidance were approved by the European Commission. For the period 2013–2020 and subsequent periods, the allocation of allowances to stationary installations will be carried out in accordance with harmonised EU-wide rules.


As an EU member and in accordance with the EU’s Monitoring Mechanism, Malta has the obligation to submit an annual National Greenhouse Gas (“GHG”) Emissions Inventory and a biennial report on Climate Change policies, measures and projections (“PAMs”).


Malta was instrumental in launching and piloting the concept of climate change through various international fora. Particularly, on 22 August 1988, Malta requested the inclusion of an item entitled ‘Declaration Proclaiming Climate as part of the Common Heritage of Mankind’, in the provisional agenda of the 43rd session of the UN General Assembly, urging the protection of global climate for present and future generations of mankind. On 21 September 1988,


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the General Committee of the General Assembly included an item entitled ‘Conservation of Climate as part of the Common Heritage of Mankind’ and allocated the item for consideration in the Second Committee. On 24 October 1988, Malta formally introduced the item at a meeting of the Plenary Session of the UN General Assembly. During the session, Malta’s policy was explained in the sense that there should be global recognition of the fundamental right of every human being to enjoy the climate in a state that best sustains life. Malta then presented a concrete proposal in the form of a draft resolution that was submitted for consideration in the Second Committee. Resolution 43/53 was unanimously adopted in the plenary meeting of the General Assembly on 6 December 1988. This resolution paved the way for a series of events that led to formulation of the United Nations Framework Convention on Climate Change (UNFCCC). On 9 May 1992, the world’s governments adopted the UNFCCC at the Earth Summit in Rio de Janeiro. In doing so, the first step was taken in addressing one of the most urgent environmental problems facing humankind. Malta ratified UNFCCC in March 1994 as a non-annex I state and, on 11 November 2001, went on to ratify the 1997 landmark Protocol to the UNFCCC (the Kyoto Protocol). The UNFCCC and its protocol reflect Malta’s policy on climate change. Malta also ratified the second commitment period to the Kyoto Protocol and, on 2 October 2016, Malta ratified the Paris Agreement. In June 2008, the Climate Change Committee was set up by the Government to address climate change, tap into sources of alternative energy and ensure that Malta’s national obligations to reduce carbon dioxide emissions are adhered to in order to attain its emission targets as agreed between Malta and the EU. In September 2009, the Government of Malta issued a Report entitled ‘National Strategy for Policy and Abatement measures relating to the reduction of Greenhouse Gas Emissions’, consolidating the work carried out by the Climate Change Committee. The Strategy seeks to articulate the action to be adopted by Malta in the years to come. Malta is obliged to reduce CO2 emissions by 10 per cent and ensure that at least 10 per cent of energy is generated from alternative sources by 2020. Malta’s obligations have, in fact, since membership in 2004, been closely associated with those of the European Union, especially through the implementation of the common and co-ordinated policies and measures being advanced within the Union as discussed above. The National Climate Change Adaptation Strategy was published and adopted by the Government of Malta in 2012. It aims to build upon the National Strategy for Policy and Abatement Measures Relating to the Reduction of Greenhouse Gas Emissions of 2009 in terms of governance and policy infrastructure. The National Climate Change Adaptation Strategy seeks to identify recommendations in various sectors, which are vulnerable to climate change, such as water, agriculture, infrastructure, building, human health and tourism. It also addresses the financial impacts as well as sustainability issues.The National Climate Change Adaptation Strategy identifies the principal strategic climate impacts likely to affect Malta. The Strategy also highlights specific issues for improvements, such as that Malta cannot continue to rely exclusively on active cooling to counter the effects of poor building design.Malta has adopted the Climate Action Act, 2015 (CAP 543) to streamline Malta’s commitments on climate change on both main fronts of climate action, namely mitigation and adaption in a legally binding way. This Act aims to instil ownership across the board to fine tune effective climate action and governance. Specifically, on adaptation, the Climate Action Act, 2015 (CAP 543) dictates the process to conduct periodic reviews and update the National Adaptation Strategy. It also foresees to include information on climate change actual and projected impacts.

Malta has also transposed Directive 2009/28/EC on the promotion of the use of energy from renewable sources (SL423.19). The National Renewable Energy Action Plan 2011 (“NREAP”) indicates Malta’s measures for energy from renewable energy sources, as well as energy-efficiency strategies and other measures including cooperation with other Member States in joint projects, statistical transfers, joint support schemes as well as joint project with third countries.In addition, in June 2017, Malta adopted the Subsidiary Legislation entitled Limitation of Emissions of Certain Atmospheric Pollutants Regulations, implementing Article 10 (2) of Directive (EU) 2016/2284 of the European Parliament and of the Council on the reduction of national emissions of certain atmospheric pollutants, amending Directive 2003/35/EC and repealing Directive 2001/81/EC. This regulation imposes upon the competent authority the obligation to compile national emission inventories and projections, spatially disaggregated national emission inventories, large point source inventories and the informative inventory reports. These must then be forwarded to the European Commission and the European Environment Agency by the competent authority.

10 Asbestos


The majority of reported cases of asbestos-related diseases in Malta relate to the Malta Shipbuilding. In this jurisdiction psychological, moral, punitive or penal damages are not awarded in such cases by Maltese courts (First Hall, Civil Court, 6-Dec.06 writ 1427/97 Fenech et v. Malta Drydocks and Constitutional Court, 11 November 2011, Applications 31/10 and 26/09, Attard et v. Malta Shipyards). In this jurisdiction, damages would be limited to material damages consisting of damnum emergens and lucrum cessans. When determining quantum, as well as questions of causation (establishing a nexus between ‘cause and effect’), Maltese courts tend to take a relatively more cautious or conservative approach. Notably, Maltese law on quantum is currently being legislatively reviewed (Act VI/2004).It should be further noted that as regards moral damages, the Maltese Courts have also decided cases wherein it was decided that exposure to asbestos resulted in a breach of fundamental human rights and for this reason ordered the payment of moral damages (First Hall, Civil Court, (Constitutional Jurisdiction) 23-Nov.16 writ 30/09MH, George Spiteri et v. Policy Manager of Malta Shipyards et.).


In Malta, this matter is considered to be both an issue that concerns the protection of the environment and also a health and safety issue. Specific regulations have been passed in order to protect, in particular, workers against risks to their health, including the prevention of those risks arising or likely to arise from exposure to asbestos at work (SL424.23). Employers who operate from such buildings are by law obliged to conduct regular monitoring, consult and inform the workers, make regular reports to the Occupational Health and Safety Authority, to take samples, to keep health registers and are prohibited from handling asbestos in certain ways; and the demolition of structures containing asbestos subjects them to health surveillance.


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The Regulation of environmental and planning matters is currently in flux due to the legislative changes that are being implemented in light of the ‘de-merger’ of the MEPA into two separate authorities: the ERA and the PA. The split in the competent authority has also resulted in the splitting of the main legislative instrument regulating environmental and planning matters – the Environment and Development Planning Act. Indeed, three new acts have been published as follows: the Environment Protection Act (Chapter 549 of the Laws of Malta), the Environment and Planning Review Tribunal Act (Chapter 551 of the Laws of Malta, the “EPRT”) and the Development Planning Act (Chapter 552 of the Laws of Malta). The said three acts are aimed at gradually replacing the Environment and Development Planning Act which formerly regulated environment and planning matters holistically.Another important legislative development in the field of environmental law was the introduction of Legal Notice 223 of 2014 which, inter alia, introduced Article 41A into the Environment Development Planning Act (“EDPA”) giving NGOs established to protect and preserve the environment locus standi in environmental matters. For a number of years, it was difficult to institute an environmental law action under Maltese law since the required juridical interest was not always present. However, with this recent development, NGOs established for the protection and preservation of the environment are deemed to have the necessary juridical interest, allowing them to institute actions to review certain environmental decisions. This recent impetus to deeming NGOs to have juridical interest in environmental matters was also seen in the judgment Ramblers Association of Malta v. MEPA et (Court of Appeal, 27-May.12, writ. 228/2010). The conclusions reached by the Court of Appeal in this case showed the Court’s willingness to give a wide interpretation to the juridical interest notion in the context of environmental protection mirroring other court decisions in the past and the legislative impetus embodied in Article 41A. However, the commendable legislative implementation of the notion of “deemed interest” of NGO’s under Article 41A may be in jeopardy due to the legislative changes concerning the EDPA discussed above. Indeed, although Article 41A and this “deemed interest” provision were introduced into the EDPA, the 2016 legislation brought about following the MEPA “de-merger process” mentioned above omits the most essential part of Article 41A which deems NGOs promoting environmental protection to have sufficient interest enabling them to institute actions to review certain environmental decisions. This has not been reproduced into the said EPRT Article 11(1)(e). This means that the right granted to NGOs to access a review procedure risks being entirely deleted once the EDPA is repealed in its totality unless it is somehow ‘saved’ through judicial interpretation that dares to engineer an extension of the meaning of “interest”. Finally, the Control of Invasive Alien Species of European Union Concern Regulations were implemented in December 2017. These regulations promulgate Regulation (EU) No. 1143/2014 on the prevention and management of the introduction and spread of invasive alien species in Malta. These Regulations allow the competent authority to take all necessary measures for the eradication, control, prevention and monitoring of species included in the Union list.


There is also specific and comprehensive legislation that regulates the disposal or destruction of asbestos, or of building or other material that contains asbestos.There is also in place the Prevention and Reduction of Environmental Pollution by Asbestos Regulations, which prohibit the use of asbestos and also aim at the reduction and prevention at source of asbestos emissions into the air (SL549.18).



With the increase in environmental awareness and responsibilities, environmental risk insurance has in recent years been given a more dominant role in Malta. The principal types of environmental risk insurance in Malta relate mainly to marine pollution and land pollution, with an emphasis on oil spills, wreck removals, maritime claims, the carriage of passengers at sea, the shipment of waste, and the disposal and treatment of waste.


The limited amount of claims made relate to the marine environment and specifically to oil slicks. Such claims are rarely brought before the Maltese Courts. For this reason, one cannot talk of a claims experience in Malta that relates distinctly to environmental insurance.

12 Updates


Recent legal development in environmental law matters was the introduction of the Climate Action Act (Chapter 543 of the Laws of Malta) which is aimed at contributing to the mitigation of climate change by limiting anthropogenic emissions of greenhouse gases and protecting and enhancing greenhouse gas sinks and reservoirs, and to contribute to the prevention, avoidance and reduction of adverse impacts of climate change and the reduction of vulnerability, enhancement of resilience, and adaptation to the adverse effects of climate change.Moreover, the Regulator for Energy and Water Services Act (Chapter 545 of the Laws of Malta) was recently introduced establishing a new Regulator for the exercise of regulatory functions regarding services relating to energy and water.


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GANADO Advocates is a leading law firm based in Malta, widely recognised for its business and commercial law practices. The firm traces its roots back to the early 1900s, and is today one of Malta’s foremost law practices that is consistently ranked as a top-tier law firm across all its core sectors. The firm has, over the past decades, contributed directly towards creating and enhancing Malta’s hard-won reputation as a reliable and effective international centre for financial and maritime services.

GANADO Advocates’ Environment practice advises a wide variety of domestic and international clients on both regulatory and commercial issues, including drafting and negotiating of power purchase agreements, implementing EU Directives into local law and advising on ship sourced pollution issues. The practice also focuses on legislative development instigated as a result of “climate change” concerns, the regulation of waste, development planning and the protection of the natural environment and sites of national importance. In 2012, the firm was also involved in a legislative project that was led by the Government, to introduce a new law entitled the “Public Domain Bill” focusing mostly on environmental protection. The Bill became law in 2016.

Dr. Jotham Scerri-Diacono is a Partner within GANADO Advocates’ Ship Registration team, with particular focus on ship registration, shipping litigation and maritime law generally. Jotham also regularly advises and assists clients on questions of environmental law, corporate law and dispute resolution generally.

Jotham sits on a number of Committees and Boards involved in either maritime or environmental law. He lectures and is an examiner at the University of Malta on topics dealing with shipping, advocacy and environmental law. He regulatory writes and contributes articles on maritime law in various local and international journals.

Dr. Jotham Scerri-DiaconoGANADO Advocates 171, Old Bakery Street Valletta VLT 1455Malta

Tel: +356 2123 5406Email: [email protected]: www.ganadoadvocates.com

Dr. Lara Pace is an Associate within GANADO Advocates’ Employment team, regularly assisting clients on legal and regulatory matters relating to drafting of employment contracts and other legal documentation as well as on issues relating to termination of employment, dismissals, redundancies, discrimination, industrial disputes and litigation connected to such matters. Lara also advises clients on general corporate and company law matters, as well as environmental law issues.

Dr. Lara PaceGANADO Advocates 171, Old Bakery Street Valletta VLT 1455Malta

Tel: +356 2123 5406Email: [email protected]: www.ganadoadvocates.com


Chapter 17

Gonzalez Calvillo, S.C. Leopoldo Burguete Stanek

Mexico

The National Commission of Water is, as well as PROFEPA, a decentralised administrative agency of the SEMARNAT in charge of the administration and preservation of the national hydric resources to achieve its sustainable use.And finally, we have the National Agency for Industrial Safety and Environmental Protection of the Hydrocarbons Sector, a decentralised administrative agency of the SEMARNAT which regulates and oversees industrial safety, operative safety and protection of the environment regarding the activities performed by the hydrocarbons sector. In a nut shell, it holds the powers of SEMARNAT and PROFEPA regarding the hydrocarbons sector.


As general rule, in Mexico, authorities take into account the principles of prevention and precaution, same that should be reflected in all of their actions so as to guarantee the constitutional right to a healthy environment (article 4 of the constitution). In case of observing breach to environmental laws, the authority applies corrective and punitive measures upon those found responsible.


In terms of the Federal Law on Transparency and Access to Public Information, all public governmental entities are obliged to reveal all information within their possession upon the request of interested persons of the society. Only data considered sensitive or private will be reserved; however, all authorisations, concessions, licences and permits are subject to the Transparency Act, as well as the name of their holders.



Environmental permits are required for activities that are considered likely to cause ecological misbalance and/or exceed the maximum limits allowed in the applicable normativity. In most cases environmental permits may be transferred from one person to another, some permits require of a prior assignment



The Political Constitution of Mexico, the General Law of Ecological Balance and Environmental Protection and its diverse Regulations in matters such as Environmental Impact Assessment, Natural Protected Areas, Prevention and Control of Pollution to the Atmosphere; as well as the General Law of Forestry Sustainable Development, Wildlife General Law, General Law of Climate Change, Federal Law of Environmental Liability, General Law for the Prevention and Integral Management of Wastes, General Law of National Assets, the Regulations for the Federal Maritime Terrestrial Zone and Lands Gained from the Sea, Federal Criminal Code, Law of National Waters, the Law of the National Agency for Industrial Safety and Environmental Protection of the Hydrocarbons Sector and the Regulations of each of the aforementioned, as well as Mexican Official Standards. Please bear in mind that all the above are federal and general laws and regulations, and there are also local regulations for each state of the republic, as well as municipal regulations for each municipality of every state.The Ministry of Environment and Natural Resources (“SEMARNAT” for its acronym in Spanish) and its 31 Delegations across the Country, being the Federal authority in charge of conducting the national environmental politics, promoting the sustainable development and conservation of natural resources. It exerts the possession and property over the national assets in beaches, federal maritime terrestrial zone and lands gained from the sea. It oversees evaluating the Environmental Impact Assessments for projects under the federal jurisdiction that may cause ecological misbalance or alterations to the environment during their construction and/or operation, Forestry Land Use Changes, hazardous wastes and materials, emissions to the atmosphere, wildlife and vegetation, among others.The General Attorney’s Office for Environmental Protection (“PROFEPA” for its acronym in Spanish) is a decentralised administrative agency of SEMARNAT, with technical and operational autonomy. Its main faculties are to watch the compliance of the environmental normativity, safe keep the interests of the population in environmental matters and to sanction persons and/or companies that violate said normativity.


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authorisation, others are only subject to filing a notice. There are a few cases where assignment is not possible and so a new permit needs to be obtained.


There are three actions that may be taken in a subsequent order:1. Appeal for Review (Recurso de Revisión), which is filed

before the hierarchical superior of the environmental authority that denied or issued the permit.

2. There is also the option for an Annulment Trial (Juicio de Nulidad) where the legality of the authorities’ actions will be judged by a Federal Court of Tax and Administrative Justice.

3. When both of the above actions have proven unsuccessful, an Injunctive Action/Amparo Trial (Juicio de Amparo) would proceed, this is a constitutional trial against the actions of authorities that injure the constitutional rights of individuals.


Activities that require [federal] Environmental Impact Assessments are enlisted in article 28 of the General Law of Ecological Balance and Environmental Protection and article 5 of its Regulations in Matters of Environmental Impact Assessment. Activities not listed therein may be subject to such procedure within the terms of the local jurisdiction.Some of the activities [of federal jurisdiction] subject to impact assessment are: hydraulic works; construction of general communication ways such as roads, highways, bridges, railways, etc., as well as for their maintenance; construction of pipelines for the conduction of gas, oil and hydrocarbons; petroleum industry; petrochemical industry; chemical industry; steel industry; paper industry; sugar industry; cement industry; electric industry; exploration and exploitation of minerals and substances reserved for the Nation; treatment, storage or elimination of hazardous and/or radioactive wastes facilities; exploitation of forestry materials in rainforests and of species of difficult regeneration, and forestry land use changes; among others.


Enforcement powers for the authorities are broad; they may go from a simple ammonisation and corrective measures to an economic fine, a temporary or definitive, partial or complete shutdown of facilities, and in the worst-case scenario, to the authority revoking permits. Also, depending on the violation, and the result of the investigation surrounding it, criminal actions may be taken against the responsible party.

3 Waste


Waste is the material or product, whose owner or possessor disposes, and which is in a solid or semisolid state, or is liquid or gas in a

container, and which may be susceptible of being valued or requires to be subject of treatment or final disposal in accordance to the rules set forth by the General Law for Prevention and Comprehensive Management of Wastes and its Regulations. Wastes that require additional duties or controls are categorised as: (i) Wastes of Special Management; (ii) Hazardous Wastes; and (iii) Solid Urban Wastes. Also controls and duties will depend on the category of the generator: micro; small; or large generator.


Regarding non-hazardous wastes, there is no maximum storage time; however, each state establishes its own regulations regarding its management and disposal, in most cases, non-hazardous wastes are disposed of in the municipal landfills if not subject to valorisation.Regarding hazardous wastes, a special permit is required for their management and disposal (in Mexico there is only one authorised final disposal site for hazardous wastes). In any case, the generator of hazardous wastes is responsible for their correct management and final disposal and is obligated to give notice to the Ministry of Environment and Natural Resources and to local authorities. In case of on-site treatment, a specific authorisation is required.


The producers are liable for the wastes they generate; however, when transferring them to authorised companies for their transportation and/or final disposal, the responsibility for the handling of the wastes is of the authorised companies. However, the generator may be charged again with the burden of the management given by the company hired for the transportation and/or final disposal of the wastes, when this last one is proven to not have the corresponding authorisation for management, transportation and/or final disposal of the corresponding wastes.


The General Law for Prevention and Comprehensive Management of Wastes establishes that when it comes to hazardous wastes there must be a strict control from the moment they are produced until the moment of their final disposition; there is a joint liability for all those involved in their management and disposal (i.e. producer, transporters, and those responsible for the final disposition). Additionally, waste producers must implement waste management plans so as to ensure the proper management of waste requiring special treatment and that all of the waste that can either be reused or recycled is recovered to minimise waste production.

4 Liabilities


Liabilities may result in fines, administrative sanctions, administrative arrest, temporary suspension of activities or permanent closure


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(either partial or complete) of the establishment, permits being revoked, environmental remediation or compensation, and in some cases, criminal liability.


Yes, in case that the operator causes environmental damage as consequence of exceeding the permitted limits of pollutants in water, soil or atmosphere, as would be the case of a spill or failure of the control equipment. Our legislation establishes the obligation for remediation or when not possible, compensation, to all those who pollute, even when said pollution is the result of an involuntary incident.


Legal representatives of companies, as is the case of most directors and administrators of a company, can be environmentally liable for the systematic non-compliance of environmental obligations; they can even be subject to administrative arrest, and, if an environmental crime is committed (foreseen in Title Twenty-fifth of the Federal Criminal Code), they can be liable as the intellectual or material author of the crime, independently of the sanctions imposed on the company.Insurance will only cover accidents and payment of damages to third parties, in some cases, for environmental remediation; however, it is unlikely to have coverage over the possible liabilities of directors and officers of corporations.


Upon acquiring a company all the environmental obligations and liabilities are assumed by the new owners, including the repair of environmental damages. In case of an asset purchase, it would be possible for the purchaser to claim the recovery for damages paid in case of detecting that the environmental damages were prior to the purchase and not properly disclosed.In the case of soil contaminated by hazardous wastes, transmission of property must be authorised by SEMARNAT, since notice must be filed in order to establish who will be taking care of the remediation.


Lenders have no direct liability for environmental wrongdoing or remediation costs.

5 Contaminated Land


The person considered liable for the contamination is the one in charge of the operation which caused it; therefore, it is upon such

person or entity to execute all necessary studies and actions to determine the extent of the contamination and remediate it, and only when remediation is impossible, compensation may be given. In the case of contaminated sites with no clear owner or whose owner is unable to perform the soil remediation, the federal government can declare site remediation and register it in the Federal Registry of Commerce and Property as a sort of encumbrance and the same authority is responsible for preforming the remediation works, normally through a public bid.In the case of groundwater, there is no specific law or regulation on the matter; however, the National Commission of Water has the responsibility to identify the quality of water and, if it finds it to be polluted, it can take joint action with the General Attorney for Environmental Protection to identify those responsible and make them repair the damages.The above approaches apply for both environmental emergencies and historic contamination, the latter being known in Mexico as environmental liability.


Joint liability will apply, and if only one of the responsible parties is found he will answer for the total damage and he can later claim for payment from the others to the extent of their responsibility.


An environmental remediation must be authorised by the environmental authorities and validated by an authorised verification unit that will evaluate the remediation level; once the process is concluded, it is submitted before the federal authorities for their approval, which are empowered to determine whether the process is indeed concluded, or further works are needed.The law also contemplates the possibility of third parties challenging the authorised remediation programme and its compliance.


Yes, and yes. First, as mentioned before, if the seller of a contaminated land failed to disclose such situation to the purchaser, the purchaser will hold the right to a private claim against the seller. And second, a polluter may transfer contamination liability to a purchaser when the latter knew of the contamination and, jointly with the seller, informed such situation to the SEMARNAT, accepting the risk of contaminated land liability and obligations deriving thereof.


No, monetary damages apply only for environmental reparation or compensation.


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The environmental authorities have full power to request production of documents, sampling, site inspections and whatever else considered necessary for the verification of the compliance of the environmental regulations. The limitations are only applicable to certain documents, where the obligation to keep them is for a five-year period.



Yes, it must be disclosed to the environmental authorities immediately so that the corresponding measures can be taken, as well as to potentially affected third parties.


In case that a spill occurs or potential leaks in underground pipelines or equipment have been detected.


There is a full disclosure obligation, which, if not complied with, may be a cause for civil, and in some cases, even criminal actions.

8 General


It is possible to use an environmental indemnity to limit exposure; however, paying third parties for an indemnity does not discharge the environmental damage liability before the corresponding authorities. It may reduce it, but not delete it.


This is a no for both, since the authorities have the capacity to investigate the responsible party for environmental liability, and in case the company is dissolved, it may charge its former shareholders with the liability.


It is highly unlikely for any of the scenarios presented above to occur, it would require a series of specific situations to take place for the piercing of the corporate veil to happen; for example, if it is proven that the shareholders or parent company intentionally constituted the polluting entity to execute certain actions that knowingly cause pollution.


Yes, the legislation foresees their right to remain anonymous, and also, the legislation foresees for penalties in case of threats and intimidation towards anyone under which “whistle-blowers” could also find cover.


Class actions for environmental matters are foreseen within the Federal Code of Civil Procedures, through which the plaintiffs may claim economic indemnification proportionately to the damages proven, being their main objective to obtain a remediation and, if not plausible, compensation to the environment. As for penal or exemplary damages, such measures are not foreseen in the Mexican legislation. However, economic sanctions can be imposed by the Attorney General for Environmental Protection; regardless of this, they cannot exceed 50 thousand times the minimum wage (around 237,500.00 USD) for each violation found. The environmental authorities also have discretional faculties to impose corrective measures that can be very onerous.


If an individual or public interest group present a General Accusation (denuncia popular) before the PROFEPA, the environmental process will be between the authority and the defendant, consequently, the federal government will absorb all the costs of the environmental litigation.In the case of an environmental class action, a fund for the costs of evidence and expert testimonies was created so as to allow individuals and public interest groups the possibility of presenting class actions without fear of the costs. Furthermore, if the defendant is proved guilty, he has to pay all the legal costs of the trial.



Currently we have Green Bonds managed by the Mexican Stock Market Exchange, the function of which is to finance sustainable


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There are few, if any, insurance companies that offer environmental insurance as such, rather, civil liability insurance policies cover the damages that may be caused by authorised works. The General Law of Ecological Balance and Environmental Protection foresees the possibility of environmental insurance; however, as we have explained, there are none on the market.The Federal Government created a sort of insurance against natural disasters for agriculture and livestock farming; however, it is more of an adaptation fund in case of climate change-related natural disasters than an environmental insurance.


So far, there has not been any relevant precedents of environmental insurance claims.

12 Updates


As seen in the Climate Change section, we are expecting a series of new activities within the Emissions Trading market and the compliance of regulations for meeting the goals set by the Mexican government in the Paris Accords.We are also expecting a series of reforms to the General Law of Ecological Balance and Environmental Protection as to the verification process followed by authorities and the administrative procedures for violations to environmental law.We also have a project for a new General Law of Biodiversity, the objective of which is to achieve, through the conservation and sustainable use and enjoyment of biodiversity, the protection of a series of human rights foreseen in the Political Constitution, such as the rights of indigenous people regarding use and management of natural resources within their territories, everybody’s right to a healthy environment, the right to be informed, to participate and to access justice.

projects (i.e. sustainable plantations). Regardless, and as a result of the Paris Accord (under COP 21), Mexican government is developing a Voluntary Carbon Market, which will become enforceable as of the first trimester of 2018. Additionally, in the Paris meeting of December 2017, the Mexican government presented a proposal to establish a carbon price for the Americas. The rules for the Market will be published soon.


