A Case Study - What if an Oil Spill Occurred on Land in Europe or in European Waters? Valerie Fogleman Consultant, Stevens & Bolton LLP Professor of Law, Cardiff University

Claims for Oil and Chemical Spills Domestic law of individual Member States (MS) –claims for bodily injury, property damage and economic loss from inland and coastal pollution incidents –clean-up costs for inland and coastal pollution incidents Application of international marine conventions

Environmental Liability Directive First EU polluter pays legislation Transposition deadline: 30 April 2007 Full transposition into national law of EU-27: 1 July 2010 Supplements existing MS domestic law –most MS imposed liability for cleaning up land and water pollution –but not restoring protected species and natural habitats (biodiversity) Exceptions –does not apply when international marine conventions apply Defences

Liability Two categories of “operators” Annex III: strict liability for preventing or remediating imminent threat of, and actual, environmental damage (ED) to biodiversity, water and land Non-Annex III: fault-based liability for preventing or remediating imminent threat of, and actual, ED to biodiversity

Differences between Member States Differences include joint and several or proportional liability adoption of optional defences –permit defence –state-of-the-art defence extension to nationally protected biodiversity extension of strict liability to non-Annex III activities thresholds for land, water and biodiversity

Liability Imminent threat of ED operator must carry out preventive measures “without delay” notify competent authority “without delay” if measures fail to dispel threat of damage Occurrence of ED operator must notify competent authority “without delay” “immediately” carry out emergency remedial actions carry out remedial measures agreed by competent authority

Land Damage Threshold significant risk of adverse effect on human health Remediation measures remove, control, contain or diminish contaminants to eliminate significant risk of adverse effect on human health Remediation standard lawful current use or approved future use

Water Damage Threshold significant adverse effect on ecological, chemical and/or quantitative status and/or ecological potential of waters –inland surface, ground, transitional and coastal waters Extent of seaward limit of waters differs between MS, e.g. Scotland: 3 nautical miles (5.56 km) rest of United Kingdom: 1 nautical mile (1.85 km) Ireland: 12 nautical miles (22.24 km)

Biodiversity Damage Threshold significant adverse effect on favourable conservation status Biodiversity covered by ELD inland biodiversity in individual MS plus 200 nautical miles seaward nationally protected biodiversity: 14 MS

Remediation Measures for Water and Biodiversity Primary remediation: remediation and restoration to “baseline” condition Complementary remediation: if damaged site cannot be fully restored, restoration of nearby site in addition to partial remediation of damaged site Compensatory remediation: losses between time ED occurred and its full remediation (providing, enhancing or improving same or new resources at damaged and/or alternative sites)

Examples of ELD Incidents Involving Oil and Chemical Spills France spill of crude oil from underground pipeline into Coussouls de Crau nature reserve (non-Annex III) Italy - Raffinerie Mediterranee (ERG) SpA v Ministero Dello Sviluppo economico (C- 378/08), (C-379/08 and C-380/08) (9 March 2010) (Annex III) numerous releases of petrochemicals into land and roadstead in Augusta harbour, Sicily

Financial Security No mandatory financial security ELD directed European Commission to submit report and, if appropriate, proposal for system of harmonised financial security in 2010 MS to “encourage the development of financial security instruments and markets by the appropriate economic and financial operators, including financial mechanisms in case of insolvency, with the aim of enabling operators to use financial guarantees to cover their responsibilities under [ELD]”

Financial Security MS proposing financial security Bulgaria Czech Republic Greece Hungary Portugal Romania Slovakia Spain

Potential Revisions to ELD European Commission ELD Report (October 2010) implementation and effectiveness of ELD need improvement insurance market for ELD liabilities growing insufficient justification to introduce harmonised mandatory financial security system at this time but optional mandatory financial security should be re-examined

Potential Revisions to ELD Evaluation of following issues extension of ELD to marine waters potential difficulties due to differences in MS law most efficient way to ensure financial security instruments cover large scale incidents involving operators with low or mediocre financial capacity ability of financial security instruments (including insurance, bank guarantees, funds and bonds) to cover large incidents

Potential Revisions to ELD European Commission Communication, Facing the challenge of the safety of offshore oil and gas activities (October 2010) Commission will –propose amendments to ELD to cover all marine waters including coastal waters, subsoil and seabed –re-consider introduction of mandatory financial security

What if an Oil Spill Occurred on Land in Europe or in European Waters? Current Position ELD application in individual MS depends on nature of activity (strict or fault-based liability) Liability under ELD depends on whether MS imposes joint and several or proportional liability MS includes nationally protected biodiversity threshold for damage to natural resource in MS is exceeded (MS has adopted optional defences) PLUS distance seaward for water damage

What if an Oil Spill Occurred on Land in Europe or in European Waters? Future Position Spill on land and inland waters liability: potential increase in scope and elimination of options in ELD financial security: potential harmonisation for specified activities (potential extension of scope of land damage) Spill in European coastal waters liability: likely extension of ELD financial security: likely harmonisation for specified activities