Environment & Climate Change Law 2020

A practical cross-border insight into environment and climate change law 17th Edition

Featuring contributions from:

Ambientalex - Studio Legale Associato Harris Kyriakides LLC Pinheiro Neto Advogados August Debouzy Kanagawa International Law Office Rouse & Co International (Thailand) Limited Bär & Karrer Ltd. Kieti Advocates LLP Snell & Wilmer Blake, Cassels & Graydon LLP LAER Abogados, S.C. Stibbe Borenius Attorneys Ltd LAVÍN Abogados & Consultores United Kingdom Environmental Law Association Burges Salmon LLP Law Firm Neffat (UKELA) European Environmental Law Forum (EELF) M.V. Kini URBAN STEINECKER GAŠPEREC BOŠANSKÝ Gaastra attorneys at law Maddocks Uría Menéndez Görg Partnerschaft von Rechtsanwälten mbB Makarim & Taira S. Wistrand Law Firm Guyer & Regules Philippi Prietocarrizosa Ferrero DU &Uría Youssry Saleh & Partners ISBN 978-1-83918-023-1 ISSN 2045-9661

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59 Tanner Street London SE1 3PL United Kingdom Environment & +44 207 367 0720 [email protected] www.iclg.com Climate Change Law 2020 17th Edition Group Publisher Rory Smith

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Disclaimer This 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. Table of Contents

Expert Chapters

Entering the Decade of Action: What Role for UK Environmental Law? 1 Simon Tilling, United Kingdom Environmental Law Association (UKELA)

The Courts as Guardians of the Environment – New Developments in Access to Justice and Environmental Litigation 6 Jerzy Jendrośka & Lorenzo Squintani, European Environmental Law Forum (EELF)

The Impact of a UK Legislative Commitment to Net Zero by 2050 13 Simon Tilling, Burges Salmon LLP

Q&A Chapters

Australia Italy 18 Maddocks: Michael Winram & Patrick Ibbotson 119 Ambientalex - Studio Legale Associato: David Röttgen & Andrea Farì Brazil 27 Pinheiro Neto Advogados: Antonio José L.C. Monteiro & Japan Mariana Gracioso Barbosa 126 Kanagawa International Law Office: Hajime Kanagawa & Yoshiko Nakayama Canada 35 Blake, Cassels & Graydon LLP: Jonathan W. Kahn & Kenya Anne-Catherine Boucher 135 Kieti Advocates LLP: Clarice Wambua

Chile 42 Mexico LAVÍN Abogados & Consultores: Julio Lavín Valdes & 142 LAER Abogados, S.C.: Luis Alberto Esparza Romero Andrés Del Favero Braun Netherlands Colombia 149 Gaastra attorneys at law: André H. Gaastra 50 Philippi Prietocarrizosa Ferrero DU &Uría: Luis Fernando Macías Gómez Slovakia 156 URBAN STEINECKER GAŠPEREC BOŠANSKÝ: Cyprus Marián Bošanský & Ondrej Urban 58 Harris Kyriakides LLC: Eleni Neoptolemou & Christina Christodoulou Slovenia 163 Law Firm Neffat: Vesna Ložak Polanec & Domen Neffat Egypt 66 Youssry Saleh & Partners: Esraa Hesham, Spain Yulia V. Akinfieva, Amina El Baz & Zaynab Ismail 170 Uría Menéndez: Jesús Andrés Sedano Lorenzo & Bárbara Fernández Cobo European Union 73 Stibbe: Jan Bouckaert, Guan Schaiko & Sweden Cedric Degreef 177 Wistrand Law Firm: Rudolf Laurin

Finland 81 Switzerland Borenius Attorneys Ltd: Casper Herler & 183 Bär & Karrer Ltd.: Prof. Dr. Markus Schott Henna Lusenius Thailand France 191 88 Rouse & Co International (Thailand) Limited: August Debouzy: Vincent Brenot & Fabrice Mattei & Norasak Sinhaseni Emmanuelle Mignon United Kingdom Germany 198 Burges Salmon LLP: Simon Tilling & Joanne Attwood 96 Görg Partnerschaft von Rechtsanwälten mbB: Dr. Thomas Christner & Dr. Benedikt Walker Uruguay 207 Guyer & Regules: Anabela Aldaz Peraza & India Fiorella Arenas Bollazzi 103 M.V. Kini: Tavinder Sidhu & Kshitez Kaushik USA Indonesia 215 Snell & Wilmer: Denise A. Dragoo 112 Makarim & Taira S.: Alexandra Gerungan & Raditya Anugerah Titus Chapter 1 1

Entering the Decade of Action: What Role for UK Environmental Law?