Yes, all emissions are to be monitored and reported into the Registry of Pollutants Transfer. As mentioned at the beginning of the chapter, we have federal and local jurisdictions applying, federal fix sources report through the Annual Emissions Inventory (known as COA), while local sources report through whatever system is established in their jurisdiction; additionally, the federal Registry of Pollutants Transfer gathers all of this information to establish the National Inventory.


In Mexico we have an aspirational approach to climate change, meaning that a series of goals have been set for 2030 and 2050. Notwithstanding, the voluntary communication from Mexico filed in terms of the Paris Accords establishes a plan for reducing greenhouse gases. Likewise, the Energy Transition Law, along with the General Climate Change Law, has established mechanisms to reduce the dependency on fossil fuels used by power plants.

10 Asbestos


With regards to asbestos as a human health issue, there have not been any litigation cases; however, from the environmental point of view, there have been several cases of litigations surrounding a hazardous waste management matter. Be advised that Mexican Official Standard NOM-052-SEMARNAT-2005 determines asbestos as a non-hazardous waste when contained in a binding agent. In other cases, it must be treated as a hazardous waste and sent for final disposal at authorised locations.The Mexican Official Standard NOM-010-STPS-1999 (which establishes the safety and hygiene conditions for work places that manage, transport, process or store substances that pollute the work environment) establishes the method to determine the presence of asbestos in the work environment.


As we have explained before, unbound asbestos is treated as hazardous waste; therefore, if in the terms of the Official Mexican Standard NOM-010-STPS-1999 it is identified, then, in terms of the Official Mexican Standard NOM-052-SEMARNAT-2005 it must be either contained in a binding agent or treated as hazardous waste and sent to its final disposition.


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Gonzalez Calvillo is a leading Mexican law firm based in Mexico City. Since 1987, our firm has rewritten the model of the full-service law firm by growing steadily whilst very selectively. Long-standing competitors of our firm have witnessed us surpass them qualitatively, in staffing capabilities, and broad scope of work we are able to take on. All of our practice areas have accredited performance for constancy and novelty and are headed by professionals of the highest calibre. Though our clients include various Fortune 500 companies, we are well diversified and represent a blend of local and multinational corporations, domestic and international financial institutions, governments and governmental entities and individuals.

We have a broad, solid, and energetic partnership base of 18 and close to 80 dedicated lawyers comprise our legal team. We are commended for our ability to build fluid cross-disciplinary teams in the most challenging and sophisticated transactions. Most of our lawyers have received a portion of their academic legal training in the United States or Europe and many of them have worked as foreign associates in highly prestigious global law firms.

Leopoldo Burguete-Stanek is a partner at González Calvillo in charge of the Environmental and Natural Resources Practice Group. With over 30 years of experience in the field, he has acquired expertise in all aspects of environmental and natural resource law with particular strengths in project development, energy, water, hazardous waste management, atmospheric pollution, environmental impact and due diligence and auditing, climate change, natural protected areas, mining, forestry, oil and gas activities, health and safety and all aspects of environmental litigation and dispute resolution, while advising clients in sophisticated cross-border transactions. He has been consistently ranked as a foremost practitioner in his fields of practice by recognised international publications such as Chambers&Partners, Who’s Who and Latin Lawyer.

Mr. Burguete-Stanek can advise and guide his clients through many aspects of cross-border transactions and project planning, including the management of social facets, through the implementation of international standards for project finance, environmental and health and safety regulation.

Leopoldo Burguete StanekGonzalez Calvillo, S.C. Montes Urales 632, Piso 2Lomas de Chapultepec 11000 Mexico CityMexico

Tel: +52 55 5202 7622Email: [email protected]: www.gcsc.com.mx


Chapter 18

AKD

Eveline Sillevis Smitt

Gerrit van der Veen

Netherlands



An environmental permit is required prior to the establishment (or changing) of an industrial plant set out in more detail in a regulation. In the Netherlands we have three different types of industrial plants: type A; B; and C. Only type C require an environmental permit and involves heavier industries including IPPC plants. IPPC plants are appointed according to annex I of the EU directive on industrial emission (integrated pollution prevention control) 2010/75.Type A and B plants do not require an environmental permit. However, the operator of such plants do need to comply with the applicable rules and regulations set forth in the Activities Decree and underlying Activities Regulation (kind of standardised permit provisions). In specific circumstances it is possible for the operator to ask for other “tailor-made” provisions, which the authorities will lay down in a decision which is subject to appeal (in court) for the applicant and interested third parties. Environmental permits for type C plants are linked to the business and are not personal licences. Another operator is allowed to use the environmental permit. He and the original permit-holder need to (jointly) notify the authorities at least one month before the new operator wants to make use of the permit involved. Not doing this in a timely manner is not a constitutive requirement in order to use the permit. However, not acting within this timeframe or not acting at all does constitute a criminal offence which is punishable according to our Economic Offences Act (EOA).Only a permit under our Nuclear Energy Act is a personal licence.


An environmental permit can be acquired according to the following procedure. The applicant files his application to the authorities. The authorities supply a draft permit. The draft will be published by the authorities for six weeks and is subject to opinions (“zienswijzen”) from the applicant and third parties. The authorities have to make a final decision, taking into account the submitted opinions. The final decision (the acquiring or refusal of the permit) will also be published by the authorities for (again) six weeks. When the



Environmental policy in Dutch law is based on several sources. Article 21 of the Dutch Constitution lays down a duty of care for the government to take care of the habitability of the land and the protection and improvement of the environment. The Environmental Permitting (General Provisions) Act, the Environmental Management Act and the relevant European treaties, regulations and directives comprise the specific environmental regulations and policies. Several bodies administer and enforce environmental law. In most instances the municipal executive is the competent authority, but some complex plants are still regulated by the provincial executive. In practice, the environmental competences of the municipal and provincial executives are carried out by several environmental agencies that carry out environmental tasks in name of the municipal and provincial executives.


Enforcement of environmental law has a prominent position in Dutch environmental policy. The Dutch government takes an active approach to enforcement based on policies which describe priorities in enforcement, active monitoring and enforcement tools. Enforcement also takes place on request of interested parties.


Publication of governmental information is governed by the Government Information (Public Access) Act. Public authorities are required to provide environmental information on request. Anyone can request information and does not have to have a specific objective for requesting that information. The request for environmental information can only be denied on certain restricted grounds relating to public and private interests.


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authorities do not agree on the submitted opinion, the party (the applicant or third parties) that submitted the opinion is allowed to appeal in court. Third parties also need to qualify as an “interested party” in order to be submitted into court. An interested third party is a person who suffers serious adverse effects from the plant involved (like noise, odour, etc.). Interest groups are submitted into court when its objects clause contained in the articles of association are at stake and the (daily) activities of interest group itself is not limited to (only) litigation in court. Parties appeal to the district court involved and are allowed to appellate to our Administrative Jurisdiction Division of our Council of State (highest court for administrative matters) situated in the Hague.


There is no general obligation under Dutch law for the performance of an audit. It is, however, possible that the environmental permit provisions or the provisions attached to the Activities decree and/or Activities regulation do require the operator of a plant to perform investigations, report the outcome to the authorities in order to achieve a specific goal (like, for example, to meet specific requirement with regard to energy conservation) and obtain explicit approval from the authorities.Some plants that are allowed to storage or process specific dangerous substances (according to the Seveso III directive) need to put up and comply with its safety reports in order to control dangers internally and externally. The safety report will be reviewed by the supervisors appointed by the authorities on a regular basis. Furthermore, some environmental permits cannot be granted, unless Environmental Impact Assessment (EIA) is included in the application. It concerns industrial activities which can cause serious adverse effects to the environment and listed in our AIE Decree (based on the EU directive as amended by EU directive 2014/52). The applicant needs to supply information in the EIA like the industrial activities he wants to perform and its impact on the environment; he also needs to consider reasonable alternatives as set forth in our environmental Management Act (EMA). The EIA is linked to the permitting process and is open for public inspection and submitting opinions (see also question 2.1). When no EIA is performed there were our regulations do require to do so, the permit is subject to annulment.


The Environmental Permitting (General Provisions) Act and the General Administrative Law Act grant the competent authorities the power to impose remedial sanctions in order to end the infringement. In that respect, the authorities are allowed to enforce permit violations through either (1) an order subject to a penalty for noncompliance (“last onder dwangsom”), or (2) an administrative enforcement order in which the government corrects the violation itself at the violator’s expense (“last onder bestuursdwang”). Aside from that, the competent authorities are also allowed to impose (3) an administrative penalty (“bestuurlijke boete”). When the infringement is serious, criminal prosecution will follow instead of the imposition of an administrative penalty. Non-compliance with permit regulations may also result in permit withdrawal.

3 Waste


In line with the Waste Framework Directive (2008/98/EC) waste is defined as any substance or object which the holder discards or intends or is required to discard. Waste is regulated by the Environmental Management Act in accordance with the Waste Framework Directive. The specific waste streams are regulated by the national waste management plan which describes national policy on waste prevention, waste management, recycling and best practices. This programme is used for permitting, monitoring and enforcement.


Storage before removal is allowed on the site of production for a maximum period of one year. In case of useful application/recovery, storage on the site of production is allowed for a maximum period of three years.


Article 10.37 of the Environmental Management Act contains the obligation for producers of waste to hand over its waste to a licensed waste processing company or at least to a licensed collector. For landfill of waste, Book 6 Article 176 of the Dutch Civil Code determines that producers of waste that hand over its waste to a licensed landfill operator, do not retain any residual liability. When a waste processing company goes bankrupt, the insolvency practitioner is in principle liable for the processing of the waste involved. However, the liquidation assets will not be sufficient to recover the costs involved. From there, the authorities under the environmental permit (mostly provincial authorities and sometimes municipal authorities) are in fact responsible for the processing of the remaining waste present at the plant. From 2003 until 2009, the Financial Security Decree applied, which contained an obligation for waste operators to set financial security, before an environmental permit was issued. The financial amount depended on the amount of waste the operator was allowed to accept under its environmental permit. This provided the authorities financial back-up when the operator went bankrupt. As from 2009, this Decree is no longer in force. We had several bankruptcy cases involving “high risk plants”. It concerned Seveso III plants that are allowed to store or process specific dangerous substances. It led to discussions to reintroduce a kind of financial security for such high risk plants in order to be able to recover costs for actions needed to comply with the environmental permit and/or to recover costs needed to restore damage caused to the environment. This piece of legislation will probably enter into force as from 2012 (see also under question 12.1).Our Environmental Management Act moreover provides rules for closed down landfill sites. Landfill sites that are closed down, are handed over to the provincial authorities, after appropriate measures have been taken in order to assure that the landfill will not cause damage to the environment. From that moment, the provincial


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authorities have the legal obligation for aftercare. To finance this obligation, taxes are imposed on the operator of the landfill site during the operation of the landfill site involved.


Extended producer responsibility to take back and recover waste has been established for several product sectors. Examples are electronic devices, batteries, car wrecks and packaging.

4 Liabilities


In case of a breach of environmental laws and/or permits, administrative, criminal and private liabilities can arise. Administrative liabilities include the possibility of a penalty for noncompliance, an administrative enforcement order in which the government corrects the violation itself at the violator’s expense and/or (in some cases) a fine. The available defences against these types of liabilities are to make an administrative objection and subsequently appeal at the district court and subsequently to the Administrative Jurisdiction Division of the Council of State. Criminal prosecution can be defended at the district court, appealed at the court of appeal and after that at the Dutch Supreme Court. The same goes for private liabilities.


In accordance with EU directive 2004/35/CE on environmental liability, operators can be liable for environmental damage when the polluting activity is operated within permit limits. However, the competent authority has the power (but is not obligated) to waive damages when the operator proves that he was not negligent and the damage was caused by an activity that was explicitly permitted in an environmental permit or was not deemed damaging based on the latest scientific and technical knowledge.


Directors and officers can attract personal liabilities for environmental wrongdoing when they fit the criteria for author in an organisation context. This means the person must have assigned the act that led to the wrongdoing or the act must have taken place under his command. The monetary damages or the monetary consequences of the damages can be insured. However, the person cannot rely on insurance or indemnities for protection from the competent authorities.


In a share sale, the target remains liable from an environmental liability perspective. However, in a share purchase, it is sometimes harder to know all possible liabilities that can arise after the

purchase. In an asset purchase, the purchaser becomes liable for the targets’ environmental liabilities vis-à-vis the specific asset that has been acquired. However, in an asset purchase, the seller has a more specific obligation to disclose possible liabilities regarding the specific assets, which makes it “easier” for the purchaser to get a complete picture of environmental liabilities.


Lender-liability does not exist under Dutch law, unless the lender provides a contractual warranty or indemnity.

5 Contaminated Land


Under the Soil Protection Act, a distinction is made between historic and new cases of soil/groundwater contamination. With historic contaminations (caused before 1987), the current owner (even the innocent owner) can be held liable and forced to decontaminate the historic contamination. With new cases (caused after 1987), only the person responsible can be forced to decontaminate.


In case more than one person is responsible for the contamination, liability is allocated through joint liability: all persons are liable for the whole contamination. The competent authority can decide who it wants to charge.


Generally, remediation is imposed through an administrative decision which generally can be challenged through administrative objections and appeals to the administrative courts and subsequently appeal to the Administrative Jurisdiction Division of the Council of State. The regulator cannot come back to an earlier decision to the detriment of the addressee.


When a previous owner/occupier explicitly discloses the contamination, the purchaser generally has no right to seek contribution from the previous owner/occupier. When the contamination was not explicitly disclosed, it depends on the wording of the purchase agreement whether contribution can be obtained. The Dutch Civil Code contains a private right to seek contribution for hidden defects that become known after the purchase.


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The Environmental Management Act (Article 17.16) provides the competent authority the power to recover monetary damages from the polluter for preventative and remedial actions resulting from environmental damage caused by the polluter. As far as we know, this article has not been used to date.



The General Administrative Law Act grants broad powers to supervisors who are appointed by the competent authorities to inspect compliance with environmental rules and regulations. They can enter places for inspections (if needed even effect entry with police assistance), demand verbal and written information, conduct research, take samples, interview employees, etc., all if required to carry out their supervisory tasks. Moreover the request should be reasonable and proportional.



The Soil Protection Act requires anyone who finds pollution on a site to notify the environmental regulator. In some circumstances, the Dutch Civil Code requires the owner of a contaminated site to inform neighbours and prevent further spreading. This is especially the case when neighbouring land is affected by the contamination.


Most of the historic cases of soil contamination have been identified. However, when carrying out industrial activities that may affect the environment and which require a notification to the environmental regulator or a permit, a baseline survey is required. Moreover, soil surveys are not required by law in case of land sale/purchase, but are usually conducted in those cases as a way to comply with seller/purchaser investigation obligations.


See question 5.4.

8 General


As a rule, liability between private parties can be limited through indemnities. This does not shield the actual perpetrator from any government action for breaches of environmental law. The only case known in the Netherlands where a contribution to the government indemnifies the perpetrator from further action is in case of complex groundwater pollutions where the government uses an area-based approach in which all owners contribute to decontamination.


In general, known liabilities which include environmental liabilities cannot be sheltered off balance sheet. If a company is dissolved in order to escape environmental liability, this is not allowed and might constitute fraud. Dissolution also does not mean that the officers and directors escape liability when they fit the criteria for author in an organisation context (see question 4.3).


Only persons who fit the criteria for author in an organisation context (see question 4.3) can be held liable for breaches of environment law and/or pollution caused by the company. A Dutch parent company cannot be successfully sued in Dutch court for pollution caused by a foreign subsidiary/affiliate.


The House for Whistleblowers Act protects any employee that wants to report a wrongdoing. The House for Whistleblowers Act requires any organisation with 50 or more employees to have a whistleblowers’ scheme in which the procedure for whistleblowing is described. Organisations are prohibited from treating a whistleblower unfairly. The House for Whistleblowers can assist whistleblowers and oversees compliance with the House for Whistleblowers Act.


Article 3:350a of the Dutch Civil Code allows foundations or association with full legal capacity to launch class actions.


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In addition, the Netherlands also reports Greenhouse Gas Emissions under other international agreements, such as the United Nations Economic Commission for Europe (UNECE), the Convention on Long Range Transboundary Air Pollutants (CLRTAP) and the EU’s National Emission Ceilings (NEC) Directive.


Our present government (Rutte III formalised in October 2017) is planning to implement a strict climate policy in order to reduce greenhouse gas emissions and to achieve the goals agreed to in “Paris” in 2015. A Climate bill will be put up. The government expects that the goals can be achieved by closing down five coal-fired power stations and by realising (underground) Carbon Capture Storage (CCS). In the Netherlands we also want to realise (additional) windfarms on land as well as in sea. In court an interest organisation filed a claim against the Dutch State, stating the State committed a tort since the State does not comply with her obligations under UN climate treaty, Kyoto protocol and the “no-harm principle”. It concerns the “Urgenda-case”. The district court of The Hague convicted the State and ordered the State to achieve greenhouse gas emission in 2020 at least 25% lower than in 1990. The State lodged an appeal, which is still pending.

10 Asbestos


There is much litigation, especially started by former employees who – in former days – worked with asbestos or asbestos-related products. The employer has a duty of care to protect its employees against damages incurred when performing labour activities for his employer. The employer is only exempted from his duty of care when he is able to prove that he took sufficient measures in order to prevent the negative effects (causing in the case of working with asbestos: mesothelioma). The employer is also exempted from liability when he could not be aware of the risks involved (approximate as from the sixties in the twentieth century). However, the party against whom an action is brought might invoke the statute of limitation. The period of limitation is 30 years after the claimant has been exposed to asbestos. The incubation of mesothelioma is 10 to 60 years; so many times the 30-year period has already lapsed. Our highest civil court has ruled that it might be reasonable to extend this 30-year period under several exceptional conditions and taking into account all kind of circumstances like whether the defendant should have been aware of possible future claims and whether the claim is filed in due time after the damages occurred.


In the Netherlands, using or producing an asbestos-containing product is not permitted. If one wants to tear down an older building (built before 1993), an asbestos inventory needs to take place and should be handed over to the authorities before starting the actual demolition activities. When the building or works contain asbestos, the asbestos need to be removed first by a designated party. Currently, a bill is pending in order to introduce an obligation for owners of buildings which have roofs that contain asbestos in the outer layers. The legislator has plans to prohibit such roofs from

AKD Netherlands


With regard to administrative proceedings, there is no exemption from liability for individuals or public interest groups. However, for individuals, the court register fees are a little lower and any party contesting governmental decisions in administrative court are exempted from covering the legal fees of the opposing party (being a governmental body) in case they lose the procedure (except in case of abuse of law). In civil legal proceedings, the court register fees for individuals are also lower, but any party that lost the proceedings, including individuals or public interest groups, should bear the costs of the legal proceedings. In both private as well as in administrative proceedings, costs of the legal proceedings are submitted to rules which fix the amount of the costs to be paid (and never cover the actual costs incurred).



As from 2005, the Netherlands participates in the EU Emission Trading Scheme (EU ETS). For the present third trading period (2013–2020), national allocation plans were replaced by an EU-wide cap on emissions. This cap will be reduced yearly by 1.74% in order to reduce the CO2 emissions in 2020 by 21% compared to 2005. Further reduction is envisaged up to 40% in 2030, leading to a yearly reduction of 2.2% (instead of 1.74%). EU ETS plants emit more than 50% of the CO2 within the Netherlands. 85% of the CO2 emissions from EU ETS plants are derived from 10% of the industry that participates in this system (being mainly the electricity and chemical sector). The auction price of an emission allowance differs from time to time due to several circumstances, like the 2008 financial crisis and the large surplus of such emission allowance on the market. Prices started to go up again due to the EU decision on backloading and market stability reserve. In June 2016, there appeared a second fall in price due to the announced Brexit. In general, the Dutch government is of the opinion that the system works well but needs to be supported by renewable/green energy and other measures in order to achieve an (energy) transition (see also under question 9.3). In the Netherlands, we also used to have a national NOx trading system as from 2005. This system did not function right and was abolished in 2014.


Under the United Nations Convention on Climate Change (UNFCCC) and under the Kyoto Protocol, the Netherlands is obliged to prepare an annual inventory report of Greenhouse Gas Emissions. The estimates that must be provided in this annual report (National Inventory Report) must be consistent with the Intergovernmental Panel on Climate Change (IPCC) 2006 Guidelines for National Greenhouse Gas Inventories (IPCC, 2006). The annual report must also be consistent with the guidelines under the Kyoto Protocol and the European Union’s Greenhouse Gas Monitoring Mechanism.


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12 Updates


Currently the entire field of environmental and planning law is under revision. The aim of this revision is to bring all sectoral laws and regulations within the scope of one Environmental and Planning Act. All the current permits (environmental, water, etc.) will be integrated into one environmental permit. Moreover, all environmentally relevant regulations will be integrated into one governmental decree. It is expected that fewer activities will require a permit and more will be required to comply with general regulations and be notified to the environmental regulator. It is not clear when the new Environmental and Planning Act will enter into force as it has been postponed several times. The current plan points to 2021.

1 January 2024. In other words, when the bill enters into force, owners have to remove their roofs which contain asbestos and have to do so before 1 January 2024. The reason behind this is that older roofs, which are not properly taken care of, are able to expose mankind to asbestos fibres. This needs to be prevented.



Environmental insurance is widely available in the Netherlands. Environmental insurance generally covers environmental damages including gradually caused damages. Insurance can only cover monetary damages and does not protect against governmental orders to prevent or reverse environmental damage.


Proceedings about insurance claims are common in the Netherlands. The normal civil court procedures are applicable.

AKD Netherlands


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AKD is one of the largest law firms in the Netherlands. With a team of 250 committed lawyers, civil-law notaries and tax lawyers, AKD delivers high quality legal services and tax matters in nearly all legal fields, based on a full-service approach. Our client base varies from very large multinational companies to stock-listed Dutch entities, from large corporates to family-owned businesses, from financial institutions to municipalities and hospitals.

Given the extensive expertise of our administrative and environmental law department, we are able to take on complex and labyrinthine cases and provide top-quality service. AKD is amongst others involved in several energy-related projects and has specialist knowledge regarding nuclear energy. Continually maintaining and expanding our specialist knowledge, we regularly publish in and also serve on the editorial boards of various academic journals and other publications. In addition, we are regularly invited to speak and give lectures at seminars and conferences. Moreover, a number of our lawyers hold professorships and other positions at various universities.

Our specialists receive recognition from independent parties both at home and abroad. For instance, the European Legal 500 and Chambers (leading independent guides to commercial law firms in Europe) have for many years described our practice group as one of the best law firms in this field with many of our specialists receiving individual recommendations.

Eveline Sillevis Smitt has been a partner since 2002: with AKD since 2009 and prior to that with Simmons & Simmons. Eveline is a leading expert in the field of environmental law (including spatial planning) and she has been recognised in both ‘Chambers’ and ‘The Legal 500’. One client said of her, “Eveline is very engaged, helpful and bright, with outstanding knowledge”.

In the field of environmental law, Eveline has considerable experience with permitting and enforcement matters that play a role in heavier industries, the energy industry, waste management and the foodstuffs sector. Examples of these are best practices, air quality, noise zoning, emissions and emissions trading, soil contamination, odour issues, (external) safety, waste spillages , environmental protection (including flora and fauna), the use of secondary building materials and the preparation of environmental impact assessments. Eveline also advises and litigates in specialist environmental disputes involving asbestos liability and the law on waste substances, including the import and export of waste (EWSR) and other waste-related matters.

Eveline has worked on projects involving various kinds of power generation, including wind and nuclear energy. She also advises on issues related to coordinating and expediting procedures for acquiring any government permits that may be required.

She has considerable experience with large enforcement cases, such as ChemiePack and Edelchemie, a former waste processing company in the province of Limburg.

Alongside her legal practice, Eveline frequently publishes articles and lectures for various programmes as well as at client seminars.

Eveline Sillevis Smitt AKD PO Box 43023006 AH RotterdamThe Netherlands

Tel: +31 88 253 5361Email: [email protected]: www.akd.nl

Prof. Mr. G.A. (Gerrit) van der Veen (1967) is a partner at AKD. He heads the Regulatory and Governmental Affairs practice group in Rotterdam.

Gerrit van der Veen is also professor of Environmental Law at the Law Faculty of the University of Groningen.

Gerrit works for many municipalities, provinces and public authorities, water boards, cooperative bodies and independent administrative bodies, as well as for companies (including real estate developers) and organisations (such as hospitals and educational institutions). Gerrit specialises in administrative law and environmental law. His practice focuses chiefly on general administrative law and procedure, public administration and government acts that are subject to private law, environmental law/liability, the law on subsidies and administrative compensation, mining legislation and associated liabilities.

Gerrit is increasingly being asked to deal with ‘high spec’ cases that also draw media attention. He also acts as an in-house lawyer for medium-sized and larger municipalities. Although a perfectionist, Gerrit is acutely aware of events around him and looks for practicable solutions. His rapport with the various government bodies he is involved with is excellent. His thorough professional knowledge and affinity for administrative aspects means that he gives solidly reliable advice and litigates with a keen focus. An example of his practical approach was shown by an evaluation of him at a conference: “Quite an experience to hear the most practical work from a professor.”

Gerrit is able to draw on his own highly experienced team and fellow practice group members for specialised administrative issues. And for support in other areas of the law Gerrit has access to AKD’s numerous specialists as well as its international network.

In his capacity as professor at the University of Groningen he examines the interaction between environmental law and general administrative law, for example with regard to enforcement in the area of environmental law. His inaugural lecture, given in 2014, dealt with duties of care and liabilities under the new Environmental and Planning Act (Omgevingswet), with a particular focus on major enforcement cases.

Gerrit van der VeenAKD PO Box 43023006 AH RotterdamThe Netherlands

Tel: +31 88 253 5556Email: [email protected]: www.akd.nl


Chapter 19

Romulo Mabanta Buenaventura Sayoc & de los Angeles

Benjamin Z. Lerma

Claudia R. Squillantini

Philippines

Pursuant to the Constitution’s mandate of ensuring local government autonomy and devolving executive power, the responsibility for enforcing certain aspects of environmental laws is assumed by Local Government Units (“LGUs”). As a general rule, aspects of environmental regulation not specifically allocated by law to national agencies are within the jurisdiction of LGUs.


Except for specific powers allocated by law to the DENR, the enforcement of environmental laws has been devolved to LGUs. In the performance of its devolved powers, LGUs share with the national government the responsibility for the sustainable management and development of the environment and natural resources within their territorial jurisdiction. Notwithstanding this devolution of power, LGUs’ enforcement of environmental laws remains subject to the supervision, control, and review of the DENR. To illustrate the extent of authority devolved to LGUs, the local chief executive of the Philippines’ smallest administrative unit, the Punong Barangay, is tasked to enforce laws relating to pollution control and protection of the environment. The municipal mayor is mandated to adopt adequate measures to safeguard and conserve land, mineral, marine, forest, and other resources of the municipality. The legislative body of a municipality, the Sangunniang Bayan, has the power to enact ordinances and pass resolutions necessary to protect the environment and impose appropriate penalties for acts which endanger the environment. In a recent Supreme Court decision, the court upheld the requirement of conducting LGU consultation and obtaining prior LGU approval for national government projects that are deemed environmentally critical.


The Constitution provides that the right of the people to information on matters of public concern shall be recognised. It further provides that access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as a basis for policy development, shall be afforded to citizens, subject only to limitations provided by law. Although the foregoing Constitutional right to information on matters of public concern has repeatedly been affirmed by the Philippine Supreme Court, there is no legislation that sets out the



The Philippines’ environmental policy is based on the Philippine Constitution’s mandate to protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature. This right to a balanced ecology is tempered by the Constitution’s mandate for the State to develop its patrimony and to promote industrialisation and full employment through industries that make full and efficient use of natural resources.The principal agency tasked with the mandate of implementing the Philippines’ environmental policy is the Department of Environment and Natural Resources (“DENR”). The DENR is responsible for the conservation, management, development, and proper use of the country’s biological resources, natural physical endowments, and major natural assets. Amongst other functions, it: licenses and regulates all use of natural resources; manages protected areas; assesses environmental impact; controls pollution and decides pollution cases; manages toxic chemicals and hazardous wastes; settles mining conflicts; conducts ecosystems research and technology transfer; carries out information, education, and communication campaigns; and implements international and regional environmental agreements.The DENR consists of the following bureaus: the Forest Management Bureau (“FMB”), which is responsible for the protection, development, and management of forest lands; the Lands Management Bureau (“LMB”), which is responsible for the administration and disposition of alienable and disposable lands of the public domain; the Mines and Geo-Sciences Bureau (“MGB”), which is responsible for mineral resources development and regulation of mining activities; the Environmental Management Bureau (“EMB”), which is responsible for environmental management, conservation, and pollution control; the Ecosystems Research and Development Bureau (“ERDB”), which is responsible for charting and implementing the DENR’s research programmes; and the Protected Areas and Wildlife Bureau (“PAWB”), which is responsible for managing national parks, wildlife sanctuaries, and marine parks.The DENR’s exercise of regulatory powers is performed through 13 Regional Offices distributed throughout the Philippines’ 13 administrative regions. These Regional Offices are principally responsible for implementing the Philippines’ environmental laws, policies, and programmes.


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procedures for the exercise of this right and the penalties for its denial. A Freedom of Information Bill has been pending in Congress for almost half a decade. Note that, although public authorities are required to provide access to official records, they are not required to prepare lists, abstracts, summaries, and the like. Note also that the right to information is not absolute and is limited by an individual’s right to privacy and State interests in national security. The DENR Freedom of Information Manual (“FIM”) was published on 1 February 2017. The FIM mandates the DENR to regularly publish, print, and disseminate at no cost to the public and in an accessible form, and through their website, its rules and regulations, orders, and decisions, as well as current and important databases and statistics that it generates. The FIM also establishes the procedure for requesting information from the DENR and the remedies in case of a denial of such request.



Projects that qualify as an Environmentally Critical Project (“ECP”) and/or that are located in Environmentally Critical Areas (“ECA”) are required to secure an Environmental Compliance Certificate (“ECC”). Otherwise, a Certificate of Non-Coverage (“CNC”) may be obtained. A CNC is generally not required, except in cases where the project proponent intends to obtain a permit from another government agency that requires the submission of either an ECC or a CNC (e.g., projects proponents applying for investment incentives with the Philippine Economic Zone Authority (“PEZA”) and projects located within the jurisdiction of the Laguna Lake Development Authority (“LLDA”)). An exempt project may voluntarily obtain a CNC for the purpose of confirming its exclusion from the ECC requirement.ECPs include heavy industry, resource extraction, and infrastructure projects. ECAs include declared national parks, watersheds, and ancestral domains of indigenous peoples.Other permits may also be required, e.g., air pollution clearances, wastewater discharge permits, and solid waste management permits, among others. Generally, these permits are not transferable without the consent of the granting authority. Note that while a share sale involving the permit-holder does not generally require notifying or getting the consent of the granting authority, an asset sale involving a regulated asset (e.g., a pollution-emitting device) will require the relevant authority’s consent.


A party aggrieved by a final decision in an ECC application may, within 15 days from receipt of such decision, file an appeal on the grounds of grave abuse of discretion on the part of the deciding authority, or serious errors in the review findings.The DENR may adopt alternative conflict/dispute resolution procedures as a means to settle grievances between proponents and aggrieved parties to avert unnecessary legal action.


Yes. The issuance of an ECC or CNC is dependent on the submission of an Environment Impact Assessment (“EIA”) which evaluates and predicts the likely impact of a project on the environment during construction, commissioning, operation, and abandonment. The EIA also includes designing appropriate preventive, mitigating, and enhancement measures, and addressing these consequences to protect the environment and the community’s welfare. The process is undertaken by, among others, the project proponent and/or the EIA consultant, the EMB, a Review Committee, the affected communities, and other stakeholders.


Any person, corporation or partnership found violating the terms and conditions of an ECC, or of the standards, rules, and regulations issued by the National Environmental Protection Council (“Council”), shall be punished by the suspension or cancellation of his/its certificate and/or a fine in an amount not exceeding 50,000 pesos (PHP 50,000) for every violation, at the discretion of the Council. Other penalties are also specifically provided by law with regard to violations of requirements under air pollution clearances, wastewater discharge permits, solid waste management permits, and other permits.

3 Waste


Waste is defined and classified under the Ecological Solid Waste Management Act, the Clean Air Act, the Toxic Substances and Hazardous and Nuclear Wastes Control Act, and other environmental laws. For example, solid waste is classified into at least seven categories: agricultural; bulky; hazardous; municipal; solid; special; and yard waste. Airborne waste is classified into medical, infectious, and municipal waste. The different classes of waste are subject to different requirements with respect to their disposal, treatment, and storage.


Occupants of buildings and residences are required to store waste in suitable containers while awaiting final disposal by city or municipal officials. In cases involving nuisances or offensive trades or occupations, owners, managers or operators are required to secure sanitary permits from the local health authority to remove all injurious by-products and waste daily to prevent the escape of industrial impurities and adopt methods to render them innocuous, and to store all materials properly to prevent emission of noxious or injurious effluvia.


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Yes, producers or generators of waste continue to own and be responsible for any hazardous waste generated, produced, or transported outside their premises. These include toxic, corrosive, reactive, and flammable waste products. In fact, they are required to submit to the DENR comprehensive emergency contingency plans to mitigate any spills and accidents involving hazardous waste, which must conform to the guidelines issued by the DENR.


There are currently no take-back requirements for waste disposed of by waste producers. However, producers of hazardous waste continue to own waste, despite its transfer outside their premises.

4 Liabilities


Liabilities for breach of environmental laws may be administrative, civil, or criminal. Administrative sanctions are frequently used in environmental law enforcement and must be defined clearly in the implementing regulations. They may come in the form of cancellation of permits, revocation of business permits or licences to operate, and revocation of health and sanitary permits, as well as administrative fines and other penalties. Criminal sanctions may result in fines or imprisonment. In most instances, fines are imposed, since imprisonment is considered an extreme remedy reserved for cases involving wilful concealment or wanton and careless disregard of known risks that result in widespread health hazards. For violations of environmental laws, defences available are the same as any other case, i.e., no technical violation, the law or rule is inapplicable, and force majeure. With respect to force majeure, the DENR’s Mines and Geo-Sciences Bureau has previously rejected the defence of a mining company that a tailings spill incident was caused by unprecedented heavy rainfall. The decision casts doubt on the viability of mounting a force majeure defence in similar cases.The Supreme Court’s new Rules of Procedure on Environmental Cases govern the procedure in civil and criminal actions before courts in cases that involve the enforcement or violations of environmental and other related laws.


Generally, an operator may not be held liable for environmental damage if the polluting activity is operated within the permit limits. However, remedies in tort law (quasi-delict) and damages may still prosper if there is reckless imprudence or negligence on the part of the operator.


Directors and officers of corporations may be held personally liable for environmental wrongdoing in limited cases. By express provision in various environmental laws, where a violation is committed by a corporation or other juridical person, the directors and officers who consent to or knowingly tolerate the wrongdoing shall be responsible for the liability. There are insurance providers in the Philippines that can extend directors’ and officers’ (D&O) indemnity cover for liability arising from environment-related cases.


Environmental regulators impute liability on whoever are the owners of the pollution-causing asset at the time of discovery of the environmental damage. The responsibility to implement remedial measures also rests on the current owner.Assuming that a third party is responsible or shares responsibility (e.g. the former owner or occupier), the current owner will still be responsible vis-à-vis the regulators but may shift the burden to the third party by claiming damages from them. Philippine law recognises and upholds the separate legal personalities of shareholders and corporations. A shareholder can only be held responsible for corporate liabilities to the extent of his subscription to the corporation’s capital. As an exception to this general rule, the corporate veil may be pierced in cases where the corporate fiction is used to justify wrong, protect fraud, or defend crime. Thus, absent any of these circumstances, a shareholder will not be held liable for a corporation’s breach of environmental law.With respect to directors and officers, they can only be held liable if they wilfully and knowingly vote for or assent to patently unlawful acts of the corporation, including those related to environmental matters. They can also be held liable for acts done with gross negligence or made in bad faith in directing the affairs of the corporation. In view of the above, there is no substantial difference from an ultimate liability perspective between a share sale and an asset sale – both the share transferors and the asset sellers may be held liable provided the share transferees and asset buyers establish the former’s responsibility. Note that proximate liability vis-à-vis the regulators will rest on the share transferees and asset buyers.


Absent any showing of direct involvement in the damage caused, there is no precedent in the Philippines for making lenders liable for environmental damage and/or remediation costs.

5 Contaminated Land


There is no specific precedent in Philippine environmental law on


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this matter. However, an action based on tort or quasi-delict may be filed against the polluter, alleging fault or negligence.


There is no specific precedent in Philippine environmental law on this matter. However, government agencies have always enforced the rule of solidarity in these cases, with each party being fully liable for the violation.


Environmental regulators are not prohibited from agreeing to voluntary environmental remediation by parties that cause environmental damage. Notwithstanding the agreement, there is no law preventing the relevant regulator from coming back, under the banner of public policy, and requiring additional works should it deem the remediation insufficient. Such agreements, moreover, are not immune from challenge by third parties, who can challenge the agreement as contrary to public policy. Under the Supreme Court’s new Rules of Procedure for Environmental Cases, courts are required to exert their best efforts to persuade parties to arrive at a settlement of a dispute involving alleged environmental damage. To this end, courts are authorised to issue a Consent Decree approving the settlement agreement, which must be in accordance with the public policy to protect the right of the people to a balanced and healthful ecology. Except when attended by grave abuse of discretion, the issuance of a Consent Decree cannot be impugned by a third party.


There is no specific precedent in Philippine environmental law on this matter. However, an action based on tort or quasi-delict may be filed against the previous owner or occupier, alleging fault or negligence. Given that liability is based on tort or quasi-delict, despite any transfer of risk to the new owner, the previous owner responsible for the environmental damage can still be held liable by the authorities.


There is no specific precedent in Philippine environmental law on this matter. However, an action based on tort or quasi-delict may be filed against the previous owner or occupier, alleging fault or negligence.



The DENR, as well as the LGUs to which some of its functions have been devolved, enjoy broad powers to supervise and control activities that pose potential threats against the environment. They are authorised to require the production of all documents needed to prevent and control activities which may be harmful to the environment. The authorities also have the power to subpoena witnesses and documents. The various bureaus of the DENR are granted broad powers to enforce the law. The National Pollution Control Commission is authorised to enter at all reasonable times any property of the public dominion and private property devoted to industrial, manufacturing, processing or commercial use without doing damage, for the purpose of inspecting and investigating conditions relating to pollution or possible or imminent pollution. The Pollution Adjudication Board has the legal authority to issue a cease-and-desist order ex parte, without a hearing, where the amount of waste discharge of a company exceeds the allowable standards under the law.



There is no specific duty to disclose this information to regulators or potentially affected third parties.


Philippine law does not impose a positive duty on an individual to investigate land for contamination. However, where a party is required to comply with regulatory processes in order to secure government permits or licences, it may be required to investigate its land for contamination or other forms of pollution.


Philippine law does not impose a positive duty to disclose environmental problems relating to land or a building that is subject of a sale, merger or takeover transaction. In contracts of sale, the principle of caveat emptor is followed, where the buyer must investigate potential problems relating to the property to be purchased, subject to the principle of good faith. Parties may, however, contractually agree on representations, warranties, and indemnities with regard to an asset or corporation’s environmental compliance.


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8 General


Yes, there are insurance providers in the Philippines that can underwrite a company’s environmental liability exposure. Directly making a payment to affected third parties does not necessarily discharge or mitigate the polluter’s liability under applicable laws and regulations.


Likewise, while a company can be dissolved at any time, it cannot escape existing liabilities by doing so. The company is obligated to settle all its outstanding obligations during the dissolution process. Should the assets of the company be found insufficient, it may be possible to go against responsible officers and/or the shareholders if piercing the corporate veil is found to be proper.


Philippine law recognises and upholds the separate legal personalities of shareholders and corporations. A shareholder can only be held responsible for corporate liabilities to the extent of his subscription to the corporation’s capital. As an exception to this general rule, the corporate veil may be pierced in cases where the corporate fiction is used to justify wrong, protect fraud, or defend crime. Thus, absent any of these circumstances, a shareholder will not be held liable for a corporation’s breach of environmental law. With respect to directors and officers, they can only be held liable if they wilfully and knowingly vote for or assent to patently unlawful acts of the corporation, including those related to environmental matters. They can also be held liable for acts done with gross negligence or made in bad faith in directing the affairs of the corporation. Philippine courts exercise authority over acts done in their respective jurisdictions. As such, there is no basis for a parent company to be sued in the Philippines for pollution caused by a foreign subsidiary or affiliate in another jurisdiction. The Philippines has no long-arm statute similar to the United States’ Alien Tort Claims Act.


Currently, there is no Philippine law specifically protecting the rights of whistle-blowers on environmental matters. Under the Rules of Court on Criminal Procedure, however, an accused whistle-blower in a criminal case relating to an environmental law violation may be discharged as a State witness so that he or she may testify for the State. To qualify as a State witness: the testimony of the whistle-blower must be absolutely necessary; there must be no other direct evidence available; the testimony can be corroborated; the whistle-

blower must not be the most guilty; and the whistle-blower must have no prior conviction for an offence involving moral turpitude.


A provision on citizen suits is provided for under the Rules of Procedure for Environmental Cases. The Rules liberalise the rules on standing to easily allow citizens to initiate actions for the enforcement of environmental laws. However, no damages can be awarded to any party since, being a citizen suit filed to protect the public interest, any corrective action shall be for the purpose of benefitting the environment, and not for certain individuals. A person or class of persons who wish to recover damages for injury suffered pursuant to an environmental claim may file a separate civil action instead. Under the Revised Rules of Civil Procedure, when the subject matter of the controversy is one of common or general interest to many persons so numerous that it is impracticable to join all as parties, a number of them which the court finds to be sufficiently numerous and representative as to fully protect the interests of all concerned may sue for the benefit of all. In this instance, proof of personal injury is required in order to claim damages. Certain environmental laws provide for penalties and award exemplary damages, whether the suit was filed as a class action or otherwise. For example, the Toxic Substances and Hazardous and Nuclear Wastes Control Act imposes exemplary damages of at least five hundred thousand pesos (PHP 500,000) on corporations that store any amount of hazardous and nuclear wastes in any part of the Philippines.


Under the Rules of Procedure for Environmental Cases, the payment of filing and other legal fees by the plaintiff shall be deferred until after judgment unless the plaintiff is allowed to litigate as an indigent. For citizens’ suits, the payment of filing and other legal fees shall likewise be deferred until final judgment. In both cases, the fees shall constitute a first lien on any judgment award.



The Philippines is a signatory to the United Nations Framework Convention for Climate Change (“UNFCCC”) and to the Kyoto Protocol. Its commitment under these agreements is to establish a Clean Development Mechanism (“CDM”), which is one of three market-based flexibility mechanisms included in the Kyoto Protocol that allows Annex I countries to earn “Certified Emission Reduction units (“CERs”) or carbon credits. These are to be used for fractional compliance with the countries’ reduction commitments under the Protocol whenever they undertake projects that contribute to sustainable development in a non-Annex I Party (i.e. a developing country not bound by emission reduction targets), and concomitantly result in real, measurable, and long-term reductions that are additional to any that would otherwise occur.


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on national and international standards. Proper removal requires sealing the area with a plastic of the required thickness to avoid the escape of asbestos fibres into the air and the environment before removal starts. It further requires double-bagging of asbestos in special waste bags with labels. Breathing apparatus and Personal Protective Equipment (“PPE”), such as gloves and clothing/overalls to workers, are also required. It also requires negative air pressure units and HEPA-filter equipped air pumps to suck, filter and trap asbestos fibres.



The DENR has issued an Administrative Order which requires a Mandatory Environmental Insurance Coverage (“MEIC”) for all ongoing projects and activities and for all applications for ECCs and/or CNCs. The MEIC covers payment of damages to health and property, environmental rehabilitation, remediation and/or clean-up costs and expenses, and provides a facility for the recompense of any kind of environmental impairment or damage by reason of a project. However, affected industries resisted the implementation of the MEIC on the ground of redundancy due to the Environmental Guaranty Fund (“EGF”), required to be set up in compliance with the ECC terms and conditions. Due to this, along with other factors, the DENR indefinitely suspended the MEIC requirement on 21 February 2006. With the exception of large conglomerates that require environmental risk insurance as part of their internal compliance procedures, Philippine companies do not normally cover such risks. Concerns have been raised on premiums payable since insurance companies normally offer all-risk insurance that covers not only environment and pollution damage, but also terrorism and natural calamities.


The Foreign Chambers of Commerce of the Philippines reported in its Position Paper dated 31 January 2006 that out of the 41 accredited insurance companies in the country, only one company attests to having company policies covering environmental insurance, making itself underwriter of the insurance; the rest of the 40 simply act as agents.Recently, a publicly listed mining company settled its claims with an insurer for environmental legal liability arising from a tailings spill incident.

12 Updates


The Philippines participated in the 2015 United Nations Climate Change Conference, where it was one of 196 States to negotiate the text of the Paris Agreement. Through the Paris Agreement, State parties seek to curtail rising global temperatures to “well below 2°C above pre-industrial levels”, and further “to limit the temperature

In 2008, the Philippines ranked eighth globally in the number of CDM projects registered, yet efforts to adapt to and mitigate climate change have yet to become part of major government policies, programmes, and projects. The Philippines is the seventh country with projects registered with the CDM Executive Board in Bonn, Germany. As of 29 June 2009, 64 projects have been issued letters of approval by the CDM authority in the Philippines and two projects have been issued CERs or carbon credits.


There are no such requirements.


As a party to the UNFCCC, the Philippines has adopted the ultimate objective of the Convention, which is the stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.Recognising the vulnerability of the Philippine archipelago and its local communities to potential dangerous consequences of climate change, in accordance with the UNFCCC, the Philippines cooperates with the global community in the resolution of climate change issues, including disaster risk reduction. As a result, it is the State’s policy to enjoin the participation of national and local governments, businesses, non-government organisations, local communities and the public to prevent and reduce the adverse impacts of climate change.In 2009, the Philippines enacted the Climate Change Act, pursuant to which the Climate Change Commission was established. The Commission was designated as the sole policy-making body of the government tasked to coordinate, monitor, and evaluate the programmes and action plans of the government relating to climate change. In 2015, the Philippines participated in the United Nations Climate Change Conference and is now a state-party to the Paris Agreement. The Paris Agreement became effective in the Philippines on 22 April 2017.

10 Asbestos


The Philippine Supreme Court has yet to deal with claims to recover damages due to asbestos exposure. However, as a general rule, Philippine labour laws provide for employer liability where an employee suffers injury or illness due to work-related causes. Additionally, bills on asbestos exposure are currently pending with both houses of the Philippine Congress.


At present, there are existing Administrative Orders (“AOs”) issued by the DENR for the safe handling of asbestos. The AOs require safe demolition, removal, handling, and disposal of asbestos based


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The Firm:

Romulo Mabanta Buenaventura Sayoc & de los Angeles traces its roots to the law firm of Gibbs, McDonough and Ozaeta (est. 1902). Romulo is composed of more than 90 lawyers – all of whom speak English fluently, and the majority of whom have received training and graduate degrees from international universities.

Romulo offers a full range of legal services, including mergers and acquisitions, capital markets, foreign investments, dispute resolution, art and antiquity, taxation, mining, oil and gas, infrastructure, environment, family, immigration, insurance, labour and employment, real estate, securities, banking, intellectual property, aviation, and admiralty.

Romulo’s Environment Law Practice:

Romulo has corporate and litigation lawyers whose areas of expertise cover the range of environmental concerns such as assessment and approvals, compliance reviews, damage and insurance claims, industrial regulation, pollution offences, waste management and disposal, and deal structuring and documentation.

Benjamin Z. Lerma is the vice chair of the Intellectual Property department. His practice focuses on intellectual property, corporate law, and real estate and environmental law.

Benjamin handles patent and trademark applications in the Intellectual Property Office of the Philippines for various multinational companies.

Benjamin also advises domestic and foreign corporations on general corporate matters, particularly in identifying and implementing the proper corporate vehicle and ownership structure to operate in the Philippines. He also assists in major real estate transactions, as well as the enforcement of Philippine environmental laws.

Benjamin has been a faculty member of the Ateneo de Manila University School of Law since 2001.

Benjamin received his Bachelor’s degree in Economics and Legal Management from the De La Salle University in 1992 and his juris doctordegree from the Ateneo de Manila University in 1996. He was admitted to the Philippine Bar in 1997.

Benjamin Z. LermaRomulo Mabanta Buenaventura Sayoc & de los Angeles21st Floor, Philamlife Tower 8767 Paseo de Roxas, Makati City, 1226Philippines

Tel: +63 2 555 9555Fax: +63 2 810 3110Email: [email protected]: www.romulo.com

Claudia R. Squillantini is an associate who works with several practice groups, including Securities, Project Development and Finance, and Corporate Banking. Her practice presently spans several practice areas, from corporate law, competition law, securities transactions, and environmental law. She regularly advises Philippine and foreign clients on environmental and regulatory matters.

She graduated with Honours from Ateneo de Manila University School of Law in 2015 and was the recipient of the second Best Thesis Award for her thesis entitled “Demystifying Dominance: Establishing Legal Parameters for Abuse of Dominance”. She was admitted to the Philippine Bar in 2016 and joined the firm in the same year.

Claudia R. SquillantiniRomulo Mabanta Buenaventura Sayoc & de los Angeles21st Floor, Philamlife Tower 8767 Paseo de Roxas, Makati City, 1226Philippines

Tel: +63 2 555 9555Fax: +63 2 810 3110Email: [email protected]: www.romulo.com

an order directing the audit of all mines and imposed a moratorium on the acceptance, processing, and approval of mining applications. As a result of this audit, Lopez ordered the closure of 23 mining operations and suspended five others due to serious environmental violations. Lopez further ordered the cancellation of 75 mineral production-sharing agreements for allegedly damaging watershed. On 3 May 2017, Philippine lawmakers relieved Lopez from her post by rejecting her appointment as Secretary. Roy Cimatu was appointed as her successor and has already received the confirmation of the Commission on Appointments. While Cimatu has lifted the ban on open-pit mining, he has yet to rule on the closures, suspensions, and cancellations ordered by Lopez.

increase to 1.5°C above pre-industrial levels”. The Agreement was opened for signature on 22 April 2016 and entered into force on 4 November 2016, when at least 55 States responsible for at least 55 per cent of the world’s greenhouse gas emissions ratified the instrument. President Rodrigo Duterte has previously expressed his misgivings on the Paris Agreement. However, due to the pressure exerted on him by many sectors, he signed the Agreement. The Paris Agreement was ratified by the Philippine Senate and became effective on 22 April 2017.In 2016, President Duterte appointed a new Secretary, Regina Lopez, to head the DENR. Since her appointment, Lopez has been aggressively investigating the mining industry. In April, she imposed a ban on open-pit mining. On 8 July 2016, Lopez issued



Chapter 20

Cliffe Dekker Hofmeyr Inc.

Terry Winstanley

Valencia Govender

South Africa


The right of access to information is enshrined in our Constitution. The Promotion of Access to Information Act, No 2 of 2000 (PAIA) gives effect to this Constitutional right by allowing access to information held by the State and private bodies that is required to exercise or protect any rights. Where environmentally-related information is held by a public body the requester usually does not have to justify why the document is required – the requester’s entitlement to the document is presumed. A public body must therefore disclose the record to the person who submitted a request under PAIA, provided that the procedural requirements of PAIA have been met and there is no legitimate ground of refusal (such as protecting trade secrets or protecting the privacy of a third party).Some information is automatically available to the public without requiring the submission of a PAIA request. Automatically available information includes copies of environmental authorisations (EAs), waste management licences (WMLs), atmospheric emission licences (AELs), water use licence applications, water use licences (WULs), and audit and compliance reports.



Most environmental statutes require authorisations, licences or permits before the activities they regulate may commence. There is no integrated environmental permitting system in South Africa and separate permits are often required from different environmental authorities in various spheres of government. Examples of permits and licences include WULs, WMLs, AELs and effluent discharge permits).It is ordinarily not possible for the holder of an environmental permit to transfer it to another person. The statute under which the permit was issued specifies how it may be transferred, almost always with the consent of the issuing authority. The transferee will usually have to sign an undertaking to comply with the conditions of the permit and may be required to demonstrate its ability to comply with them.



The Constitution guarantees every person the right to an environment that is not harmful to his or her health or well-being and for the protection of the environment against pollution and degradation. This right is binding on the state and people, both natural and juristic. Importantly, environmental protection must balance against the need for sustainable development and use of natural resources in a manner which addresses past economic and social injustices. Environmental management in South Africa is highly regulated and various authorisations are required from different spheres of government (national, provincial and local) for activities that are legally controlled. The principal act governing activities that affect the environment is the National Environmental Management Act, No 107 of 1998 (NEMA).The administration, monitoring and enforcement of environmental law is primarily undertaken by the (national) Department of Environmental Affairs (DEA) together with the relevant provincial and local environmental authorities. Depending on the nature of activities undertaken, the Departments of Water and Sanitation; Mineral Resources; Energy; Agriculture Forestry and Fisheries; and Trade and Industry, may also be involved in the administration of environmental law.


Enforcement of environmental law is primarily undertaken by the environmental management inspectorate/ors (EMI) of the DEA. EMIs monitoring compliance and take enforcement action against transgressors by using administrative and criminal sanctions.There has been growing enforcement of environmental law by the EMIs. The DEA’s National Environmental Compliance and Enforcement Report for 2016/2017 recorded 1,092 arrests and 1,497 criminal dockets having being opened for transgressions of environmental laws.


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Cliffe Dekker Hofmeyr Inc. South Africa


An unsuccessful applicant for an EA or an applicant who is unhappy with the conditions of an EA may appeal such decision within 20 days of notification of the decision. In addition, a person aggrieved by an authority’s decision may, under the Promotion of Administrative Justice Act, No 3 of 2000 (PAJA), seek judicial review of the decision in a court. However, a judicial review may only be sought once the aggrieved person has exhausted all internal remedies provided for in the environmental legislation concerned.


Under NEMA, certain activities that are considered likely to have detrimental impacts on the environment require environmental authorisation prior to commencement. The Environmental Impact Assessment (EIA) Regulations contain lists of these activities, as well as the procedures to be followed to obtain environmental authorisation. Assessment may entail either a basic or full EIA, depending on the extent of the environmental impact of the listed activity. Examples of listed activities include: construction and expansion of facilities and infrastructure for generation and transmission of electricity; extraction or processing of gas, oil or petroleum products; bulk transportation of water; and storage of dangerous goods.All EAs and Environmental Management Programmes (EMPrs), are subject to compliance auditing. An EA must specify the frequency of the auditing of compliance with the conditions of the EA and EMPr. The holder of the EA must ensure that compliance with its conditions and that of the EMPr, including the audit requirements.


An EMI may issue abatement notices; compliance notices or directives. A compliance notice will set out the details of the conduct constituting non-compliance; any steps the person must take and the time periods for compliance. An EMI must give the recipient advance warning of the intention to issue such compliance notice. If the specified measures are not taken, the competent authority may take those steps itself and recover the costs from various parties, including the landowner or the land user (regardless of fault); anyone who could have and failed to prevent the polluting activity; and anyone who indirectly contributed to, or derived a benefit from, the polluting activity. Most environmental statutes contain criminal sanctions for breach. Penalties usually include imprisonment up to 10 years and/or fines of up to R10 million.

3 Waste


The National Environmental Management Waste Act, No 59 of 2008 (Waste Act) broadly defines waste “as any substance, material or object, that is unwanted, rejected, abandoned, discarded or disposed

of, or that is intended or required to be discarded or disposed of, by the holder of that substance, material or object, whether or not such substance, material or object can be re-used, recycled or recovered and includes all wastes as defined in Schedule 3 to the Act but ceases to be waste once it is reused or has been excluded from the definition of waste.The Waste Act imposes a general duty upon waste-holders (which term is widely defined) to take reasonable measures to avoid waste generation and, where this is impossible, to: minimise the toxicity and quantities of waste generated; re-use, reduce, recycle and recover waste; and ensure that it is treated and disposed of in an environmentally-sound way. Additional measures may be required for wastes identified as priority wastes. These additional measures may include reuse of such waste, treatment and disposal and reporting obligations. It is necessary to hold a WML for defined waste management activities involving both general and hazardous waste. Some waste management activities do not require a WML but a holder must comply with prescribed norms and standards.


A producer of waste is allowed to store waste on site provided that it is not likely to cause environmental pollution or harm to human health. Depending on the type and quantity of waste, the producer will have to obtain a WML and/or comply with norms and standards. For example, currently the disposal of general waste to land covering an area of more than 50m2 but less than 200m2 and with a total capacity not exceeding 25,000 tons will require a WML. Where more than 80m3 of hazardous waste or more than 100m3 of general waste is stored on a site, the holder of such waste will have to comply with the norms and standards for the storage of waste.


The Waste Act provides for extended producer responsibility (EPR) for certain products; however, the regulations giving effect to these responsibilities have not yet been published. Currently voluntary initiatives are typically undertaken by industry, and are usually aimed at postconsumer waste streams. An example of an effective voluntary EPR initiative is the Recycling Oil Saves the Environment (ROSE) Foundation’s used lubricating oil recycling initiative. A producer’s responsibilities may include waste minimisation programmes, the financing of such programmes, conducting life cycle assessments or labelling requirements. These mechanisms means that producers retain responsibility for their waste, notwithstanding lawful transfer to a recipient. The Waste Act also places a general duty on sellers of products, that may be used by the public and which are likely to result in hazardous waste generation, to take reasonable steps to inform the public of the waste’s impact on health and the environment.


The Waste Act does not require a producer to take back or recover its waste, but it remains obliged to ensure that its waste is disposed of in an environmentally-sound manner.


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Under the Consumer Protection Act, No 68 of 2008, where goods contain substances that may not be disposed of in a common waste collection system, the supplier is under an obligation to accept their return from any consumer without charge and irrespective of whether they supplied the particular goods to the returning consumer.

4 Liabilities


Liability is usually in the form of criminal liability; the commencement and continuation of a listed activity without an EA or failure to comply with the conditions of an EA is an offence and may result in imprisonment for a period not exceeding 10 years or a fine not exceeding R10 million (or both). Further, the competent authority may direct measures that must be taken. If the specified measures are not taken, the competent authority may take those steps itself and recover the costs from various parties, including the landowner or the land user (regardless of fault); anyone who could have and failed to prevent the polluting activity; and anyone who indirectly contributed to, or derived a benefit from, the polluting activity. Where there is a breach of environmental law, a possible defence will show that reasonable measures were taken to prevent, minimise and rectify the pollution or degradation. Reasonable measures include: assessing the impact on the environment; informing employees about the environmental risks of their work and the manner in which their tasks must be performed to avoid causing significant pollution or degradation of the environment; ceasing, controlling any act, activity or process causing the pollution or degradation; or eliminating the source of the pollution.


Despite the issue of a permit, NEMA imposes a duty of care on any person who causes, has caused or may cause significant environmental pollution or degradation, to take reasonable measures to prevent, minimise and rectify the pollution or degradation, even where it is legally authorised. There is no stipulated pollution threshold limit that triggers the remediation obligation and legislated standards to which contamination must be remediated only in certain narrow circumstances prescribed by the Waste Act. What is required is the taking of reasonable measures.


Directors, employers, managers and employees of companies who caused the environmental damage may be held personally liable. An employer can be held criminally liable for the conduct of an employee unless he is able to show that reasonable steps were taken to prevent the commission of the offence. Further, someone who was a director of a firm when the firm committed the offence is presumed to have committed the offence and may also be personally liable (unless it can be shown that all reasonable steps were taken to prevent the offence).

Joint and several liability can be imposed on directors of companies and members of close corporations for any negative impact on the environment, whether advertently or inadvertently caused by the company or close corporation which they represent, including for damage, degradation or pollution.


Share sale:A purchaser may be liable for the target company’s failure to meet its obligations under environmental law if it becomes a shareholder of the target. When acquiring a company’s shares, a purchaser also generally acquires any liabilities incurred by the seller, as liabilities remain with the target company after the sale. Asset sale:As a general rule, a purchaser will not inherit any pre-acquisition criminal environmental liability (unless the parties agree to a different division of liabilities in the transaction agreement). However, as explained above, the purchaser may be liable for costs of remedial action incurred by competent authorities.


Under NEMA, where shareholders or lenders have material control over operations or management of a company that caused environmental harm, they may also attract liability. A greater involvement in a polluting company’s daily activities is likely to increase the liability potential of such shareholders or lenders. Further, where they had the power to prevent pollution from occurring and did not do so, they may be required to contribute to clean-up costs. This issue has not been considered by a South African court.

5 Contaminated Land


The Waste Act regulates contaminated land (including land contaminated before the commencement of that Act) which is land that may be harmful to health or the environment due to substances present in it. The owner of land will be held liable for the contamination but could attempt to recover a share of remediation costs from any prior polluter. Under these contaminated land provisions, an owner of land that is significantly contaminated, or a person who undertakes an activity that caused significant contamination of the land, must notify the Minister of Environmental Affairs of that contamination on becoming aware of that contamination. While there is no positive obligation to assess a site to determine whether the site is significantly contaminated, this absence of a positive assessment obligation would not be a defence if the contamination is an obvious consequence of the activities undertaken at the site.If the land is contaminated, a site assessment must be conducted and a site assessment report must be compiled. The Minister may order


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that the land be remediated urgently, within a specific period or that the risk only needs to be monitored and managed in accordance with specified norms and standards.


Primary liability rests on the person who caused the pollution and/or the person in control of the land, but may also attach to successors in title of the entity that caused the pollution, even if it had no part in the polluting activity. Additionally, the competent authority may take remediation steps itself and recover the costs from various parties, including the landowner or the land user (regardless of fault); anyone who could have and failed to prevent the polluting activity; and anyone who indirectly contributed to, or derived a benefit from, the polluting activity. Apportionment is at the discretion of the competent authority but must be rational.


There is no specific provision for this. The Waste Act only requires that the Minister issue a remediation order containing the measures that must be taken to remediate the land or the standards that must be complied with when remediating the land.


No person may transfer contaminated land without informing the transferee that the land is contaminated and, in the case of a remediation site, without notifying the Minister and complying with any conditions that are specified. It may be possible to institute a damages claim against a predecessor-in-title if it can be shown that it failed to take steps to prevent or alleviate the environmental harm. One cannot entirely absolve oneself from statutory environmental liability under contract, although one may limit it by way of contractual indemnities.


The competent authority may take steps to remediate the environment itself and recover the costs from various parties including: the landowner or the land user (regardless of fault); anyone who could have and failed to prevent the polluting activity; and anyone who indirectly contributed to, or derived a benefit from, the polluting activity.



EMI’s have wide search and seizures powers and may:

■ question a person about any act or omission where there is a reasonable suspicion that it might constitute an offence or breach of environmental law of a condition of a permit, authorisation or other instrument issued in terms of such law;

■ inspect, copy, or question a person about, any document, book or record or any written or electronic information;

■ inspect, question a person about, and if necessary remove any specimen, article, substance or other item which, on reasonable suspicion, may have been used in committing an offence or breach of environmental law or a breach of a term or condition of a permit, authorisation or other instrument issued in terms of such law;

■ take photographs or make audio-visual recordings of anything or anyone that is relevant for the investigation; and

■ without a warrant, enter and search any vehicle, vessel or aircraft, or search any pack-animal, on reasonable suspicion that the vehicle, vessel, aircraft or pack-animal is being used to commit an offence.



There is no specific obligation to notify third parties about general pollutions save for:■ notification of contaminated land once it comes to the

attention of the owner under the Waste Act; and■ notification to the Minister and individuals whose health and

safety may be affected of “emergency incidents” such as accidental spills or emissions under NEMA.


While there is no positive obligation to assess a site to determine whether the site is significantly contaminated, this absence of a positive assessment obligation would not be a defence where the contamination is an obvious consequence of the activities undertaken at the site.


There is no statutory environmental provision that deals with the obligation of a seller to disclose environmental liabilities. The Waste Act requires the seller of land to notify the buyer if the land is contaminated. However, this issue is mainly dealt with under the common law. If the seller knows of an environmental liability and does not disclose it to the buyer, this may amount to a material misrepresentation and breach of contract.


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8 General


Environmental indemnities are usually included in commercial transactions to limit the exposure for environmental liability. The polluter remains liable for any pollution but could claim the costs from an indemnifier.


South African environmental law does not contain any specific regulation regarding the dissolution of companies (but as explained, a director at the time when the dissolved company would retain personal liability). Under South African company law, creditors like those who have a claim for environmental non-compliance, may apply to prevent the dissolution of the company.


There is no decided case law which extends the duty to comply with environmental law to persons/entities other than those that own the land, exercise control over the land or those who benefit from the polluting activity. It is conceivable that the parent company could be liable for environmental non-compliance if it exercises a material degree of control over the subsidiary.


NEMA protects all persons who make disclosures in good faith, especially where a disclosure was made in the public interest, including where such disclosure is made to the news media.Additionally the Protected Disclosures Act, No 26 of 2000 makes provision for the protection of employees who report unlawful or irregular conduct of their employers and fellow employees. Disclosures regarding damage to the environment are specifically protected.


A wide range of persons is granted legal standing under NEMA and the Constitution to institute legal action for protection of the environment, including any person or group of persons with an interest in protecting the environment or persons acting on behalf of a group of persons whose interests are affected. Exemplary damages are not typically awarded under South African environmental law, but it is possible to claim such damages under a delictual claim.


A court hearing an environmental dispute has the discretion whether to award costs against an unsuccessful public interest litigants if the court finds that the person or group acted reasonably out of a concern for the public interest or in the interest of protecting the environment and had made due efforts to use other methods available to it.



South Africa is a party to the UN Framework Convention on Climate Control (UNFCCC) 1992, the Kyoto Protocol 1997 and most recently the Paris Agreement 2016. South Africa was classified as a developing country under the Kyoto Protocol so there is no current obligation on South Africa to reduce its greenhouse gas (GHG) emissions. As a result no national or regional trading schemes of GHG emissions have yet been developed. Some clean development mechanism (CDM) projects were implemented.However, Government recently released the draft Regulations on Carbon Offsets under the Carbon Tax Bill for comment. The Proposed Carbon Offsets will give effect to one of a number of tax allowances in the Carbon Tax Bill, to lower these companies’ tax liability and establish a carbon-offset scheme for South Africa (the Scheme). The Designated National Authority (initially tasked with administering CDM projects under the UNFCCC) will administer the Scheme and manage the South African registry. This will include assessing projects to ensure compliance with local eligibility criteria prior to implementation or transfer of certified emission reduction (CERs) to the South African registry, registering projects and issuing offset certificates. Treasury has stated that it has not yet decided whether SA’s CERs should be traded on international platforms or whether to develop a local trading platform. If trading on international platforms is agreed to, the international market for CERs under the Paris Agreement is presently unclear.


Carbon tax is one of the mechanisms that government will use to control and ultimately mitigate global GHG emissions and is expected to be implemented soon. A draft Carbon Tax Bill has been published. The Pollution Prevention Regulations published under the National Environmental Management Air Quality Act, No 39 of 2004 require that anyone who emits priority pollutants (GHGs) above the threshold of 0.1 megatonnes of carbon dioxide equivalent must prepare and submit a pollution prevention plan before December 2017. These entities must also report annually on progress made in implementing pollution prevention plans. Industries that are required to prepare plans include mining, oil refining, paper and pulp, glass production, cement production, iron and steel industries.


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It is possible to obtain environmental risk insurance. However, because of the difficulty of predicting the consequences of environmental damage and the costs of repairing that damage, this type of insurance is very expensive and so rarely used in practice.Insurance cover is more likely to be used where an event can be specifically defined, both in time and area. Insurance companies do insure against ongoing environmental damage, but this is also prohibitively expensive.


Environmental insurance claims are currently very limited and indemnity is usually claimed in terms of general insurance policies held, as was the case in Truck and General Insurance Co Ltd v Verulam Fuel Distributors CC and Another 2007 (2) SA 26 (SCA). In this case the Supreme Court of Appeal found an insurer liable to indemnify the insured party under a vehicle insurance policy for the costs incurred by a diesel spill from its vehicles. Liability arose out of clause in the policy which provided that the Insurer would indemnify the insured party for any costs arising out of an accident involving the insured vehicles for which it was legally liable. The insurer argued that clean up measures under NEMA did not constitute a legal liability for purposes of the insurance contract. The Court found that an environmental legal obligation constituted a legal liability and was covered by the relevant clause of the agreement.

12 Updates


In addition to various regulations regarding GHG emissions promulgated this year (as discussed above), one of the main issues raised was the fact that climate change considerations may now need to be taken into account when applying for an EA and undertaking and environmental impact assessment. This is following the case of Earthlife Africa Johannesburg and Another v Minister of Energy and Others (19529/2015) [2017] ZAWCHC 50; [2017] 3 All SA 187 (WCC); 2017 (5) SA 227 (WCC) (26 April 2017). This is the county’s first judgment dealing with the impacts of activities on climate change. The case involved the grant of an EA for the construction of a 1200MW coal-fired power station. An environmental NGO appealed against the grant based on various grounds including that the DEA did not take into account the impacts that the power station will have on climate change before issuing the EA. The court found that the impact of the power station on climate change should have been taken into account in deciding whether to grant the EA. There is no express provision in our law that requires a climate change impact assessment (CCIA) before an authorisation under NEMA or anyone of its specific management acts is granted. The


The GHG Gas Emission Reporting Regulations (GHG Regulations) require industries undertaking specified activities to report annually on the amounts of fuels used and their GHG emissions (including all process and fugitive emissions). Examples of specified activities include: energy generation, manufacturing industries and construction, food processing, beverages and tobacco and transport industries.


South Africa has also adopted a Climate Change Response policy. South Africa’s response to climate change has two objectives which unpin climate change regulation:■ effectively to manage the inevitable climate change impacts

through interventions that build and sustain South Africa’s social, economic and environmental resilience and emergency response capacity; and

■ to make a fair contribution to the global effort to stabilise GHG concentrations in the atmosphere at a level that avoids dangerous anthropogenic interference with the climate system within a timeframe that enables economic, social and environmental development to proceed in a sustainable manner.

A Climate Change Act is currently being drafted and is expected to be promulgated soon.

10 Asbestos


Asbestos litigation has declined since the establishment of trusts who process claims of employees of mines and others who were exposed to asbestos. The Asbestos Relief Trust and Kgalagadi Relief Trust arose from an out-of-court settlement, i.e. an agreement between several claimants who were ill with asbestos related diseases and various companies that historically owned asbestos mines/mills in different provinces of South Africa.The trusts process claims from former employees, their dependents and people who have had environmental exposure to asbestos from the mines/mills. The trusts are accessible to potential claimants and provide information to claimants and all other stakeholders.


Asbestos has effectively been banned in South Africa since 2008. No person may acquire, process or repackage, import or export asbestos and may not manufacture or distribute asbestos and asbestos-containing materials.The continued use of asbestos-containing materials (such as asbestos cement roof sheets or ceilings) that currently exist is not prohibited. However, these should be replaced over time with asbestos-free materials. Employers have a legal obligation to perform a survey of buildings to ascertain and quantify the presence of asbestos and must assess the risk of exposure to the asbestos. Employers (and therefore possibly owners of buildings) may be required to repair sections containing asbestos, have it removed completely or encapsulated so that it no longer poses a threat to the employees. Where asbestos must be removed, this must be done by an authorised asbestos contractor.


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Cliffe Dekker Hofmeyr, a full-service law firm, has one of the leading environmental legal teams in South Africa. The fact that the environmental law team continually attract and retain quality and industry-leading clients is evidence that they practice in the highest echelon of the environmental law field.

DealMakers has ranked Cliffe Dekker Hofmeyr first for South African M&A deal flow (number of deals) for the past eight years in a row, with a M&A market share of more than 26%. Our firm has been key to a number of the largest and most prominent transactions in South Africa. The work undertaken by our Environmental team played an important part in this unprecedented track record, as they are able to quickly and effectively identify key environmental liability risks to clients, particularly regarding liability for historical land and water pollution, and ensure appropriate contractual provisions are included to protect them from potential liabilities.

Valencia Govender is an associate in our Environmental law practice. She has an in-depth understanding of the various pieces of environmental legislation and her experience includes preparing legal opinions on environmental issues, drafting due diligence reports and assisting clients in administrative appeal processes. Her expertise also includes conducting environmental legal compliance audits and advising on various aspects of health and safety law, preparing legal registers and risks assessments.

Valencia’s general environmental and mining work includes preparing applications for rights and authorisations, interpreting various mining and environmental statutes and the preparation of opinions.

Valencia advises various project proponents and lenders in respect of renewable energy projects and has a particular interest in carbon and climate change law.

Valencia GovenderCliffe Dekker Hofmeyr Inc.11 Buitengracht Street Cape Town, 8001South Africa

Tel: +27 21 481 6419 Fax: +27 21 481 9516Email: [email protected]: www.cliffedekkerhofmeyr.com

Terry Winstanley is a director and national head of Cliffe Dekker Hofmeyr’s Environmental Law practice. She is one of the leading environmental lawyers in South Africa and has wide experience in environmental law and policy in Southern Africa; a field in which she has worked exclusively for more than 20 years. Her commercial clients are drawn from the energy, forestry, petro-chemicals, pulp and paper, mining and manufacturing sectors. Her government clients include national, provincial and local governments including those of Namibia, South Africa, Swaziland, the Western Cape, KwaZulu-Natal, Cape Town, Durban and Johannesburg.

Market Recognition:

■ Chambers Global 2015–2017 ranked Terry in Band 1 for environment and she was named a ‘Star Individual’ – given to practitioners with exceptional recommendations in their field.

■ The Legal 500 EMEA2014–2017.

■ Best Lawyers International 2013–2018 listed her for environmental law.

■ Terry was also recommended by IFLR1000 2012, 2015 and 2017 for energy and infrastructure and for project development.

Terry WinstanleyCliffe Dekker Hofmeyr Inc.11 Buitengracht Street Cape Town, 8001South Africa

Tel: +27 21 481 6332 Fax: +27 21 481 9516Email: [email protected]: www.cliffedekkerhofmeyr.com

judgment addresses the issue regarding a CCIA narrowly by asking whether a CCIA is necessary before authorising a coal-powered station. It is, however, now conceivable, that all projects having an impact on climate change may require a CCIA as part of its application for an EA.


Chapter 21

Del Pozo & De la Cuadra Covadonga del Pozo

Spain


The right of access to environment-related information has been deeply developed in the Spanish jurisdiction by Law 27/2006, which transposes EU Directives 2003/4/CE and 2003/35/CE and establishes that the general public is entitled to access environmental information held by public authorities with no need to demonstrate any specific interest, as well as to be informed about their rights, to be helped during their search for information, to receive the required information within certain terms and formats (or to be informed about the reasons to deny it), and to know the list of applicable fees and prices.



The Spanish system of environmental permits is quite complex. Usually, activities that have an environmental impact will need a permit for each element of the environment that may be affected (waste, water supply, wastewater discharge, air pollution, etc.). However, since the enactment of Law 16/2002 on Integrated Pollution Prevention and Control (IPPC), which has been subsequently substituted by the consolidated text approved by Royal Legislative Decree 1/2016 of December 16th, most of these individual authorisations have been unified into a single permit for certain activities: the integrated environmental authorisation (“autorización ambiental integrada”).Depending on their object, environmental permits are granted to facilities or to the titleholder of the activity. Most of the permits can be transferred, generally requiring prior notification to the competent authority. In some exceptional cases, the transfer of permits requires prior administrative authorisation.


Permit applicants can challenge both the decision denying them and the inclusion of detrimental conditions of mandatory observance. The aforementioned decisions may be challenged through an administrative appeal (which will be mandatory or voluntary



Spanish environmental policy has its basis in article 45 of the Spanish Constitution, which sets out the right to enjoy an environment that is adequate for the development of people and the obligation to protect it. Following this constitutional dictate and the framework developed by the EU Directives, the Spanish Law 26/2007 on Environmental Liability sets prevention and “polluter pays” principles as the guidelines of environmental law in Spain.The Spanish system foresees three levels of competences for bodies in charge of the enforcement of environmental law: national; regional; and local.The National Administration (specifically, the Ministry of Agriculture, Fishing, Food and Environment) is entitled to enact basic legislation and to set the main coordination and supervision mechanisms. Autonomous Regions develop basic legislation in their territorial scope and approve environmental plans; they are usually the authorities who grant environmental permits and carry out most environmental procedures. Finally, municipalities have competences on certain sectors which have a special incidence on them such as noise or waste collection, and they usually grant the permits to start an activity in their territories.Besides this three-level outline, there are other national and regional bodies and agencies which take part in the enforcement of environmental law within specific sectors, such as hydrographic confederations, the OECC (Climate Change Spanish Office), SEPRONA (Police in charge of the environment’s protection), etc.


Spanish authorities are strict in their role of supervision of compliance with environmental obligations. Permits usually contain technical conditions that have to be met by the operators; inspections are carried out periodically and disciplinary proceedings are quite frequent. Serious infringements may even be communicated to the Public Prosecutor for the initiation of criminal proceedings.


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Del Pozo & De la Cuadra Spain

depending on the authority who issued the challenged resolution), and afterwards through a contentious-administrative appeal before the courts.


Particular polluting activities will require a previous environmental impact assessment. Specifically, Law 21/2013 on Environmental Assessment and its subsequent developing regional regulations set a list of activities and conditions under which (i) plans and programmes are subject to a strategic environmental evaluation (“evaluación ambiental estratégica”), and (ii) projects are subject to an environmental impact assessment (“evaluación de impacto ambiental”).Environmental audits are generally voluntary (except in some regions). They are usually conducted through the EU Eco-Management and Audit Scheme (EMAS) or the UNE-EN ISO (14001:2015) system.


Environmental regulators are public authorities entitled to carry out inspections, require information and documentation, take samples, etc. If they detect infringements of environmental regulations, they may initiate the corresponding disciplinary proceedings. Penalties may include significant fines (possibly millions, depending on the infringement and the damage caused), temporary or permanent closure of the facility with suspension or reversal of the permit, or even disqualification of its holder to continue to carry out the activity. The operator will also have to repair the damage caused and serious infringements may even lead to criminal proceedings.

3 Waste


The definition of waste within the Spanish jurisdiction is stated by Law 22/2011, of July 28th, on Waste and Contaminated Land. The aforementioned law defines waste as “any substance or object which the holder discards or intends to or is required to discard”, in accordance with Directive 2008/98/EC.Duties of producers and managers of waste depend on the type of waste produced and/or managed (domestic, commercial and industrial), and especially on their hazardous or non-hazardous nature. Obligations set by Law 22/2011 regarding hazardous waste are much stricter than those established for non-hazardous waste. Regional and local regulations must also be checked, since regions and municipalities are entitled to develop and reinforce the duties on certain aspects of the waste legal regime provided that their regulations do not infringe Law 22/2011.In addition, there are specific types of waste whose production or management often have their own regulations setting particular obligations, usually denominated “special waste”. Among these, we can find used industrial oils, waste of electric and electronical equipment (WEEE), batteries and accumulators, construction and demolition waste, packaging waste, sanitary waste, etc. The extended responsibility of the producer is generally applicable to devices which generate these types of waste.


According to Law 22/2011, producers of waste have to keep the waste generated in their facilities stored in the right health and safety conditions. Non-hazardous waste can be stored for up to two years in its production site if it is going to be recovered and up to one year if it is due to be disposed of, while the maximum storage term for hazardous waste is always six months. These terms might be exceptionally modified by the competent regional body for justified reasons.Generally, producers cannot dispose of their waste themselves unless they are duly authorised to carry out this type of management activity. They have to deliver their waste to authorised managers, who will be responsible for carrying out the corresponding disposal operations. However, Law 22/2011 sets an exemption of this management authorisation for producers of non-hazardous waste who recover or dispose of it on-site.


The responsibility of waste producers ends once they transfer their waste to an authorised manager for its disposal or treatment off-site, provided that the delivery is properly documented.However, if producers infringe their legal obligations concerning production and storage of waste prior to their transfer to the next manager (for example, in case a producer delivers non-hazardous waste mixed with hazardous substances), they will still be liable for those infringements. In fact, managers can reject those batches of waste which do not meet legal specifications and return them to the producers.


Obligations to take-back and recover waste are not linked to producers of waste, but to the extended responsibility of producers of products with regard to the waste generated by their articles sold in the market. Producers of waste are only forced to accept their waste back and ensure their right recovery or disposal when an authorised manager rejects their waste due to infringement of legal or agreed specifications of delivery.

4 Liabilities


Traditionally, there have been three types of legal liabilities: civil; criminal; and administrative. Nevertheless, since the enactment of the Law 26/2007 on Environmental Liability, “administrative” liability has unfolded, resulting in a fourth category: environmental liability, whose purpose is to cover those areas of the environment that were not well covered by the regulations previously in force.(i) Civil liability derives from infringements which cause

damage to third parties, who will be entitled to obtain the


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corresponding compensation provided that there has been a damaging action or omission with harmful results for the environment and there is a causality link between these two elements. The main defences available would imply proving the lack of cause-effect relation between conduct and damage, or that the damage has been produced by the injured party due to its own recklessness or fault.

(ii) Criminal liability is a consequence of the commission of environmental crimes established in the Spanish Criminal Code. It may entail high pecuniary sanctions, closure of facilities and activities, disqualification, imprisonment, etc., as well as the obligation to repair the damage caused.

Lack of participation or intentionality are two of the main allegeable defences, as well as to carry out as many measures as possible to repair the damage caused.

The last reforms of the Spanish Criminal Code also envisage the possibility of criminal liability of legal entities due to crimes committed by their legal representatives and employees on behalf of the company. In these cases, the company may be exempt from criminal liability if an adequate system to supervise corporate compliance is set and executed to prevent the crime.

(iii) Administrative liability derives from the commission of administrative infringements envisaged by regulations. Penalties to be imposed after the perceptive proceedings may also imply fines or restrictions on the activity.

Defence in administrative disciplinary proceedings usually involve formal grounds, irregularities during the proceedings, term expiration, or evidencing technical inaccuracies (lack of correspondence between the conduct and the legal infringement).

(iv) Environmental liability comprises the operators’ duties to prevent, avoid and repair environmental damage (damage to habitats and wild species, water, seashores and banks of estuaries, and land). With regard to damage caused by certain categories of activities, environmental liability is strict, so it does not depend on the existence of fault or negligence of the operator.

Nevertheless, the operators will avoid assuming the costs of the prevention, avoidance and reparation measures if they evidence that the damage was caused by the conduct of a third party or by a mandatory order or instruction issued by a competent public authority. Operators will not have to bear reparation costs either if there has been no fault or negligence and damage derived from the realisation of the specific object of an administrative authorisation, or if the existing state of science did not enable foresight of the damage that would be caused. In all these cases, operators are still obliged to carry out the corresponding prevention and reparation measures.


Environmental liability for activities listed in Annex III of Law 26/2007 is strict: there is no exoneration of liability even when the operator has not committed fault or negligence. Fulfilment of requirements, precautions and other conditions set by the regulations or established in the corresponding permits is not an exoneration cause either, being the operator obliged to bear with the reparation and prevention of environmental costs.However, as stated in question 4.1 above, the operator will be able to recover the reparation costs when there is no fault or negligence in his behaviour and the damage derives directly from the performance of the specific object of an administrative authorisation, provided that the operator has not infringed any of the conditions of the permit or applicable regulations at the moment of generation of damage.


The Spanish Criminal Code envisages that directors and officers of legal entities will attract personal criminal liability in case a criminal offence is committed by the actions of a company represented by such person. In addition, Law 26/2007 on Environmental Liability sets that those managers of legal entities whose conduct has been decisive for the causation of environmental damage will have subsidiary liability regarding the prevention, avoidance and reparation obligations imposed on the company. The company or its shareholders may also make a claim against its directors or officers regarding civil liability due to their illegal or reckless behaviour.Directors and officers of companies could get insurance for administrative and civil liability, but it must be noted that insurance does not usually cover damages caused intentionally.


If shares of an operator are sold, such operator will keep the environmental liability derived from the damage caused by its activity before and after the transaction.When the object of the sale is an asset, the buyer does not generally keep any liability for the previous activity (except in cases of continued infringements), and would only be liable for damages caused after the purchase (except for some special cases such as historical land contamination or hidden defects in the purchase). However, since the enactment of Law 26/2007 on Environmental Liability, those who substitute the person who caused the environmental damage in its ownership or in the exercise of its activity, have subsidiary liability. Subsidiary liability can be avoided by obtaining a certificate from the competent authority stating that the seller had no pending environmental liabilities, although this certificate is not common practice yet and may be difficult to get.


According to Law 26/2007, the person who causes environmental damage is liable and has to assume the costs of avoidance of more damages and reparation. Therefore, if the borrower of a facility causes environmental damage, in general terms there is no action that can be brought against the lender unless the latter had control or power over the activity carried out by the former.This general rule has an exception in the case of soil contamination, where the lender (owner) has subsidiary liability in case the borrower who caused contamination cannot be identified or cannot face the decontamination costs.

5 Contaminated Land


The person or entity which contaminates soil is liable for


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such pollution and will assume the decontamination costs. Notwithstanding the foregoing, the Law on Waste and Contaminated Land envisages that the owner of the land affected or its current holder, in this order, will have subsidiary liability (except in case of public domain under concession, where the concessionaire will be liable in the second place and the owner would be liable thirdly). With regard to groundwater contamination, Royal Decree 849/1986 also sets out that the damage has to be repaired by the polluter, but without foreseeing any “cascade system” of subsidiary liability. In opposition to soil contamination, Spain has not yet approved the parameters to consider groundwater decontaminated. In practice, technical experts on groundwater remediation apply other EU states’ parameters (e.g. Dutch).


The general rule set by Law 26/2007 for environmental damage is common liability shared in proportion to their participation. However, some exceptions apply. In particular, when soil contamination has been caused by two or more people, they will be jointly and severally responsible in regard to the decontamination and recuperation obligations.


Royal Decree 9/2005, which establishes the list of activities potentially contaminating soil and the criteria to declare land as contaminated, states that contaminated land will not be deemed decontaminated until the competent regional authority declares it so after checking the result of the recuperation activities. Thus, if any defects are found after the decontaminating activities carried out under a cooperation agreement subscribed with the authorities, additional measures could also be required until land is fully repaired. Third parties will be entitled to challenge collaboration agreements between polluters and public authorities, provided that they justify a legitimate interest.


The subject who has to assume decontamination costs of polluted land is the person who caused the contamination. Only when the polluter cannot be identified or does not have enough resources will such obligations fall on the owner of the land or on its current holder. Therefore, if a previous owner of the land caused its contamination, its current owner will be entitled to claim its costs against the former.In this regard, a private agreement between the seller of a piece of land and its buyer exonerating the seller from any responsibility arising from a previous contamination will only be enforceable between the parties but not before the authorities, who will require the real polluter to carry out the decontamination of land.


Yes. Law 42/2007 on Natural Heritage and Biodiversity considers “the installation of publicity or the production of sensitive landscape impacts in protected natural zones”, a severe administrative infringement which can be punished with monetary fines.Additionally, the main purpose of the reparation measures set by Law 26/2007 is the restoration of natural resources to their primary situation, which shall include its aesthetic elements.



Almost every environmental regulation in Spain provides public authorities with important powers of supervision and control over activities with environmental impact. They are able to carry out inspections of facilities, take samples, ask for information and documentation, etc. Obstruction of inspections is generally considered an administrative infringement and it must be noted that in case the authorities initiate a disciplinary proceeding, their testimonies are presumed to be true (without detriment to the possibility to prove the opposite).



Most environmental regulations in Spain set the obligation to inform the competent authorities immediately in case of a pollution leak or environmental accident. The Law on Environmental Liability specifies that operators have to immediately communicate the existence of environmental damage or imminent threat that has already been caused by them or that could eventually be caused.


Those who carry out an activity deemed as potentially contaminating land have the obligation to submit a preliminary report about the situation of the land where the activity is located within a maximum term of two years. This is a non-intrusive report which does not require land investigation, like the reports that also have to be submitted with the periodicity set by the competent authority and in case of extension or closure of the activity. Owners of land where a potentially contaminating activity was carried out in the past are also obliged to submit a non-intrusive report about the situation of the land in case they apply for a permit or authorisation to develop a non-contaminating activity or to change the use of the land.On the other hand, land investigation reports have to be filed in the following cases: i) if the competent authority requires so after the examination of the preliminary report; ii) if the holder of the


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activity is aware of the existence of polluting parameters above the thresholds set by Royal Decree 9/2005; and iii) in some regions, in case of closure of the activity.


Good faith has to be respected in every transaction in Spain. Moreover, the seller should inform the prospective purchaser of any environmental problems that he is aware of in order to avoid subsequent claims for compensation due to hidden defects or even the nullity of the purchase due to vitiated consent of the buyer. Additionally, owners of land where a potentially contaminating activity has been carried out have to declare such circumstance in the corresponding public deed for the transfer of the land (this declaration will be registered in the Property Registry).

8 General


Indemnities can be used between private parties (for example, in a purchase where the buyer accepts an indemnity introduced by the seller in exchange for a price reduction). However, such indemnities will only be enforceable between them, but environmental liability will always fall on the polluter according to Law 26/2007.


According to Spanish law, it is necessary for the balance sheet to contain a specific item for environmental contingencies, which has to be included in the report that is submitted jointly with the annual accounts.Environmental liabilities of the company will be liquidated with its own resources during the dissolution process, and in case there is evidence of fraud by their managers, the “lifting of the veil” doctrine enables the corresponding administrative and criminal responsibility to be attributed to them.


Unless a shareholder has directly participated in the behaviour of the company that caused the environmental damage, his responsibility only equals the value of his shares.However, in the case that the company belongs to a group of companies, Law 26/2007 establishes that environmental liabilities could be extended to the parent company if there has been an abusive use of the affiliate or legal fraud.


Article 62.4 of Law 39/2015, which regulates the Ordinary Administrative Proceeding of Public Administrations and whose entry into force took place on October 2nd 2016, envisages an exemption (or proportional reduction) of fines and other non-monetary sanctions for those complainants who have taken part in an infringement along with other people but are the first to provide the public authorities with evidence that enables the initiation of a disciplinary proceeding, provided that some other requirements are met as well.


Law 27/2006 establishes a public action that can be exercised by non-profit organisations dedicated to the protection of the environment which meet certain requirements. Moreover, consumer associations can also defend collective interests.


Law 1/1996, on Free Legal Aid, establishes that litigation will have no cost for those who lack resources to finance it and sets the requirements and conditions to exercise the aforementioned right. Law 27/2006 specifically states that non-profit entities which are legitimated to exercise the public action for environmental matters are entitled to obtain free public aid (given its grounds, this right has to be understood as limited to environmental litigation, excluding criminal and civil jurisdictions).



Through Law 1/2005, Spain has implemented the EU Emissions Trading System (ETS), the most important European measure pursuing the reduction of greenhouse gas. We are currently in the third phase (2013–2020), which is consistent with the second commitment period of the Kyoto Protocol.As is occurring in other EU Member States, ETS is getting stricter on each new phase, with less free allowances allocated to industrial activities in order to push them to further reductions in their emissions.


According to Law 1/2005, which also incorporates the provisions set by the Commission Regulation 601/2012 on Monitoring and Reporting, owners of facilities have to implement and maintain a monitoring system of greenhouse gas in compliance with the conditions of their emissions authorisation, and to submit an annual report before the competent authorities before February 28th each year.


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a fund created to cover the eventual environmental damage of the activity with materialisation on financial investments backed by the public sector. Pursuant to Ministerial Order APM/1040/2017, of October 23rd, these guarantees shall be mandatory for priority level 1 & 2 activities (most pollutant activities) in October 2018 and October 2019 respectively.There is an economic interest group in Spain called “Pool Español de Riesgos Medioambientales”, which gathers the most important insurance and reinsurance companies in the country for the joint subscription of the environmental risks. Environmental insurance is already relevant in Spain and many entities have already benefitted from it, but it will become crucial once the obligation set by Law 26/2007 becomes enforceable.


Environmental insurance has usually been materialised within the general terms of civil liability insurance, where it has functioned normally. Environmental insurance litigation initiated by the policyholder or the insured party due to conflicts with the insurance company is limited in Spain.

12 Updates


A number of new environmental regulations have been enacted within the last 12 months in Spain. Among them, we can highlight the following:■ Industrial emissions: Royal Decree 773/2017, of July 28th,

amending several regulations on products and industrial emissions; Royal Decree 115/2017, of February 17th, on commercialisation and manipulation of fluorinated gases, amended by Order PRA/905/2017, of September 21st; and Royal Decree 39/2017, of January 27th, amending RD 102/2011 on air quality.

■ Marine waters: Directive 2017/845/EU of May 17th, amending Directive 2008/56/EC of the European Parliament and of the Council as regards the indicative lists of elements to be taken into account for the preparation of marine strategies; and Royal Decree 363/2017, of April 8th, establishing a framework for the regulation of maritime areas.

■ Waste and soil pollution: Royal Decree 20/2017, of January 20th, on vehicles at the end of their useful life; Order PRA 1080/2017, of November 2nd, amending RD 9/2005 on polluted soils; and Order APM/1007/2017, of October 10th, on valorisation of natural excavated soils.

■ Environmental liability: Order APM/1040/2017. of October 23rd, establishing the date on which a mandatory financial guarantee shall be enforceable for activities of Annex II of Law 26/2007, of October 23rd, of Environmental Liability, classified as priority levels 1 and 2.

Apart from the new dispositions approved during 2017, 2018 will begin with very important developments in the environmental legislative framework. As a consequence of the environmental undertakings assumed by Spain when subscribing the Paris Agreement on climate change, the Government is currently commencing the drafting of a new law on energy and climate change. This law, expected in 2018, will have a notable impact on the day-to-day operation of all industrial activities in Spain.

Additionally, there are other regulations in Spain which set specific requirements for greenhouse gases different than those included under the scope of Law 1/2005, and environmental integrated authorisations may also impose additional conditions in exceptional cases.


Spain’s current policy regarding climate change is to follow the path set by the EU, whose current approach implies, in addition to a prevention perspective, to start to adopt the focus on the adaptation of future projects and activities to the near future climate change impacts. The Paris Agreement may have a significant influence in this regard.

10 Asbestos


Asbestos claims are not rare within the Spanish jurisdiction, which already has quite a large case-law about this matter. Even when compensations awarded to workers affected by asbestos are not as high as they are in other jurisdictions (the clearest example is the US), there are recent Spanish rulings which grant relevant indemnifications, such as the one issued by the Supreme Court on March 2nd 2016 granting compensation close to half a million euros to the heirs of a shipyard worker who eventually died due to his professional exposure to asbestos. The existing case-law also includes several rulings obliging different Public Administrations to compensate their affected workers.On the other hand, the liability of producers of articles containing asbestos before its final users has barely been explored in Spain.


Commercialisation of asbestos and products containing asbestos is forbidden in Spain, but the use of products created before June 14th 2002 is allowed until the end of their useful life. Without detriment to the need to comply with applicable obligations with regard to prevention of labour risks, holders of activities will have to ensure that the asbestos is removed in compliance with waste provisions (specifically, grouping and transporting asbestos out of the workplace as soon as possible, duly packed and labelled before disposing of it following the requirements set for hazardous waste).



According to Law 26/2007 on Environmental Liability, operators who carry out the most potentially polluting activities need to carry out a risk analysis and constitute a financial guarantee to face the eventual environmental liability linked to their activity. There are three categories of financial guarantees available for operators: the subscription of an insurance policy; obtaining an endorsement by a financial entity; or the constitution of a technical reserve through


Del Pozo & De la Cuadra is an environmental, natural resources and energy law boutique that initiated its professional activities in Spain in September 2012. Behind the project of creating a highly specialised law firm to give full coverage on these inter-related legal practices to national and international clients stands its founder and legal expert, Mrs. Covadonga del Pozo, former partner and responsible for the environmental and energy practices in the Madrid office of Cuatrecasas (second largest law firm in Spain), for which she had worked since 1998.

The firm is probably unique in its class in Spain, perfectly combining the top-qualified and highly specialised advice of a very large law firm with the closeness, quick response, cost-efficiency and business understanding of a smaller structure. Del Pozo & De la Cuadra is formed of a team of very motivated and enthusiastic lawyers fully dedicated to their clients in a very pro-active manner.

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Before becoming a founder partner of Del Pozo & De la Cuadra, Covadonga del Pozo was a partner at Cuatrecasas, responsible for the practices of environmental and energy law at the office of Madrid where she worked for almost 15 years. Covadonga advises on all environmental and energy law issues. She has wide experience in all the areas of the environment and natural resources, as well as in the main energy sectors: electricity (conventional and renewable); and oil & gas. She provides legal advice to clients in different matters, including the development and implementation of big industrial activities, M&A operations, litigation processes and in general, advising clients in regulatory compliance from a very proactive perspective (including environmental corporate compliance processes). During the almost two decades of her professional experience, she has advised national and international corporate groups, Ibex businesses, publicly owned companies, and the major financial entities in Spain, among others.

Covadonga del PozoDel Pozo & De la CuadraRíos Rosas 36, 6º Dcha28003 MadridSpain

Tel: +34 915 757 817Email: [email protected]: www.dpdc.es

WWW.ICLG.COM158 ICLG TO: ENVIRONMENT & CLIMATE CHANGE LAW 2018

Chapter 22

Wistrand Law Firm Rudolf Laurin

Sweden

been committed. It can further be noted that all activities having an impact on the environment are not licensable but can nevertheless be supervised. In environmental permit proceedings, various authorities act as counterparties to the applicant upholding public interests.


The main rule is that the public has access to official documents submitted to or drawn up by authorities. In case of environment-related information, some parts can be subject to confidentiality, for instance information regarding the location of sensitive species.



Environmentally hazardous activities and water operations are examples of activities that require an environmental permit. Even if an activity does not require a permit, the supervisory authority may order an operator to apply for a permit where the activity involves the risk of significant pollution or other significant detriment to human health or the environment. There is also the option for the operator of a non-licensable environmentally hazardous activity to apply for a voluntary permit.An environmental permit is decided for an operation at a certain location and may be transferred to a new operator. A new operator needs to notify the supervisory authority about the transfer in order to become the new permit-holder.


An applicant may appeal a decision by the County Administrative Board to the regional Land and Environmental Court if a permit is denied or if the applicant is not satisfied with the permit conditions. A judgment by the Land and Environmental Court may be appealed to the Superior Environmental Court if a leave to appeal is granted. For operations of such significance that the regional Land and



The main Swedish environmental legislation consists of the Swedish Environmental Code (SFS 1998:808) which entered into force on 1 January 1999. The Environmental Code brought together 15 existing central environmental laws. The aim of the Environmental Code is to promote sustainable development. The Environmental Code is further elaborated and specified in the form of ordinances, regulations issued by public authorities and decisions taken in individual cases. As far as environmental policies are concerned, the Swedish Parliament has adopted national environmental quality goals. Being a member of the European Union (EU), the EU environmental policy is in many aspects part of Swedish environmental law.The agencies/bodies enforcing environmental law consist of the national environmental agencies, such as the Swedish Environmental Protection Agency and the Swedish Agency for Marine and Water Management as well as regional authorities, such as the Country Administrative Boards and local municipal authorities.In Sweden, the courts handling environmental law matters consist of five Land and Environmental Courts, the Superior Land and Environmental Court and the Supreme Court. As far as permitting procedure is concerned, most permits are, depending on what kind of operation the permit concerns, issued either by the County Administrative Boards or the Land and Environmental Courts. When it comes to supervision, the County Administrative Boards and the municipal authorities are the main authorities. As far as criminal law is concerned, the district courts, the Courts of Appeal and the Supreme Court handle those issues.


The supervisory authorities have a central role in ensuring that environmental permits, decisions and environmental laws are met. They have the mandate to issue orders, prohibitions and, to some extent, penalties or a fine. The supervisory authorities are obliged to report infringements of the provisions of the Environmental Code or rules issued in pursuance thereof to the police or public prosecution authorities where there are grounds for suspicion that an offence has


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The provision regarding storage and/or disposal of waste has been redrafted as from 1 January 2017. In general, it has been clarified that the storage of waste on the site where it has been produced requires a permit only in specific situations (storage of more than 50 tonnes of dangerous waste). The treatment or disposal of waste will normally require a permit or a notification, depending on the method, the type and the volume of waste. As a general obligation, the producer of waste is always obliged to ensure that the waste is handled in an acceptable manner for the environment and human health.


Normally, if transferred to a person holding the necessary permits, the producer of waste will not retain a residual liability. Such a liability would be retained in the case that the producer is considered as being the factual operator of the treatment facility.


Producer responsibility has been introduced for certain categories of waste (packaging, glass, paper, tires, cars, WEEE, batteries and pharmaceuticals). The responsibility may be actual or financial depending on the category of waste. Specific provisions are to be found in the relevant government ordinance. The extent of the producer responsibility is currently under review.

4 Liabilities


Please see question 2.4 above. In addition to what is mentioned regarding permits, please also note that even other incompliance with environmental laws may give rise to criminal liability. Some infringements can lead to environmental sanction charges ranging between SEK 1,000 and SEK 1,000,000 and some to sanctions under criminal law. Where criminal liability requires intent or negligence, this is not a requirement for environmental sanction charges. Criminal liability requires that an individual person may be held liable or, in case of corporate fines, that a crime can be shown to have been committed. Some offences considered to be minor are not punishable under criminal law.


Yes. An environmental permit does not preclude liability for contamination or environmental damage.

Environmental Court is the first instance for issuing the permit, a judgment, after being appealed to the Superior Environmental Court, can be appealed to the Supreme Court. Even for such an appeal, a leave to appeal is needed.


In order to apply for an environmental permit, an environmental impact assessment (EIA) is normally required. The content of the EIA mainly depends on whether or not the activity or operation is likely to have a significant environmental impact. If that is the case there are more formal requirements regarding what the EIA shall address.As of 1 January 2018, a new piece of legislation will apply regarding environmental assessment. The main element concerns chapter 6 of the Swedish Environmental Code and the purpose is to better comply with the EIA Directive (85/337/EEC) and its amendments. For example, the requirements on the content of the environmental impact assessment (EIA) has been clarified. Also an EIA is only required when an activity or operation has significant environmental impact. When the activity or operation does not have a significant environmental impact it is only necessary to make a smaller environmental impact assessment. The purpose of this legislation is that an EIA will only be required when it is environmentally motivated. The aim of the new legal amendments is also to make the Swedish Environmental Code more efficient when it comes to environmental assessment, to reduce the expenditure of time and the administrative work.


A licensing authority may withdraw a permit where a permit or its conditions have not been met and the discrepancy is not inconsiderable.A supervisory authority may issue any injunctions and prohibitions that are necessary in individual cases to ensure compliance with the provisions of the Environmental Code and rules, judgments and other decisions issued in pursuance thereof. The measures taken must not be more intrusive than necessary.An operator who neglects to comply with conditions of a permit may also be held liable under criminal law. In addition to personal responsibility, corporate fines, ranging between SEK 5,000 and 10,000,000, may be imposed.

3 Waste


The Swedish legislation concerning waste is largely based on the EU Waste Framework (2008/98/EG). The directive has been implemented in Swedish legislation through the Environmental Code and the Waste Ordinance (2011:927).Under the Environmental Code, waste is defined as any object, matter or substance belonging to a specific waste category which the holder disposes of or intends or is required to dispose of. Appendix 4 of the Waste Ordinance contains the waste catalogue. Hazardous waste in general is subject to stricter provisions regarding collection, transport, storage, etc. Waste from packaging, glass, paper, tyres, cars, WEEE, batteries and pharmaceuticals is subject to producer responsibility.

Wistrand Law Firm Sweden


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Yes; please also see questions 2.4 and 4.1. Criminal responsibility is personal. In order not to expose the CEO or the board of a company to liability for issues outside their control, liability for environmental issues are often delegated. Insurance, if any, does not preclude criminal responsibility.


In case of a shares sale regarding a limited liability company, the environmental liability follows the corporate identity number. When assets are acquired, the purchaser will take on the liabilities connected with the assets and may, under environmental law, be regarded as a new operator of the previous polluting activities performed by the selling company.When properties are acquired, there are secondary responsibilities for properties acquired after 1 January 1999. See further question 5.1.


A lender of money cannot be held liable, merely due to the lending of money, for environmental wrongdoings or remediation costs linked to the borrowing company. In order to be held liable, the lender must act in such a way that the lender can be deemed to be the operator of the operation performed by the borrower.

5 Contaminated Land


As far as criminal law is concerned, contamination in a manner which involves risks to human health or detriment to flora and fauna that are not insignificant is considered to be a criminal offence according to the Environmental Code. In case of intent or negligence, liability can arise. Liability for contaminated areas is regulated in chapter 10 of the Swedish Environmental Code. The provisions are based on the Polluter Pays Principle; the liability for environmental damages therefore primarily rests on the person(s) or legal person(s) who pursue or have pursued an activity that has contributed to the contamination (operator). In order to be held liable, the operator’s actual operation needs to have continued after 30 June 1969, the effect of the operation must still be apparent when the Environmental Code entered into force (1 January 1999), and there must be a need to remediate the contaminated area. With respect to serious environmental damage, specific provisional regulations apply.If there are no operators that can remediate the contaminated area, the owner of a property can secondarily be held responsible. This applies to properties purchased as from 1 January 1999 where the purchaser had knowledge about the contamination or ought to have discovered it.


If several operators have contributed to the contamination, the liability is joint and several (subject to some limitations as specified in chapter 10 of the Environmental Code). However, the payment made by the liable persons shall be shared between them as appears reasonable with regard to the extent to which each of them was responsible for the pollution and to other relevant circumstances. Property owners being secondarily responsible also have joint and several liability.


The form of what is “agreed” will be taken from a decision by the authority. It will not gain legal force in the sense that it will preclude all future claims. A third party can challenge such a decision if this party is considered to be individually affected by the decision more than marginally.


Liability for contaminated land can be handled and transferred in a purchase agreement. Civil agreements, however, only address the situation between the contracting parties and parties to an agreement cannot hinder an authority to act in a certain way or to issue orders to a specific party. A property owner cannot act against an operator when it comes to recourse under chapter 10 of the Environmental Code. A property owner can under these rules only seek recourse from another property owner and an operator can only seek recourse from another operator (if not hindered thereto according to an agreement between the parties).


In case of serious environmental damage, the responsible polluter is primarily obliged to restore the environmental values and, if this is not possible, to compensate for loss values.



Authorities have the right to be given access to properties for the purpose of carrying out investigations and taking other measures in order to perform their tasks pursuant to the Environmental Code. A supervisory authority may also order an operator to submit any information and documents to the authority or carry out any investigations of the operations that are necessary for the purposes of supervision.


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The owner or user of a property is obliged to immediately notify the supervisory authority if any pollution is discovered on the property that may cause damage or detriment to human health or the environment, or if there is a risk that the operations may cause serious environmental damage. Failure to notify is a criminal offence. Third parties need not to be notified.


An operator or land owner is obliged to investigate if so ordered by the supervisory authority. Such an order must be based on substantial grounds. In the case of exploitation of an area which may be contaminated, there will be a need to investigate.


There is no obligation to disclose environmental problems under Swedish environmental law to a purchaser. However, civil law may require disclosure.

8 General


The agreement on environmental indemnity is commonly used in transfer agreements of different kinds. However, provisions on indemnity are only valid between the contracting parties. The indemnity does not limit or bind the authorities.


As a general rule, balance sheet reservations should be made in respect of liabilities that are known to arise in the future, which also includes environmental liabilities. General accounting principles apply. Recent jurisprudence suggests that dissolution of a company does not prevent the authorities from reviving the dissolvent procedure in certain cases. Bankruptcy and subsequent dissolution ends environmental liability.


As a main rule, a shareholder in a limited liability company cannot be held liable for breaches of environmental law or pollution caused by the company, solely due to the fact that the person is a shareholder. Under recent case law, however, a parent company was held liable for contamination caused by a subsidiary solely due to the fact that the parent company enabled the subsidiary to continue its activities through economic subsidy.


There is no protection for “whistle-blowers” under environmental law.


Group actions are available for environmental damage claims and for requests on prohibition of operations and precautionary measures. Penal or exemplary damages are not rewarded under Swedish environmental law.


No person is liable for costs occurring during a permitting procedure under the Environmental Code, with some exceptions regarding water operations where liability to pay costs occurs on appeal. Environmental litigation regarding damages is subject to the general provisions normally leading to the losing party to compensate the winning party.



Sweden has implemented the EU Emission Trading Directive (2003/87/EC) through the national Emissions Trading Act (2004:1199), the Emissions Trading Ordinance (2004:1205) and the regulations from Environmental Protection Agency and the Swedish Energy Agency.


There are no other obligations on the operators. Regarding the state, Sweden is a party to the United Nations Framework Convention on Climate Change and the Kyoto Protocol, and is therefore obliged to record and estimate the amount of greenhouse gas emissions produced in the country.


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As described above, there is a market for environmental insurance solutions. To our knowledge, litigations regarding environmental insurance claims are not particularly common.

12 Updates


In February 2017, the Land and Environmental Court of Appeal decided on a case regarding the national regulations governing protection of species. The judgment is considered to be of great significance. It leaves a way to receive compensation in cases where a protection of endangered species would make it considerably more difficult to use the affected part of a real property. If a territory must be protected and a dispensation is not given, the individual has a right to compensation insofar as the current use of the real property is hindered. Last year, two cases of principle interest for the wind industry were reported. The Superior Land and Environmental Court declared that, if the noise from several wind farms affect the same area, the maximum level of noise allowed from each and every one of those wind farms must not lead to a higher total impact on the housing than 40 dB(A). Thus, the individual operator may have to accept a condition limiting the noise emission from his windfarm to less than the standard 40 dB(A) level. The condition shall, however, be designed so that the individual operator has the power to ensure that the condition is met. This jurisprudence of the court has been forcefully adopted by competent authorities at all levels. Decisions following those principles have been handed down both permitting new farms and in the course of supervision of existing windfarms.A historical Climate Change Act has been adopted by the Parliament. The act will apply as of 1 January 2018. The purpose of the act is to regulate the climate change policy and to structure environmental work. The overall vision in the proposed act is to have zero net-emissions of greenhouse gases into the atmosphere in Sweden by 2045.


One of the goals of Swedish environmental policy is to reduce climate impact. The goal is set up in accordance with the United Nations Framework Convention on Climate Change. The Government has recently proposed adoption of a comprehensive Climate Change Act. The goal is to obtain zero net-emissions of greenhouse gases by the year 2045.

10 Asbestos


This is not applicable in Sweden.


The use of asbestos is prohibited in Sweden. The removal of asbestos is not mandatory, but when removed, is subject to strict rules (Swedish Work Environment Authority’s provisions and general recommendations concerning asbestos (AFS 2006:1)). Asbestos is, when disposed of, considered hazardous waste.



General and product liability insurance provides coverage for liability to pay damages for sudden and unforeseen damages to persons’ or third parties’ property. Property damage insurances are also used, and may cover sudden and unforeseen leakages of oil and other liquids. Stand-alone environmental liability insurances also exist, and will cover gradually incurred environmental damage. In recent years, insurance solutions have been to a limited extent used during transactions.



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Since its foundation in 1915, Wistrand has focused on providing quality legal advice within all areas of commercial law to private and public industry in Sweden and internationally. The firm is one of Sweden’s leading, full-service business law firms with nearly 200 employees and offices in both Stockholm and Gothenburg.

Wistrand draws on the range and depth of its expertise to develop commercial, effective solutions for its clients. In order to provide tailored advice, the firm invests in understanding its clients’ organisations, operating context as well as the opportunities and challenges they face.

Rudolf Laurin (Partner) has practised environmental law since 1994 and heads Wistrand’s Environment & Energy practice. He became a partner in Wistrand´s energy and environmental department in 1999. Rudolf advises on the environmental aspects of projects regarding inter alia power and heat generation from biomass, peat, waste, natural gas, biogas, and wind including off-shore wind farms. He also has an in-depth knowledge of industry sectors such as waste handling, manufacturing, paper mills and rock quarries. During his 23 years of practice, he has successfully represented clients in all types of permitting procedures, including the Supreme Court.

Rudolf appears in TheExpertGuides, Chambers, The Legal 500 and Who’s Who Legal.

Rudolf LaurinWistrand Law Firm Lilla Bommen 1P.O Box 119 20SE-404 39 GothenburgSweden

Tel: +46 31 771 21 20Email: [email protected]: www.wistrand.se

WWW.ICLG.COM164 ICLG TO: ENVIRONMENT & CLIMATE CHANGE LAW 2018

Chapter 23

Bär & Karrer Ltd. Markus Schott

Switzerland

According to article 74 para. 3 BV, the Cantons are responsible for the implementation of the relevant federal regulations, except where the law provides otherwise and determines that the Confederation is competent for implementation. This principle is replicated in article 36 USG. Accordingly, the Confederation supervises the execution of environmental law by the Cantons and coordinates their activities (article 38 para. 1 and 2 USG). In some areas, the federal government is itself responsible for the enforcement of environmental legislation, such as import and export of waste (article 41 USG). In general, the Federal Council enacts the implementing provisions (article 39 para. 1 USG). On the federal level, the Federal Office for the Environment (“BAFU”) is generally responsible for the execution of environmental law, but there are also some special agencies, which are competent in specific areas such as the Swiss Federal Nuclear Safety Inspectorate (“ENSI”). In addition, each Canton has its own authority responsible for the execution of environmental law.


Switzerland has a rather strict approach to enforcing environmental law. Apart from authorisations and inspections, the agencies also have the power to impose fines for various violations of environmental law (article 61 USG). Severe violations may even be punished by a custodial sentence of up to three years (article 60 USG). Other sanctions include the order to discontinue illegal activities, the re-establishment of the lawful conditions and the withdrawal of authorisations.


The authorities are obliged to inform the public adequately about environmental protection and levels of environmental pollution (article 10e para. 1 USG). If it is in the public interest, the authorities may also inform interested persons about the results of inspections and conformity-assessments, after having consulted the persons concerned. Furthermore, any person has the right to inspect environmental information in official documents and information relating to energy regulations that relate to the environment and to request information from the authorities about the content of these documents (article 10g para. 1 USG).



According to article 73 of the Federal Constitution (“BV”), the Confederation and the Cantons shall endeavour to achieve a balanced and sustainable relationship between nature and its capacity to renew itself and the demands placed on it by the population. Pursuant to article 74 BV, the Confederation is responsible for the legislation on the protection of the population and its natural environment against damage or nuisance and it shall ensure that such damage or nuisance is avoided. The Cantons are primarily responsible for the execution of the relevant federal regulations, but they may also enact implementing rules where federal law so provides. The Federal Constitution contains further provisions regarding protection of the water, forests as well as natural and cultural heritage (articles 76, 77 and 78 BV). There are numerous acts and ordinances implementing the constitutional mandate regarding environmental protection. The following acts are the most important: the Environmental Protection Act (“USG”); the Ordinance on Avoidance and Disposal of Waste (“VVEA”); the Ordinance on Contaminated Sites (“AltlV”); the Chemicals Act (“ChemG”); the Act on Reduction of CO2 (“CO2 Act”); as well as the Nuclear Energy Act (“KEG”); and the Ordinance on the Environmental Impact Assessment (“UVPV”).The Swiss environmental policies and the implementation of environmental laws are based on the following main principles:■ The “precautionary principle” (Vorsorgeprinzip) states that

early preventive measures must be taken in order to limit effects which could become harmful or a nuisance (article 1 para. 2 USG).

■ The “polluter pays principle” (Verursacherprinzip) states that any person who causes measures to be taken due to endangering, polluting or causing damage to the environment must bear the costs related to avoidance or clean-up (article 2 USG).

■ The “principle of abatement of pollution at source” (Prinzip der Bekämpfung von Umweltbeeinträchtigungen an der Quelle) that originates from the precautionary principle and states that environmental impacts must be abated at its source.


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Bär & Karrer Ltd. Switzerland



Environmental permits are common in Swiss law and are required for constructions or the operation of, e.g., landfills or nuclear energy plants, as well as for the placing on the market or handling of specific substances or special waste (e.g., article 30e USG, article 12 ff. KEG, article 9ff. ChemG). Usually, a permit is bound to a person/company and therefore not transferable (personenbezogene Bewilligung). However, in some cases, permits can be linked to an object (sachbezogene Bewilligung). These permits generally remain in place if the ownership of the object changes.


There is a possibility to challenge the refusal or the provisions of an environmental permit, usually within a period of 30 days. The appeal has to be directed either at the competent Cantonal administrative court (in case of Cantonal authorities implementing the environmental law) or at the Federal Administrative Tribunal (if a federal authority implements the environmental law). It is possible to invoke a false establishment of the facts of the case or a violation of the applicable law. After the administrative court or tribunal has decided, its decision may be appealed before the Federal Supreme Court for violation of federal law.


Before taking any decision on the planning, construction or modification of installations, the competent authority must assess their impact on the environment. The requirement of an environmental impact assessment applies to installations that could cause substantial pollution to environmental areas, to the extent that it is probable that compliance with regulations on environmental protection can only be ensured through measures specific to the project or site (article 10a ff. USG). Any person who wishes to plan, construct or modify an installation that is subject to an environmental impact assessment must submit an environmental impact report. Based on this report and on its own investigation, the environmental protection agencies order the necessary measures.


Regulators can impose a fine, and there are criminal sanctions up to a custodial sentence of three years or a monetary penalty. The regulator can also confiscate objects or order the discontinuation of the illegal activities, and the re-establishment of the lawful conditions. As an ultima ratio, the regulators can revoke the environmental permits.

3 Waste


Waste is defined as “any moveable material disposed of by its holder or the disposal of which is required in the public interest” (article 7 para. 6 USG). The disposal of waste includes its recovery or deposit in a landfill, as well as the preliminary stages of collection, transport, storage and treatment (i.e. any physical, chemical or biological modification of the waste) (article 7 para. 6bis USG). The owner or holder of waste has to comply with a number of legal obligations. The owner or holder is whoever has actual control over the waste. This person has the duty to dispose the waste that he holds (article 31c para. 1 in connection with article 31b para. 1 USG) and must bear the cost of its disposal (article 32 para. 1 USG). Waste whose environmentally compatible disposal requires special measures qualifies as special waste (article 30f USG). Additional obligations for the handling of special waste apply, such as markings as well as licence requirements for import and export.


As a principle, the production of waste should be avoided wherever possible (article 30 para. 1 USG). The Federal Council may require manufacturers to avoid production waste where there is no known environmentally compatible process for its disposal (article 30a lit. c USG). All other waste may be stored and disposed of only in landfills (article 30e para. 1 USG) and, according to article 30c para. 2 USG, waste must not be burned other than in incineration plants (exceptions apply to the burning of natural forest, field and garden waste).The disposition of waste on a site requires a permit for setting up and operating a landfill (article 30e para. 2 USG).


The holder of waste is entitled to instruct third parties to dispose of it (article 31c para. 1 USG). In case of such external disposal, the third party qualifies as the holder of waste. If the third party violates its obligations, it becomes liable for the recovery measures (because it qualifies as interrupter). As the polluter has to bear the costs for recovery measures (article 2 and 59 USG), not only the third party as interrupter is responsible for such costs, but in some instances also the initial holder. This is the case if the wrongdoing of the appointed third party falls within the responsibility of the initial holder as well.


The Federal Council may require certain types of waste to be recovered if this is economically feasible and harms the environment less than other forms of disposal and the manufacture of new products (article 30d para. 1 USG). Such recovery obligations exist, inter alia, for disposable packaging consisting of glass, PET, and aluminium, as well as for batteries and electrical devices.


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4 Liabilities


According to article 59a USG, the operator of an establishment or an installation that represents a special threat to the environment is liable for the loss or damage arising from effects that occur when this threat materialises. There is no requirement of negligence or intent. However, any person who proves that the loss or damage was caused by force majeure or by gross negligence on the part of the injured party or of a third party is relieved of liability (article 59a para. 3 USG).There are also special liability provisions regarding specific activities, such as handling of pathogenic organisms (article 59abis USG) or of genetically modified organisms (article 30 of the Federal Act on Non-Human Gene Technology, “GTG”).


Yes, as the applicable liability provisions of environmental law provide for a strict liability, there is no permit defence. Consequently, the liability is not excluded if the establishment or installation has been operated or the activity has been carried out within the limits of the applicable environmental law and the conditions of the permit.


According to Swiss company law, which is based on the separation principle, directors or officers are not subject to civil law liability for environmental wrongdoing of the company itself. Furthermore, the company is liable for all activities of its bodies, which are in the interest of the company.Members of the board, as well as all persons engaged in the business management, are liable both to the company and to the individual shareholders (and to the company’s creditors in case of its bankruptcy) for any losses or damage arising from any intentional or negligent breach of their duties. Therefore, if an officer breaches his obligations regarding environmental affairs, he may become personally liable. It is common to have D&O insurance (directors’ and officers’ liability insurance) covering all damage claims against insured persons. Normally, intent and internal damage claims are excluded from the D&O insurance, as well as personal injury and damage to property. There is also a criminal law liability of directors and officers, which may not be covered by insurance.


If an investor acquires all shares of a company (share deal), the target still remains liable for the recovery of pollution and corresponding costs due to the “polluter pays principle”. The environmental liability is not affected by the change of ownership.

If a purchaser acquires the assets (asset deal), the purchaser will be liable as the new owner of the land or installation for any forthcoming environmental damage. The liability for previous pollution remains with the seller due to the “polluter pays principle”.


In Switzerland, there is no concept of lender liability. According to the separation principle, the lender cannot be held liable for environmental wrongdoing and/or remediation costs that the company caused. As long as the lender does not cause pollution, a liability is excluded.

5 Contaminated Land


Each Canton is obliged to have a register of polluted sites, which is accessible to the public (article 32c para. 2 USG and article 5 Contaminated Sites Ordinance, “AltlV”). Polluted sites are defined as sites whose pollution originates from waste, and which are restricted areas. They comprise waste disposal sites, industrial sites and accident sites (article 2 para. 1 AltlV). Sites in need of remediation are polluted sites that cause harmful effects or nuisance or where there is a real danger that such effects may arise (article 2 para. 2 AltlV). Contaminated sites are polluted sites in need of remediation (article 2 para. 3 AltlV). Based on a preliminary investigation, the authorities assess whether the polluted site is in need of monitoring or remediation with regard to groundwater protection, protection of surface waters or prevention of air pollution or pollution of the soil. All other investigated sites are defined as in need of neither monitoring, nor remediation (articles 7 and 8 AltlV). For polluted sites in need of monitoring, the authorities require a monitoring plan to be drawn up and suitable measures to be taken to detect a real danger of harmful effects or nuisances before these become evident (article 13 para. 1 AltlV). The monitoring measures shall be applied until there is no longer any need for monitoring.For sites that are in need of remediation (contaminated sites), the authorities require that a detailed investigation be carried out within a reasonable period and that the site is monitored until completion of remediation (article 13 para. 2 AltlV).The authorities require that for contaminated sites, a remediation project is prepared within a time frame appropriate to the urgency of remediation (article 17 AltlV). Persons required to carry out remediation measures must notify the authorities of the remediation measures carried out and demonstrate that the remediation objectives have been achieved (article 19 AltlV). The investigation, monitoring and remediation measures shall be carried out by the holder of the polluted site or, if the pollution of the site was caused by the action of third parties, the authorities may require these, with the approval of the holder, to prepare the remediation project and perform the remediation measures (article 20 AltlV).


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If the authorities have reason to believe that the pollution of the site was caused by the action of third parties, they may require them to carry out the preliminary investigation, the monitoring measures or the detailed investigation, as well as the remediation measures (article 20 para. 2 and 3 AltlV). Fundamentally, the person responsible for the pollution bears the costs of the measures required to investigate, monitor and remediate polluted sites (article 32d para. 1 USG). If two or more persons are responsible, they bear the costs according to their shares of responsibility (article 32d para. 2 USG). Any of the responsible persons may request a ruling on the allocation of costs from the authority (article 32d para. 4 USG).


The authorities assess the remediation project and on the basis of this assessment, they issue a ruling defining the final objectives of the remediation, the remediation measures, as well as the assessment of results and the time frame to be adhered to and further charges and conditions for the protection of the environment (article 18 AltlV). If the authorities conclude in the evaluation of results that the remediation measures carried out were not successful, they can require additional works (article 19 AltlV).Challenges by third parties are possible if they took part in the previous proceedings, are particularly affected by the ruling and have a legitimate interest in its cancellation or alteration.


In accordance with the “polluter pays principle”, if two or more persons are responsible for the pollution, they bear the costs according to their shares of responsibility (article 32d para. 2 USG). A private person can demand a ruling regarding costs (article 32d para. 4 USG) and can appeal it if he does not agree with the cost allocation. Usually, the site owner has to bear only 10–20% of the costs, while the rest is allocated to the person who caused the pollution.For the sale or division of immovable property on which a site is located that is listed in the register of polluted sites, an authorisation by the competent authority is required (article 32dbis USG). Such authorisation is granted, inter alia, if security is provided for the costs of the expected measures.


In case of damage caused by the handling of genetically modified organisms or pathogenic organisms, the responsible person must also reimburse the costs of necessary and appropriate measures that are taken to repair destroyed or damaged environmental components, or to replace them with components of equal value. If the destroyed or damaged environmental components are not the

object of a right in rem or if the eligible person does not take the measures that the situation calls for, the damages are awarded to the responsible community (article 31 Federal Act on Non-Human Gene Technology and article 59abis para. 9 USG).



Everyone is obliged to provide the authorities with the information required to enforce environmental law and to conduct or tolerate the conduct of enquiries (article 46 para. 1 USG). According to article 61 USG, non-compliance with these obligations can be sanctioned with a fine of up to CHF 20,000.



Operators of installations (i.e. buildings, traffic routes and other fixed facilities, as well as modifications of the terrain and appliances, machines, vehicles, ships and aircraft) that could seriously damage people or their natural environment must immediately report any extraordinary event to the competent agency (article 10 USG). Based on the Ordinance on Protection against Major Accidents (StFV), operators of certain establishments (e.g. where certain thresholds for substances, preparations or special waste are exceeded, or where certain activities involving genetically modified or pathogenic microorganisms are carried out) have to notify any extraordinary event, which has significant impact on the Cantonal notification body.


Each Canton is obliged to have a register of polluted sites, which is accessible to the public. Based on a preliminary investigation, the authorities assess whether the polluted site is in need for monitoring or remediation with regard to groundwater protection, protection of surface water or prevention of air pollution or pollution of the soil. All other investigated sites are defined as in need of neither monitoring nor remediation (article 7 and 8 AltlV). The investigation of land for contamination is triggered by the authorities, but according to article 20 AltlV, the holder of the site has to carry out the investigation, monitoring and remediation measures. If the land is qualified as a polluted site and if measures must be taken, the polluter has to pay for the investigation. If the authority determines the land not to be a polluted site, the competent community will bear the costs for the necessary investigation (article 32d para. 5 USG).


There is no obligation, based on environmental law, to disclose environmental problems to a potential purchaser. However, if the


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seller fails to inform the purchaser about any existing or suspected environmental problems, the purchaser may be able to claim for compensation based on the law of sales contracts. It is also standard practice to include representation and warranty clauses covering such problems in share or asset purchase agreements.

8 General


It is possible for private parties to agree on an environmental indemnity. However, liability under environmental law cannot be modified or excluded by way of such agreement.


A company may transfer environmental liabilities linked to an asset to a subsidiary or other company by transferring the respective asset. However, it remains liable as a historic polluter. Dissolution of the company is no solution to escaping environmental liabilities, as either these are shifted to the legal successor, or the respective claims have to be fulfilled before dissolution can be completed.


According to Swiss company law, which is based on the separation principle, shareholders are not subject to civil law liability for environmental wrongdoing of the company itself. Under certain circumstances, a so-called “piercing of the corporate veil” (Durchgriffshaftung) is possible if the calling on the separation principle is an abuse of rights.If a shareholder is engaged in the business’s management, he may be liable both to the company and to the other shareholders (and to the company’s creditors in case of its bankruptcy) for any losses or damage arising from any intentional or negligent breach of his duties.


So far, there is no law which protects “whistle-blowers”. The federal government is currently preparing a draft provision of the Swiss Code of Obligation, which should regulate whistle-blowing in the context of employment law.


So far, there are no class actions or penal or exemplary damages available. However, there are some special rights of appeal and liability provisions worth mentioning in this context.

Environmental organisations are entitled to appeal decisions regarding specific projects (so-called associations’ right of appeal, “Ideelle Verbandsbeschwerde”). For example, national environmental organisations can appeal projects which need to undergo the environmental impact assessment or the placing on the market of pathogenic organisms (articles 55 and 55f USG). Other associations’ rights of appeal relate to decisions based on the Federal Act on the Protection of Nature and Cultural Heritage (“NHG”), and to authorisations for putting into circulation genetically modified organisms intended for lawful use in the environment based on the Federal Act on Non-Human Gene Technology (“GTG”).Also, the Federal Office for the Environment (“BAFU”) has a right of appeal under federal and Cantonal laws against rulings by the Cantonal authorities regarding environmental matters, and the municipalities have a right of appeal if they are affected by a ruling and have a legitimate interest in having them reversed or amended (articles 56 and 57 USG).In case of damage caused by the handling of genetically modified organisms or pathogenic organisms, the responsible person must also reimburse the costs of necessary and appropriate measures that are taken to repair destroyed or damaged environmental components, or to replace them with components of equal value. If the destroyed or damaged environmental components are not the object of a right in rem or if the eligible person does not take the measures that the situation calls for, the damages are awarded to the responsible community (article 31 GTG and article 59abis para. 9 USG).


Swiss law does not provide exemption from costs such as court fees and liability for such fees for individuals or public interest groups with regard to litigation proceedings. The general principle for judicial proceedings is that the losing party must bear the costs relating to the action and the ones incurred by opposing parties. This rule also applies with regard to associations’ right of appeal.



The Swiss emissions trading scheme (“ETS”) is designed according to the “cap-and-trade” principle. The quantity of emission allowances available is limited. The total quantity of emission allowances is determined in advance, representing the maximum quantity available (“cap”). This cap was 5.63 million tonnes CO2 for 2013 and has been reduced each year by 1.74% of the initial 2010 quantity. The emission allowances needed for greenhouse gas-efficient operation are allocated free of charge annually to ETS companies and are tradable (“trade”). Companies that exercise specific activities (as defined in annex 6 of the CO2 Ordinance) are obliged to participate in the Swiss emissions trading scheme. If a company’s total emissions in the previous three years are below 25,000 tonnes CO2 in each year, the company can apply for an exemption from the ETS obligation (“opt-out”). Companies with an installed capacity of between 10 and 20 MW that are engaged in a specific activity (as defined in annex 7 of the CO2 Ordinance) may voluntarily participate in the ETS (“opt-in”).


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The ETS is organised to be compatible with the European emission trade system (EU-ETS) so that the two systems can be connected. Linking the Swiss and EU CO2 emissions markets would be beneficial for both environmental policy and the economy. The technical negotiations were concluded and the agreement was signed in November 2017. The treaty is subject to ratification by both sides and should enter into force no later than 2020.


There is the so-called CO2 levy on thermal fuels. The CO2 levy is a key instrument to achieve CO2 emission targets. This steering levy on fossil combustible fuels, such as heating oil and natural gas, has been levied since 2008. In making fossil fuels more expensive, it creates an incentive to use them more economically and choose more carbon-neutral or low carbon energy sources. Energy-intensive companies can be exempted from the CO2 levy if they commit to reducing emissions in return. Large energy-intensive companies participate in the emissions trading scheme and are also exempt from the CO2 levy.The CO2 levy is imposed on all fossil thermal fuels (e.g., heating oil, natural gas, but not motor fuels). The levy is imposed when the thermal fuels are used to produce heat, to generate light, in thermal installations for the production of electricity or for the operation of heat-power cogeneration plants. No levy is imposed on wood and biomass because these energy sources are CO2-neutral. In 2018, the levy amounts to CHF 96.00 per tonne of CO2. The Federal Council can increase the rate of the levy if the interim target for thermal fuels has not been reached. The CO2 levy is indicated on invoices for purchases of thermal fuels.Around two thirds of the revenue from the CO2 levy is redistributed to the public and the business community through health insurers and the compensation offices. The annual revenue is about CHF 1 billion.


In addition to its participation in worldwide climate programmes (e.g. Paris Agreement), Switzerland pursues an active policy on reducing greenhouse gases and contributes to the international goal of limiting global warming to two degrees. The CO2 Act is focused on reducing Switzerland’s domestic emissions. Measures to reduce greenhouse gas are the CO2 levy, emissions trading, building standards as well as compensation for CO2 emissions and the technology fund. With the technology fund, the Confederation promotes innovations that reduce greenhouse gas or the consumption of resources, the use of renewable energies and increase energy efficiency. Due to the Paris Agreement and the linkage of the Swiss-ETS with the EU-ETS, the CO2 Act is currently under revision in order to implement the new international obligations. The revised CO2 Act will be discussed by the Federal Parliament in 2018.In 2011, the Swiss government decided to withdraw from the use of nuclear energy on a step-by-step basis as a reaction to the incident in Fukushima and to strengthen the amount of renewable energy. The existing five nuclear power plants are to be decommissioned when they reach the end of their safe service life, and they will not be replaced by new ones. In this respect, the Federal Council has developed a long-term energy policy (“Energy Strategy 2050”) based on the new energy perspectives. Essentially, the Federal Council’s new strategy focuses on the consistent exploitation of

the existing energy efficiency potentials and on the balanced use of the potentials of hydropower and new renewable energy sources. The respective statute was adopted by the Federal Parliament in September 2016. In May 2017, the new Energy Act was approved in a referendum by the Swiss people, and it entered into force on 1 January 2018.

10 Asbestos


Switzerland does not have an asbestos litigation industry that is in any way comparable to the extent of asbestos litigation taking place in the US. However, there have been a number of proceedings concerning the limitation period of asbestos claims. In 2010, the Federal Supreme Court decided that the limitation period does not start from the occurrence of the loss (e.g. disease) but from the reference date of the infringement (e.g. violation of the employment contract by exposure of the workers to asbestos). According to this case law of the Federal Supreme Court, health damages which occur 10 or more years after working in an asbestos environment cannot be brought before court because the claim becomes time-barred 10 years after the (last) breach of the employment contract. However, the European Court of Human Rights (EGMR) decided in March 2014 that the limitation period of only 10 years violates article 6 section 1 of the European Convention on Human Rights because claims for late damages may become time-barred before they even come into existence. The Federal Supreme Court accepted the decision of the EGMR and adapted its practice. Currently, the statutes of limitation are under revision, but it is not yet clear to what extent the existing limitation periods will be modified.


So far, the owner of premises are not obliged to remove materials containing asbestos from buildings unless the health of people is threatened due to released fibres. If this is the case, the owner is obliged to renovate, or otherwise the owner becomes liable due to the liability of property owners (article 58 of the Swiss Code of Obligations). Also, if a building is renovated or demolished, the workers have to be protected adequately, which may be costly.



Environmental insurance policies are very common in Switzerland, particularly for companies in the building industry or handling chemicals. These policies protect against, for example, contamination of the soil or water or other environmental damage that a third party claims against the company.


To our knowledge, there are no known court cases regarding environmental insurance claims in Switzerland.


Switz

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On 21 May 2017, the Swiss people approved the revised Energy Act in a popular referendum. The revised Energy Act marks the first step of the implementation of the “Energy Strategy 2050” and has entered into force on 1 January 2018.

AcknowledgmentThe author would like to acknowledge the assistance of his colleagues Michelle Merz, Raphael Wyss, and Jean-François Mayoraz in the preparation of this chapter.

12 Updates


On 12 December 2015, Switzerland and 194 other countries passed an agreement concerning the international climate policy at the climate summit COP21 in Paris. This agreement aims to limit the global temperature rise to fewer than two degrees. In October 2017, following the approval by the Federal Parliament, Switzerland has ratified the Paris Agreement.In December 2017, the Federal Council presented its report on the revision of the CO2 Act and its report on the Swiss-EU agreement regarding the linkage of both ETS to the Federal Parliament. The revision of the CO2 Act and the Swiss-EU agreement will be discussed together in the Federal Parliament in 2018.On 1 August 2016, a partial revision of the USG entered into force. If a substantial amount of biogenic fuels that do not meet certain conditions is placed on the Swiss market, the Federal Council is now allowed to designate such biogenic fuels that may only be placed on the Swiss market if they meet certain ecological or social requirements which are defined by the Federal Council.On 16 June 2017, the Federal Parliament adopted a revision of the GTG. In essence, the revised GTG extends the moratorium to grow genetically modified organisms (“GMO”) for agricultural purposes for another four years. However, the Federal Parliament did not adopt the Federal Council’s proposal for a legal framework regarding the coexistence of GMO and non-GMO as well as the creation of growing areas for GMO in which the concentrated growing of GMO would be possible.


Markus Schott has broad experience in all kinds of regulatory and administrative law matters including governmental supervision, public procurement, and administrative sanctions. He advises and represents clients in the life science and food, banking, finance and insurance, transportation and infrastructure sectors. He also drafts expert opinions in these fields. Markus Schott is also specialised in representing clients in administrative and civil law court proceedings, as well as international administrative and legal assistance proceedings. He teaches public economic law at the University of Zurich, and he publishes regularly in his fields of interest. Markus Schott studied law at the Universities of Basel and Neuchâtel. He holds a Doctor of Laws (Dr. iur.) degree from the University of Basel and a Master of Laws (LL.M.) degree from Harvard Law School.

Markus SchottBär & Karrer Ltd.Brandschenkestrasse 908027 ZurichSwitzerland

Tel: +41 58 261 54 77Email: [email protected]: www.baerkarrer.ch

Bär & Karrer is a renowned Swiss law firm with more than 150 lawyers in Zurich, Geneva, Lugano and Zug. Our core business is advising our clients on innovative and complex transactions and representing them in litigation, arbitration and regulatory proceedings. Our clients range from multinational corporations to private individuals in Switzerland and around the world. Most of our work has an international component. We have broad experience handling cross-border proceedings and transactions. Our extensive network consists of correspondent law firms, which are all market leaders in their jurisdictions.


Chapter 24

Snell & Wilmer L.L.P. Denise Dragoo

USA

violator. Wilful and knowing violations may be prosecuted as a crime (generally a misdemeanour) resulting in fines and possibly imprisonment. Actions to recover natural resource damages can be brought in the appropriate state or federal court with jurisdiction over the alleged violation.


Most environmental data filed with state and federal government is publicly available. Information filed with federal agencies can be requested by the public pursuant to the Freedom of Information Act. State governments generally have similar laws allowing public access. Confidentiality is the exception, not the rule, but trade secrets and commercially sensitive information that is clearly marked confidential may be exempt from public disclosure.



Environmental permits are authorised under local, state and federal law to assure site-specific compliance with environmental performance standards. In some cases, the permits are standardised for an industry and can be issued as a general or nationwide permit. In most cases, environmental permits are transferrable upon notice to the issuing agency, subject to the transferee’s assumption of responsibility. The transferee may need to demonstrate the financial and technical ability to meet permit conditions. A transferee’s poor environmental compliance history may block the permit transfer.


State and federal agencies generally have an administrative appeal process set by statute or rule. Permit denial or disputed permit conditions are initially considered by an administrative law judge or appeals board. After this administrative process is exhausted, the final agency decision can then be appealed for judicial review. The scope of review depends on the enabling statute and is either a review on the administrative record or a trial de novo. Under



Environmental law and policy in the United States derives from traditional common law notions of trespass and nuisance. Modern U.S. environmental law, however, is primarily based on statutory and regulatory enactments.In areas where the federal government has chosen to act, federal environmental law pre-empts similar state and local enactments. Thus, federal law serves as a national baseline for environmental requirements. Consequently, U.S. environmental law is driven by the major federal statutes, and their implementing regulations, including the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA). Additionally, most states, and some Tribes, have been delegated the authority to implement aspects of federal law, and their statutory and regulatory requirements may exceed the requirements of federal law.The major federal statutes tend to be fairly general and limited. As such, the U.S. Congress has authorised the U.S. Environmental Protection Agency (the USEPA), the U.S. Army Corps of Engineers and the Department of the Interior, to develop implementing regulations that provide specific legal requirements.These federal regulatory agencies are also tasked with enforcement of U.S. environmental laws. Because of state delegation, however, the bulk of environmental enforcement has also been delegated to the states.


Civil penalties and criminal fines are authorised by statute to enforce state and federal environmental laws and permits. Injunctive relief can also be sought in federal or state court. Administrative penalties are generally enforced by an agency following inspection, discovery of a violation and issuance of a notice of violation and/or a corrective action order. The alleged violator may contest the fact of violation or amount of the penalty before the administrative agency and appeal a final decision for judicial review. Larger civil penalties or criminal penalties may be prosecuted in court against an alleged


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Snell & Wilmer L.L.P. USA

the federal Administrative Procedure Act (APA), the court may set aside agency action found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.


Environmental assessments have different meanings in different contexts. The term “environmental site assessment” arises in the context of CERCLA liability. Prospective purchasers of property may be protected from liability under CERCLA for certain environmental conditions by conducting “all appropriate inquiries” (AAI). To meet AAI, an environmental site assessment process must be followed which meets specified industry standards issued by the American Society for Testing and Materials (ASTM). As a separate matter, under the National Environmental Policy Act (NEPA), if the project involves major federal action or approvals, an environmental assessment or environmental impact statement must be prepared to inform the agency decision. Finally, there are benefits to environmental self-evaluation and audits which may allow the polluting industry to voluntarily identify and remediate compliance problems. Some states, including Utah, have enacted legislation and rules of evidence which protect environmental audit reports from disclosure in state administrative and judicial proceedings. If violations are properly reported and remediated as a result of self-audit, these statutes and rules may result in the waiver of civil penalties for noncompliance. Without these protections, voluntary self-audits may provide a basis for liability.


See question 1.2, above.

3 Waste


The duties and controls required for the disposal of waste in the United States depends on the waste’s classification(s). Generally, waste is classified as either non-hazardous solid waste or hazardous waste. Waste can also be classified as radioactive waste, for which separate rules apply. Finally, certain wastes (for instance, certain recycling) are exempt from classification as either solid or hazardous waste. Unfortunately, there is often uncertainty, and disagreement with regulators, as to the appropriate waste classification. Because the duties and controls vary substantially, depending on the classification, this uncertainty is often hotly contested.Hazardous wastes are tracked and regulated from their generation to their disposal, to ensure that they are handled safely. Under the USEPA’s regulations implementing RCRA, hazardous wastes exhibit at least one of four characteristics – ignitability, corrosivity, reactivity and/or toxicity. The RCRA regulations contain extensive requirements for hazardous wastes. For instance, the regulations specify how hazardous wastes are identified, how they can be recycled and how they can be transported. The regulations governing the treatment, storage and disposal of hazardous wastes are particularly extensive. Both the federal regulatory agencies and the delegated states have substantial authority under RCRA to enforce compliance with the applicable regulations.

The RCRA regulations also govern non-hazardous solid waste. These rules primarily focus on the requirements for recycling and reusing, composting, incinerating, or landfilling wastes. These rules are primarily implemented and enforced by delegated states.


Generally, a facility that treats, stores or disposes of solid wastes, including the waste generator, must obtain a permit. There are, however, exceptions. For instance, a large quantity generator can store waste on site for less than 90 days without a permit, and a small quantity generator can do so for less than 180 days without a permit. There are also exceptions that may apply for transporters, for farmers, and for parties remediating contaminated sites.


Yes. This is a substantial issue under U.S. environmental law. In particular, under CERCLA, a party that disposes or treats, or arranges for the disposal, treatment or transportation, of a hazardous substance is strictly liable, jointly and severally, without regard to fault, for releases to the environment of the hazardous substance. In 2009, however, the U.S. Supreme Court limited CERCLA “arranger” liability to those parties who intended for disposal of hazardous substances to occur. Considering that remediation of CERCLA sites can cost hundreds of millions of dollars, and that the responsible parties are strictly liable for those costs, the scope of this relatively new exception to arranger liability is now heavily litigated throughout the United States.


Generally, waste producers do not have any obligation regarding the take-back and recovery of their waste. Some states, however, require that certain electronic waste, pharmaceuticals, batteries and/or bottles and cans must be collected and recycled by their manufacturers and distributors. Additionally, many businesses and municipalities have voluntary programmes designed to take back and recycle these wastes.

4 Liabilities


A breach of environmental laws can give rise to administrative, civil and/or criminal penalties, damages, injunctions and (rarely) incarceration. The extent of liability typically will depend on the amount of damage caused, the duration of the damage, the cooperation of the party causing damage, and their prior compliance history. Criminal liabilities generally are reserved for cases where the damage is particularly egregious and/or the conduct was intentional.


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There are limited statutory defences for breaching environmental laws. Primarily, they relate to equipment malfunctions and emergency responses. In order to qualify for a defence, an operator usually must provide notice of the breach to the proper regulatory authority within a matter of days, and must correct the situation as quickly as possible. Violations may also be time-barred by statutes of limitation.


Yes. Many environmental statutes provide that compliance does not pre-empt other local, state or federal requirements. However, operation within permit limits demonstrates compliance with the specific performance standards addressed by the permit.


Yes, corporate officers and directors can be personally liable for wilful and knowing violations, intentional acts including failure to report or to disclose known violations, and for fraudulent, grossly negligent or illegal acts that result in contamination. Personal liability may be established where it is shown that the officer and director actively participated in or exercised control over the operations. Fraudulent, criminal or grossly negligent acts are generally excluded from indemnification clauses and insurance policies.


In a share sale, the buyer “steps into the shoes” of the company purchased and assumes the environmental liability of the seller. By contrast, in an asset sale, environmental liability relates to the assets acquired. Through due diligence, the buyer may determine whether or not to acquire certain assets and associated liability. In addition, the asset purchase agreement may be structured to limit or cap liability.


Lender liability largely depends on the amount of control exercised by the lender over the contaminated property. Lenders who hold a mortgage primarily to protect their security interest in the property are provided a limited “safe harbour” from CERCLA liability, if they do not directly participate in management of the property. If the lender exercises decision-making authority as to the use, management or environmental compliance of the property, the lender may become liable for environmental remediation costs.

5 Contaminated Land


As discussed in question 3.3, CERCLA imposes strict liability on a range of parties for the disposal of hazardous substances. This strict

liability also applies to the past and present owners and operators of facilities where hazardous substances are disposed. The clear public policy in the United States is to find a responsible party, or parties, to pay for remediation of contamination.Also, some states have additional statutes affecting the transferability of potentially contaminated land. For instance, New Jersey’s Industrial Site Remediation Act permits the state to rescind any transfer of industrial property if the buyer and seller have not first investigated and remediated any site contamination to the extent required by the state.


There is no definitive CERCLA law on how allocation should be done. Consequently, allocation of responsibility between potentially responsible parties is always a substantial issue in CERCLA matters.As a general matter, usually the parties or a neutral third-party will determine the allocation scheme for a given CERCLA site. Issues that are usually considered for each party include: volume of waste disposed; type of waste; toxicity or other hazardous nature of waste; culpability as to the transportation, treatment, storage and/or disposal of the waste; degree of cooperation with government authorities to remediate the waste; and degree of care taken to ensure proper disposal of the waste. As noted in question 3.3, whether a party intended to arrange for disposal of the waste has become a primary issue in recent years.


Yes, both the government and third parties usually have opportunities to either reopen the required work (for instance, if additional unknown contamination is found), or to challenge the agreement (if, in the case of a third party, their own rights may be impacted by the agreement). These opportunities, however, are often time limited, particularly with regard to third-party challenges of the initial agreement.


Yes, CERCLA, RCRA and state statutes all provide private rights of action against previous owners and operators of contaminated land.Additionally, yes it is possible to transfer the risk to a purchaser. This is discussed below in question 8.1.


Yes, the federal government, the Tribes, and the states can, and frequently do, seek to recover natural resource damages.


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Environmental regulators have inherent police power to enforce environmental statutes. This means that they may require the production of documents, take samples, conduct site inspections and interview employees. Moreover, they may, and sometimes do, arrest site personnel for impeding their investigations.Nevertheless, their police powers are limited by the United States Constitution, and by federal and state statutes and regulations. Consequently, it is usually the case that environmental regulators will work with the targets of their investigations (particularly, if the targets are themselves cooperative) in order to obtain information. In this regard, it is prudent for regulated entities to maintain cooperative relationships with their regulators.



On or off-site pollution may need to be disclosed to environmental regulators. The legal requirements vary tremendously, however, depending on the jurisdiction of the site, the environmental law(s) at issue, and the characteristics of the pollution. This issue is best resolved by a legal practitioner within the jurisdiction. Because, however, some jurisdictions have extremely short mandatory reporting timelines (for instance, as short as 15 minutes in New Jersey), it is prudent to know these requirements in advance for any potential releases at a site.As a general matter, pollution does not legally need to be disclosed to third-parties; although, as a practical matter, failure to warn third-parties can expose the property owner to new or greater liabilities if the third-parties are harmed.


Obviously, a release of contaminants will often trigger an obligation to investigate and remediate that release. Otherwise, it is generally the case that there is no obligation to investigate land for contamination unless either: (i) the ownership or operation of the land is being transferred; or (ii) the financial strength of the owner has changed, thereby calling into question the financial ability of the owner to conduct any necessary, future remediation. Because CERCLA makes current owners and operators of contaminated land strictly liable for hazardous substances, prudent purchasers as a matter of course engage in “all appropriate inquiry” prior to purchase. Finally, property used as collateral must usually be investigated.


The extent of mandatory disclosure is sometimes driven by state law, but it is usually a matter of the contractual terms between the buyer and seller.

8 General


Parties frequently include contractual indemnities for environmental liabilities. The efficacy and enforceability of such provisions depends on the terms of the provisions, the extent of any relevant disclosures, representations and warranties, and the underlying environmental laws involved.Payment under an indemnity does not alter claims that the government may have against the indemnitor. Moreover, even if responsible parties allocate responsibility among themselves, each responsible party remains strictly liable, without regard to fault, under CERCLA for the discharge of hazardous substances.


Yes, it is possible to “escape” environmental liabilities. This is an issue, however, that is impacted not only by environmental laws, but also by corporate, bankruptcy and securities law. Accordingly, any such endeavour should only be undertaken, if at all, after careful review by an appropriate team of legal counsel.


Shareholders are usually protected from corporate environmental liabilities. Parent corporations also are usually protected from subsidiary environmental liabilities. There are, however, a variety of ways that these protections might be breached. For instance, courts may “pierce the corporate veil” of a parent corporation, if the corporate form is not maintained by a subsidiary, and courts may hold a shareholder liable if a company is merely an alter ego.While the United States federal courts may entertain lawsuits involving foreign subsidiaries or foreign companies, a recent decision from the United States Supreme Court has limited the extent to which federal courts will exercise their general jurisdiction to hear such cases.


Yes. Federal environmental laws protect “whistle-blowers” who report environmental violations from retaliation. Special protection is provided under the federal CAA, CWA, RCRA and CERCLA. In addition, the federal False Claims Act offers environmental whistle-blowers a financial incentive to report environmental violations in connection with federal contracts.


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The Federal Rules of Civil Procedure provide for class action suits for a variety of legal claims, including environmental claims. As a practical matter, however, courts have determined that class action lawsuits are not well-suited for the enforcement of environmental laws. Consequently, such actions are fairly rare.Penal damages generally are not allowed. Punitive or exemplary damages are available, and regulators will pursue punitive damage when they believe a party’s conduct warrants punishment.


No. As a general rule, litigants must bear their own costs of litigation. There are, however, exceptions. First, many federal environmental statutes allow for citizens’ suits, in which private individuals seek to enforce environmental laws. If citizens prevail in those suits, they are generally able to recover their costs of litigation. Second, there are countervailing provisions that seek to prevent the filing of frivolous litigation. Under those circumstances, individuals may be forced to bear the costs incurred by others to defend against their suits.



The United States has fragmented emissions trading schemes for greenhouse gases, primarily in the northeast and California. It remains an open question whether such markets will develop fully in the United States. Indeed, the new Administration seems openly hostile to any such trading, or to acknowledging that climate change is occurring. The United States does have established trading of SO2, which has reduced nationwide SO2 emissions. Additionally, new source air permitting often requires credits of banked, traditional air pollutants, thereby reducing those emissions.


Yes, the USEPA requires monitoring and reporting of greenhouse gas emissions. The USEPA enacted regulations that would have required such reporting from a wide variety of major sources of greenhouse gases, but the Supreme Court issued a decision limiting such reporting to sources that are already regulated under Title V of the Clean Air Act (so-called “anyway sources”).It remains to be seen whether those USEPA regulations are enforced under the new Administration.


There is no overall policy approach to climate change regulation in the United States. The Supreme Court has held that the USEPA

has the authority and the obligation to regulate greenhouse gases pursuant to the Clean Air Act. However, the Supreme Court has mostly struck down the regulations that the USEPA has sought to implement. Meanwhile, there seems to be virtually universal agreement, including within the USEPA, that the Clean Air Act – last amended in 1990 – is not well suited for the regulation of greenhouse gases. Whether a future Congress would amend the Clean Air Act, or pass a climate change bill, remains doubtful.

10 Asbestos


The United States continues to experience substantial asbestos litigation. The plaintiffs’ bar has depleted, or bankrupted, many of the original asbestos manufacturer defendants. As a result, plaintiffs have sought an ever-wider array of corporate defendants who may have used asbestos in their goods or services, or who may have had asbestos installed in their premises.


The requirements related to on-site asbestos are determined based on a range of federal, state and local health and safety statutes and codes. Asbestos removal from school buildings is subject to the federal Asbestos Hazard Emergency Response requiring the certification of contractors and workers. Many states have established asbestos work practices and certification programmes for contractors and other persons engaging in the removal and disposal of friable asbestos-containing material.



The environmental insurance market in the United States is currently fairly soft and growing. Until recently, however, environmental insurance was difficult to obtain. Many of the companies that offered such insurance in the 1990s experienced losses far in excess of their expectations. Currently, to obtain environmental insurance, a contaminated site must be well characterised.


Comprehensive general liability insurance policies, particularly those issued prior to 1974, continue to provide extensive coverage for environmental liabilities. The extent of available coverage, however, varies dramatically from state to state, as the various states’ courts have often rendered distinctly different interpretations of identical policy terms. Consequently, the state in which a claim is filed (or adjudicated) can determine whether environmental insurance coverage is available, and the amount of coverage available.


USA

fired power plants. Carbon emissions from these sources were to be reduced 32 percent from 2005 levels by 2030. These climate change mandates expanded USEPA’s authority under the Clean Air Act. In October, 2017, the new administration proposed to repeal the CPP. Comments on the repeal will be accepted through January 10, 2018. In December, USEPA issued an advance notice of proposed rulemaking to take comment on a potential new regulation of emissions from existing power plants. Under this new rule, EPA may adopt more narrow carbon dioxide standards but would not necessarily prohibit states from establishing emission trading plans. Challenges to the Clean Power Plan are now pending before the D.C. Circuit Court of Appeals. These challenges currently are held in abeyance pending adoption of the final rule.

12 Updates


President Donald Trump took office on January 20, 2017 and since that time both Congress and the Executive Branch have undertaken a comprehensive review of the environmental regulations and policies of the previous administration. The Congressional Review Act (CRA) has been used to repeal several rules finalised at the end of the previous administration. Under the CRA, agencies must notify Congress when rules are issued. Congress then has 60 days from the date of notice or publication to issue a joint resolution of disapproval by a simple majority. The Bureau of Land Management’s new 2.0 landscape-scale planning rules and the Federal Office of Surface Mining stream protection rules are among the regulations repealed under the CRA. The aggressive expansion of the USEPA authority in rulemakings under both the Clean Water Act and the Clean Air Act are also subject to review. The Sixth Circuit Court of Appeals and federal district courts are considering challenges to Clean Water Act rules, adopted in June, 2015, which broadly define the scope of jurisdiction of USEPA and the Corps of Engineers over waters of the United States (WOTUS). The rule is currently stayed nation-wide, pending judicial review. In January 2017, the U.S. Supreme Court granted a petition to review whether the 6th Circuit or district courts have jurisdiction over the WOTUS challenge. Oral argument was heard by the Supreme Court on October 11, 2017. In November 2017, the USEPA proposed to delay the effective date of the WOTUS rule for two years from the date of final action on the definition of WOTUS. USEPA’s Clean Power Plan (CPP) finalised in August 2015 extended climate change mandates to existing coal-


Founded in 1938, Snell & Wilmer is a full-service law firm with more than 400 attorneys practising in nine locations throughout the western United States and in Mexico. The firm represents clients ranging from large, publicly traded corporations to small businesses, individuals and entrepreneurs.

Our environmental and natural resources attorneys advise clients on a wide variety of environmental permitting and compliance issues. We assist with negotiation of environmental liability and oversight of due diligence for commercial transactions. Our litigation team represents clients in federal, state and local environmental enforcement actions. Due to our location in the Southwestern United States, we frequently address public land issues and permits which involve the National Environmental Policy Act, the California Environmental Quality Act and associated environmental impact statements. Our team can also advise clients regarding contaminated property and brownfield development including drafting and negotiating prospective purchaser agreements, voluntary clean-up agreements, institutional controls, deed and land use restrictions.

For more information, visit www.swlaw.com.

Denise Dragoo is an equity partner with the firm’s natural resource practice group. With more than 30 years of experience, her practice focuses on environmental permitting for mining and energy-related projects. Many of these projects are located on public land and she assists clients with environmental permitting, compliance with the National Environmental Policy Act and related administrative appeals. She practises before the U.S. Department of Interior Board of Land Appeals, the Utah Board of Oil, Gas and Mining and state and federal environmental agencies.

Denise DragooSnell & Wilmer L.L.P.15 West South Temple, Suite 1200Salt Lake City, UT 84101USA

Tel: +1 801 257 1998Fax: +1 801 257 1800Email: [email protected]: www.swlaw.com


Chapter 25

Guyer & Regules

Anabela Aldaz

Betania Silvera Perdomo

Uruguay

A) Sanction with warnings when the offender lacks any prior convictions regarding the commission of minor infringements.

B) Accumulatively proceed to publicly publish the resolution which sanctioned the offender, when the infringement is not considered a minor offence.

C) Cumulatively with other penalties, confiscate objects or products used in the illicit activity.

D) Arrange for the suspension (with a total of 180 days) or for the expiration of the permits, authorisations, or concessions of the offender, when the committed infractions are considered to be serious or repeated offences.


Public authorities are obliged to provide environment-related information to interested persons who require such information, with the limitation of information that is considered a trade or industrial secret (Section 15 of Law Number 16,466).



Pursuant to Law Number 16,466 and Decree Number 349/005, several environmental permits are required prior to starting certain activities, constructions and works expressly listed in such regulations.Those interested in carrying out any of the activities, constructions and works are subject to the request of a Prior Environmental Authorisation (hereinafter, “AAP” – “Autorización Ambiental Previa”) and shall communicate the project to the MVOTMA by submitting certain information depending on the category of the same. Decree Number 349/005 also establishes that parties interested in performing certain activities, constructions or works included in Section 20 of Decree Number 349/005 shall communicate the location and a description of the area of execution and influence to the DINAMA, and, as the case may be, include an assessment of the location or section of the site where the project is to be performed, including an analysis of any alternatives.



Environmental policy in Uruguay is based on Section 47 of the Uruguayan Constitution, Law Number 17,283 (Environmental General Law), Law Number 16,466 and its regulatory Decree Number 349/005. Such provisions declare the protection of the environment against any kind of depredation, destruction or pollution of national interest, which includes the prevention any negative environmental impact, and, as the case may be, the restoration of damaged environments.Law Number 16,112 establishes that the Ministry of Housing, Territorial Planning and Environment (hereinafter, “MVOTMA”) is the main agency that administers and enforces environmental law. Particularly, the main agency is the National Environmental Agency (Dirección Nacional de Medio Ambiente) (hereinafter, “DINAMA”).Pursuant to Section 8 of Law Number 17,283, municipal authorities are also able to administer and enforce environmental law in certain delegated aspects. On the other hand, the Ministry of Public Health (hereinafter, “MSP”) (through the “División Salud Ambiental y Ocupacional”) and the National Naval Prefecture (through the “Dirección de Protección de Medio Ambiente”) have sectorial competencies regarding their commitments.


In general terms, such agencies impose fines in order to enforce environmental law. The fines depend on the kind of infringement, but in general vary from 10 R.U. (Readjustable Units – “Unidades Reajustables”) to 10,000 R.U. (currently: 1 R.U. = Uruguayan $ 1,015.33 = US$ 35 approximately).Moreover, they are also entitled to impose warnings, confiscations and suspensions. According to Section 6 of Law Number 16,112, MVOTMA will be in charge of controlling whether public or private activities comply with environmental protection standards. Specifically, Section 15 of Law Number 17,283, allows MVOTMA to:


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Guyer & Regules Uruguay

Some projects that require an AAP must also obtain an Operating Environmental Authorisation (hereinafter, “AAO”) in order to start operating. The AAO shall be requested by the interested party and, once there has been full verification of the conditions established in the AAP, the project is filed before the MVOTMA and the Environmental Impact Assessment criteria are met, the MVOTMA grants the AAO. Those activities that were built, authorised or put into operation without being required to obtain the AAP (because the activity was prior to the entry into force of the Decree or, when the activity started, it did not meet the requirement established in the Decree for obtaining the AAP), would require a Special Environmental Authorisation (hereinafter, “AAE”), included in Section 25 of Decree 349/005, if they expand the facilities or increase the productive capacity. Environmental permits can be transferred from one person to another, provided the transferee assumes the same obligations that the transferor had assumed before.


In Uruguay, decisions by an environmental regulator rejecting an environmental permit, or in respect to conditions contained in an environmental permit, may be challenged through an administrative recourse before the authority rejecting the permit and then an appeal before the Executive Power. The term to file said administrative actions is 10 calendar days from the publication of the administrative resolution in the Official Gazette or its notification to the affected person, as the case may be. Only those individuals or legal entities that have a direct, personal and legitimate interest may file said administrative actions and, in addition to proving such interest, they have to express the grounds and arguments for the administrative action. However, such grounds and arguments do not need to be filed together with the administrative action, and may be filed later (before the term for the Administration to resolve expires (in the meantime, the Administration may nevertheless decide the case even without having received such grounds). Once the administrative action has been filed, the Administration has a term of 200 days as from the filing to issue a resolution to decide upon the challenge. If the term expires without any resolution from the Administration, the action shall be deemed rejected.In case the administrative action is expressly or tacitly rejected, the Company shall have the right to file an annulment action before the jurisdictional court called “Tribunal de lo Contencioso Administrativo” (hereinafter, “TCA”) (it is the rough equivalent to a Supreme Court in administrative cases). Such action does not suspend the application of the resolution, save for the cases in which the Company requests the immediate suspension of the effects of the resolution and the Administration favourably resolves (highly unlikely). The term to file an annulment action before the TCA is 60 days from the notification of the rejection of the administrative action or as from the expiration of the 200-day term for the resolution of the administrative action (this is, after the administrative action has been tacitly rejected).The TCA may confirm or annul the resolution, as applicable, but it may not modify its content. Also, in case the environmental regulator rejects the environmental permit and the Company is not willing to file an annulment action before TCA, could file a lawsuit before our judicial authorities to

claim for the damages that the rejection of the permit cause to the Company (the term to file the lawsuit is four years).


Under Uruguayan law, there is no obligation to conduct environmental audits for particularly polluting industries. However, Law Number 16,466 and Decree Number 349/005 establish that it is necessary to perform an Environmental Impact Assessment for certain activities, constructions and works expressly listed in such Decree. The main projects that require an Environmental Impact Assessment are the following public or private constructions or works: ■ roads, bridges, railways and airports;■ ports, oil transfer terminals or chemical products;■ oil pipelines, gas pipelines and waste liquid outfalls;■ treatment plants, transport equipment and final disposal of

toxic or dangerous waste;■ extraction of minerals and fossil fuels;■ electric power generation plants of more than 10 MW; ■ nuclear energy production and transformation plants;■ power transmission lines of 150 KW or more;■ works for exploitation or regulation of water resources;■ industrial, agro-industrial and tourist industries, or units

which, by their nature and magnitude, can cause a serious environmental impact;

■ urban projects of more than one hundred hectares or in smaller areas considered of relevant environmental interest at the discretion of the Governments Executive Branch;

■ activities which will be carried out in the coastal defence area, as defined by article 153 of the Water Code; and

■ any other activities, constructions or works which are in any manner similar to those activities indicated above, that may cause a negative or harmful environmental impact.


In the case of violations of environmental protection regulations, the environmental regulator may impose warnings, the confiscation and/or destruction of vehicles, instruments and devices directly linked to the commission of the offence or the transit of objects or products, or even a suspension of the offender’s authorisations, permits, etc., for up to 180 days, cumulatively with a fine of 10 to 10,000 R.U. Furthermore, Section 453 of Law Number 16,170 establishes that apart from the possibility of imposing fines in order to enforce environmental legislation, the environmental regulator (MVOTMA) can request the assistance of the Police and the National Naval Prefecture.

3 Waste


Under Uruguayan law, there is no general definition of waste. However, Decree Number 182/013, Resolution Number 1708/2013 and Resolution Number 266/014, which regulates industrial wastes,


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defines “waste” as “any substance, material or which is disposed or removed, it is intended to dispose or remove, or it is required to dispose or remove”.There are certain categories of waste which involve additional duties or controls such as: (i) industrial solid wastes (Decree Number 152/013); (ii) hospital wastes (Decree Number 586/09); (iii) batteries (Decree Number 373/003); and (iv) agricultural, horticultural and forestry wastes (Decree Number 152/013).


In general terms, an approved Management Plan which regulates all aspects related to waste is necessary prior to storing and/or disposing of such waste.With regard to the Waste Management Plans of solid industrial waste, the same must include generation, internal management, storage, transport, recycling, recovery, treatment and final disposal of the all the solid waste generated by the activity of the company.The location, kind of waste and other conditions related to the disposal of such waste shall be approved by the environmental regulator.


Uruguayan law does not establish direct liability to producers regarding waste when they have transferred it to another person for disposal/treatment off-site. However, under the general tort rules, producers can be found liable if a direct link between such deed and the harm caused by the same is proven.


Fundamentally, waste producers shall submit a Management Plan that regulates all aspects related to such waste to the MVOTMA. If it is not possible to reintroduce the waste in the production process, the producer shall take-back and/or recover the same under the Management Plan.

4 Liabilities


Three different types of liabilities arise where there is a breach of environmental law and/or permits: civil; administrative; and criminal liability.Regarding civil liability: Uruguayan law provides that whoever causes depredation, destruction or contamination of the environment in violation of law shall be held liable for the payment of all damages caused. The law also obliges the liable party to conduct and perform all works to reduce or mitigate the damage caused.In general, doctrine and jurisprudence recognise that the claimant must give evidence of the following issues: that there has been a

harmful act; that such an act has caused real harm (not potential or eventual damage); that there is a direct link between such a deed and the harm caused by the same; and that the party has caused such an act by acting fraudulently or by acting with severe negligence. This means that such liability is not objective or based on the mere risk but the claimant must prove that the defendant acted with the full intention of causing the damage or with severe negligence.Regarding administrative liability: Law Number 16,112, 16,170, 16,466, 16,688 and 17,283, and Decree Number 100/991 provides administrative sanctions in the case of a violation of environmental protection regulations, which vary from a warning to a confiscation and/or the destruction of vehicles, instruments and devices directly linked to the commission of the offence or the transit of objects or products, or even a suspension of the offender’s authorisations, permits, etc., for up to 180 days, cumulatively with a fine of 10 to 10,000 R.U. according to Law Number 16,226 (Section 67).Criminal liability: As stated in Environmental Law Number 17,220 (dated November 17, 1999) for a person introducing hazardous wastes (as defined in Annex I and II of the Basel Convention on Movements of Hazardous Wastes and Their Disposal, as of March 22, 1989) into a zone subject to Uruguayan jurisdiction, they may be punished with up to 12 years in prison. Also, on the February 1, 2017, a law bill was presented before Parliament, (2017 Bill) which seeks to incorporate a specific section in the Uruguayan Penal Code regulating “Crimes Against the Environment”. The crimes which are punishable under this project of law are those regarding pollution, crimes against biodiversity, and crimes against environmental management.


Under Uruguayan law, there is no obligation regarding liability when pollution is caused when operating within permit limits. However, in general terms, Section 3 of Law Number 17,283 and Law Number 16,466 establish that all persons have an obligation not to cause environmental impacts.Furthermore, Section 4 of Law Number 17,283 establishes that the polluter is liable for all of the damages caused without exception.


Under Uruguayan law, there is no particular regulation that establishes direct liability for directors and officers of corporations for environmental wrongdoing, yet. However, the Uruguayan Corporate Law establishes the liability of directors and Administrators before the Company, its shareholders and third parties for all damages (it is not exclusive to environmental damages) they may cause if acting against the law or by-laws. In that sense, directors and officers of corporations could be liable for environmental wrongdoing. However, there is no express provision which establishes the possibility of getting insurance or relying on other indemnity protection in respect of such liabilities.Furthermore the 2017 Bill adds a chapter referring to environmental crime to the Uruguayan Penal Code. The 2017 Law Project regulates the liability for corporations that commit environmental crimes, and establishes that in that case, the liability will lie with the people that have effective control over a corporation, provided they have contributed and determined the commission of the said


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environmental crime. Although this has not been approved yet, it gives a hint of the tendencies of Uruguayan regulation.Moreover, as previously explained, as a general rule all persons who cause environmental damage are liable for such damage.


In principle, under Uruguayan law, shareholders are not liable for the obligations of the company, save in case the corporate veil is pierced, which is unlikely in Uruguay since the standard to raise the veil is quite high. In such sense, in order to pierce the corporate veil of a company, article 189 of Law Number 16,060 (“Uruguayan Company Law”) establishes some prerequisites that must be met: (i) fraudulent avoidance of the law; (ii) fraud in detriment of the rights of shareholders, partners or third parties; or (iii) breach of Public Order. Uruguayan Company Law demands that the use of the company for the purposes previously listed must be proven beyond any reasonable doubt. The disregard mechanism should be applied restrictively and as an exception. The legal threshold for piercing the corporate veil in Uruguay is quite high. Scholars and Courts have both understood that the Uruguayan Company Law consecrates a special requirement in the evidentiary field. Therefore, the transfer of shares between shareholders has no consequences regarding the liability of the company, who is the liable entity.In the case of an asset purchase (the transference of an ongoing business concern), provided a special procedure is followed, the liability of the purchaser will be limited to the obligations resulting from the balance sheet and those not included in the balance sheet but denounced by creditors within a specific term.


Under Uruguayan law and jurisprudence, there is no specific provision or precedent that establishes a liability to lenders for environmental wrongdoing and/or remediation costs. However, as it is understood under Uruguayan law, as a general rule all persons who cause environmental damage are liable for such damage.

5 Contaminated Land


Liability for the contamination of soil or groundwater is regulated mainly by Decree Number 253/79. In that sense, such Decree establishes the possibility of imposing fines in case of contamination. Such Decree establishes certain limitations for spilling waste on soil and groundwater.In addition, the 2017 Bill, which regulates environmental crime, establishes a penalty of prison for up to eight years in case of contamination of groundwater, as well as damage to the environment caused by toxic substances.


Section 11 of Law Number 16,466 establishes a joint and several liability when more than one person is responsible for contamination; including not only the owner of a project, constructions and works, but also the professionals and technicians who have participated in such project.Also, the 2017 Bill adds environmental crimes to the Uruguayan Penal Code. The Uruguayan Penal Code establishes the possibility of criminal liability of a “group”, in cases where the crimes were committed by more than one person.


Although there is no specific regulation in this regard, as a general rule the environmental regulator has the power to request all works that may be necessary to remediate the damage caused to the environment.


Under Uruguayan legislation, there is no Decree that expressly regulates a private right of action to seek contribution from a previous owner or occupier of contaminated land when that owner caused, in whole or in part, the contamination. However, under Uruguayan tort rule, the polluter is liable for all damages caused without exception. Nonetheless, under freedom of contract, it can be agreed between the parties which of them shall bear the environmental liability (save for the clarification made under question 5.2 regarding the 2017 Bill).


Yes. Aesthetic harms are included under the definition provided by Law Number 17,283.



Environmental regulators have different powers, such as the possibility of imposing warnings and fines, in order to require production of documents, take samples, conduct site inspections, interview employees, etc.


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Under Uruguayan legislation, there is no directive that regulates such a situation specifically. However, following the general rules, such a situation must be disclosed to an environmental regulator.Furthermore, according to the 2017 Bill, it is a crime to hinder environmental control or to provide false information to the corresponding authorities, which may incur a penalty of prison for up to two years.


Under Uruguayan legislation, there is no law that imposes the obligation to investigate land for contamination. However, as all persons are obliged to take care of the environment, it could be construed that such obligation exists.


Under Uruguayan legislation, there is no law that regulates such a situation in particular. Nonetheless, general principles of law determine the obligation of the parties in an agreement to act with good faith, avoid fraud and disclose any possible hidden faults of the object of the negotiation. Thus, according to such principles, not disclosing environmental problems may be construed as bad faith and may entail legal consequences regarding liability.

8 General


Under Uruguayan legislation, there is no law that regulates such a situation yet. Therefore, under the freedom of contract principle, an environmental indemnity should be upheld by Uruguayan Courts, as well as payments thereof. However, the 2017 Bill regulates environmental crimes. In event that the 2017 Bill is approved, the described behaviour would be considered a crime. Additionally, there is no way for a person in Uruguayan legislation to avoid or limit criminal liability, provided such person was responsible for the crime and accountable according to the general rules.


It is not possible to shelter environmental liabilities off balance sheet. The shareholders could decide to dissolve the company, but in such a case, the company’s assets and liabilities will be allocated with the shareholders.


Under Uruguayan law, the principle is that shareholders are not liable for the obligations of the company, and there are no court precedents stating the contrary. Nevertheless, please bear in mind that Uruguayan law establishes the possibility of piercing the corporate veil in some specific situations (see question 4.4). In such scenario, shareholders could be held liable for the company’s actions. However, as it was aforementioned, in Uruguay the standard to pierce the veil is quite high.Moreover, a parent company can be sued in name of a foreign subsidiary if the foreign company has no capital to pay their environmental liabilities.


No. In Uruguay, there is no law which protects “whistle-blowers” who report environmental violations/matters.


Yes. Under Uruguayan law (Section 42 of the Procedural General Code), in the case of matters related to environmental protection, cultural and historical values, and any other matters belonging to an indefinite number of persons, any interested party shall be entitled to promote the relevant process in order to protect such values. Furthermore, Law Number 16,112 establishes the same possibility for the MVOTMA. Moreover, in some types of claims on which a direct, personal and legitimate interest is required to file the claim (such as annulment actions against administrative acts or unconstitutional actions before the Supreme Court of Justice), it is now admitted by jurisprudence that if the claim relates to environmental protection, cultural and historical values, any interested party can promote them. However, said flexibility regarding special legitimation requirements has not been unanimously accepted for protective actions “Acciones de Amparo” – which are commonly used for environmental protection.


No. Uruguayan law does not establish any exemptions from liability to pay costs when pursuing environmental litigation.


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The emissions trading market is related in general to renewable energy projects that want to be settled in Uruguay. In this sense, Uruguay has implemented a major change in the energy matrix because of a significant number of projects that have been promoted related to the production of energy from renewable sources, mainly wind, solar and biomass. The development of wind projects was, basically, the beginning of the production of energy from renewable sources in Uruguay.Finally, please note that the goals regarding energy are established in the Uruguayan Energy Policy 2005–2030.


According to Law Number 19,147 the National Environmental Observatory (“Observatorio Ambiental Nacional”) shall register and update the information regarding the conditions of the environment carrying out a quantification of polluting emissions, hazardous substances, waste in the environment and greenhouse gas emissions. Further, Law Number 18,195, which has the purpose of promoting and regulating the production, marketing and use of agrofuels, establishes that it also aims to reduce greenhouse gas emissions under the terms of the Kyoto Protocol to the Framework Convention of the United Nations on Climate Change, approved by Law Number 17,279, contributing to the sustainable development of the country.Obligations for the companies to monitor their greenhouse gas emissions arise from the processing of an Environmental Authorisation. In other words, it is common that the MVOTMA, in order to authorise certain activities to operate, establishes some requirements to monitor and report greenhouse gas emissions.Finally, please note that the Project for the Production of Electricity from Biomass in Uruguay (“PROBIO”) which is a joint initiative of the National Government with the United Nations Development Program (“UNDP”), has the aim to reduce the greenhouse gas emissions from the generation of electricity from fossil fuels in Uruguay, through the promotion and development of decentralised energy generation from industrial waste biomass and by-products.


Law Number 17,279 approved the Kyoto Protocol. Law Number 19,158 founded the Uruguayan Institute of Meteorology and Hydrology, which, among other commitments, advises the Executive Branch in terms of climate change.Resolution Number 828/013 establishes the national interest of the “WCRP Conference for Latin America and the Caribbean: Developing, linking and applying climate knowledge”.

10 Asbestos


Decree Number 154/002 prohibits the manufacture, commercialisation and introduction to its territory of any product that contains asbestos.The abovementioned Decree establishes that in order to introduce asbestos into Uruguay, it is necessary to request an authorisation from the MSP prior to the opinion of the “Honorary Committee of Unhealthy Jobs” (“Comisión Honoraria de Trabajos Insalubres”). By way of example, Judgment No. 319/2011 of the Civil Court of Appeals of the 7th Circuit, relates to a Customs Offence due to the import of materials containing asbestos, therefore breaching the mentioned Decree.


As mentioned, the use of asbestos is forbidden in Uruguay.



The market of environmental insurances is not quite developed yet, and there is only one compulsory environmental insurance for the companies that provide port services. In that sense, Section 9 of Decree Number 413/92 stipulates that companies that provide port services shall have policies to cover civil liability which include protection against environmental liabilities. Although insurance companies do offer specific environmental policies, they are not yet commonly used, since environmental liability is usually covered within general insurances which cover civil liability in general.


There are no precedents in environmental insurance claims in Uruguay.

12 Updates


Aside from the 2017 Bill, currently, the most important development regarding the preservation of the environment in Uruguay is the draft of the Bill on National Waste Management. The Bill on National Waste Management has been elaborated by the Technical Advisory Commission for the Protection of the Environment (“COTAMA”) with the active contribution of the private sector.


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Another significant development in Uruguay is a bill regarding the use of plastic bags that has been recently discussed and approved by the Senate House of the Parliament. The bill states that is of general interest the protection of the environment for all damages that may derive from the use of plastic bags or non-biodegradable bags, whatever their type, delivered to the consumer as final container or for disposal of the consumer’s waste. The Plastic Bag Bill also establishes that plastic bags or non-biodegradable bags that are being used at present, should be progressively replaced by another type of material container that has a biodegradable property in the environment, guaranteed by the corresponding national or international standards. As of today, the bill is under discussion with the House of Representatives.

The purpose of the Bill is to establish a sustainable development model by preventing and reducing the negative impacts of the generation and management of all waste management stages. The Bill provides the elaboration of a National Waste Management Plan that will establish the guidelines of waste management that shall apply in all the national territory. Along with this, the provinces shall also elaborate their own Waste Management Plans that will apply within its jurisdiction taking into account the guidelines provided by the National Waste Management Plan.

Guyer & Regules is considered Uruguay’s “blue chip” firm and first choice for international and domestic complex legal and tax work, a position that the firm has enjoyed since its incorporation in 1911.

Such a reputation finds its basis, among other things, in the daily commitment to excellence of the firm’s solid team of internationally-trained professionals, and the largest and most experienced group of partners in the country, who become clients’ trusted advisors, a role that is undoubtedly cemented by excellent daily service, a great degree of trust, and unshakable professional ethics.

Lawyer Anabela Aldaz works mainly in the Banking and Corporate Department, advising on trade and investment in the country. Specialising in the area of environmental law, she actively participates in the following organisations: the Commission on Environmental Law of the Bar Association of Uruguay; the Lex Mundi Environmental Group; RIELA (American Network of Environmental Law Specialties); and the World Services Group Environmental Group.

She has attended several national and international seminars and conferences on environmental law and sustainable development, and has written papers in national and international forums on her specialties; matters related to: quality and environmental protection; waste management; effluents treatment; persistent pollutants; and in areas related to oil pollution.

Anabela is very experienced in environmental and regulatory matters – she has taken part in procedures for adaptation of major domestic and foreign companies, participated in the mechanisms and legal systems in force in Uruguay in environmental areas, and been involved in occupational health and safety.

She has been recognised by prestigious international journals, such as Legal, Latin Lawyer, and Who’s Who Legal – Environmental, for her outstanding performance in the area of environmental law.

Anabela Aldaz PerazaGuyer & RegulesPlaza Independencia 81111100 MontevideoUruguay

Tel: +598 2902 1515Email: [email protected]: www.guyer.com.uy

Lawyer Betania Silvera works in the Corporate Department, within the Regulatory and Environmental Area. She obtained a Master’s in Laws in International Business Law (LL.M.) at London School of Economics and Political Science – LSE (London, 2012–2013) and she took a Postgraduate Course in Energy Policy, University of Montevideo (2016).

Her practice includes corporate advice on civil and commercial law. In particular she specialises in advice for the development of large-scale industrial projects.

She has a relevant experience in the energy field, advising on energy regulatory issues and mergers and acquisitions. She also advises sponsors, investors and lenders in the purchase, sale and financing (project finance) of renewable energy and infrastructure projects.

She has been recognised by the International Bar Association with the award Young Lawyer of the Year – “Scholarship Rogelio de laGuardia”.

She took a secondment at Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga, San Pablo, Brazil (September 2013 – February 2014).

Betania Silvera PerdomoGuyer & RegulesPlaza Independencia 81111100 MontevideoUruguay

Tel: +598 2902 1515 ext 152Email: [email protected]: www.guyer.com.uy


NOTES

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