United Kingdom Environmental Law Association (UKELA) Simon Tilling

Introduction a Christmas general election in December 2019, with Brexit uncertainty hanging over the electorate and the economy like It is a privilege to author this introductory chapter to The International a dark cloud. You won’t be surprised, therefore, to read that I Comparative Legal Guide to: Environment & Climate Change Law 2020, will avoid predictions about the political short-term and instead on behalf of the UK Environmental Law Association, known to focus on the longer term. Whatever the outcome of the election, its members and friends as UKELA. it is striking how prominent environmental issues have been, UK environmental law is entering a period of significant with leader’s debates devoted to the topic of climate change and change. In part, that is driven by necessity, as the UK works the mainstream parties outbidding each other on how many out how to extricate its environmental laws from the European trees will be planted. It would be surprising if this rise in envi- Union legal system. However, as is so often the case, a require- ronmentalism evaporates, and whatever administration takes ment to change allows us to ask, “can we do this better, can we the UK into the new decade will need to address it. improve the system?”. For the first time in a generation, the I made one prediction in 2018 that did come true. In October UK’s environmental lawyers have the opportunity to influence 2018, the UK Government and the governments of Scotland the whole foundations of environmental law and governance in and Wales asked the UK’s independent Committee on Climate the UK, and I am proud to say that UKELA is at the forefront Change to advise it on what was required for the UK to play of that endeavour. its part in limiting global heating to 1.5 degrees Celsius and in Change is needed, and not (just) because of the UK’s planned particular, when the UK should reach net zero emissions of exit from the European Union. It is needed because the prob- carbon dioxide and other greenhouse gases, as part of the UK’s lems to the environment that we face are huge. They are well obligations under the United Nations Framework Convention known: climate change; biodiversity loss; resource over-use; on Climate Change’s Paris Agreement. I predicted that, what- plastic pollution; water scarcity; and the public health emergency ever the advice, it would be hard to ignore, given the authorita- from air quality, etc. The solutions do not emerge from the legal tive voice of the Committee on Climate Change and its reputa- status quo. New thinking is needed. tion. The Committee on Climate Change recommended that In this chapter I share some perspectives gained from the the UK as whole should reach net zero emissions by 2050. In the vibrant debates and discussions that have taken place this year, summer of 2019, when the UK Parliament agreed on very little within UKELA and indeed between UKELA and others, else, an amendment to the Climate Change Act 2008 achieved including the UK Government. I do not claim in this chapter cross-party support and its passage enshrined the commitment to speak on behalf of UKELA: UKELA is far too broad a to reach net zero emissions by 2050 into UK law. The enormous church to have “a point of view”, and that is one of its great implications of this change deserve a chapter of their own, and strengths. No other organisation brings together the full spec- I am pleased to say the topic is addressed in detail in Chapter 3. trum of voices in environmental law: regulators; campaigners; For the purpose of this chapter, I simply note that this signifi- solicitors; barristers; consultants; academics; senior members of cant achievement is yet more evidence of political and societal the judiciary; students and the voices of tomorrow; and those support, and indeed, in some cases, a loud demand for change. from other professions who are simply concerned to ensure the These issues and public concerns have been used to further preservation and development of good law for the benefit of the Brexit agenda. For example, free from the EU’s common the environment. When we make our interventions into public agricultural policy, the £3 billion in subsidies that go to support debate, we have the ear of Government and Parliament, and UK agriculture could be used for environmental benefits, using our reputation as an impartial, objective voice on matters of “public money for public goods” based on a natural capital good environmental law is unparalleled. As the whole country approach. Given the significant changes in land use that will be wonders what will happen next for UK environmental protec- needed to deliver a net zero greenhouse gas economy, a radical tion, UKELA as an organisation has never been so relevant, or overhaul of land use subsidies is likely whatever the outcome of so vital. All I can seek to do here is to reflect on those excellent Brexit. debates and discussions and to offer you my own perspective. Of course, there are others who argue Brexit provides an opportunity to row back on the “green tape” from Brussels, A Period of Change and gives us more freedom to drive economic growth without what some see as unnecessary regulation. Certainly, regardless Last year, I wrote that “to address (and predict) political events of one’s perspective, it is possible to achieve the same objec- … would be futile and foolish”. I was right. Back in December tives and high environmental standards of EU environmental 2018, I would not have guessed that the UK would be facing law through different, potentially more “British” methods.

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For some, though, there is concern that the drive for inter- failure to meet targets set down at EU level. The possibility of national competitiveness and the willingness to sign free trade significant fines exists but, in most cases, the political pressure agreements will be to the detriment of environmental protec- is enough to ensure prompt rectification of non-conformities, tion, with environmental laws sacrificed as unduly restrictive and the UK has to a large extent been good at the administra- non-tariff barriers. The EU’s flagship chemicals regulation, the tive tasks such as ensuring directives are implemented promptly REACH Regulation, is often-cited as anti-free trade, although and accurately. Where the UK has struggled more is around after a decade of significant investment, many in the chemi- absolute targets for environmental protection. A good (and cals industry would much prefer to stay part of it. For environ- topical) example is compliance with the Ambient Air Quality mentalists, REACH is lauded as a landmark regime for incor- Directive, where the UK has consistently struggled to meet the porating the “polluter pays” and precautionary principles into limits set for nitrogen dioxide, while at the same time the public chemicals regulation by making those who profit from chem- awareness of the health impacts of nitrogen dioxide has grown icals pay for the costs of evaluating the potential hazards to significantly. It is undoubtedly true that there are no easy solu- human health and the environment, and there is strong opposi- tions to the air quality issues in the UK’s cities, and that the tion to rolling back those protections. Another example is the various solutions require weighing up competing policy objec- concern of environmentalists that the regimes for the protection tives. However, such political issues did not stop the European of habitats will be watered down in a desire to promote devel- Commission from referring the UK (along with France and opment, with the predominantly European laws often cited as a Germany) to the Court of Justice for failure to take sufficient barrier to progress by those who wish to obtain consents for new action to reduce nitrogen dioxide exceedances in the shortest schemes. possible time. Whatever a person’s point of view may be, it is undoubt- The potential departure from the EU raises the question of edly the case that the public is anticipating change. Whatever who holds the Government to account for its environmental happens with Brexit itself, those conversations have started. obligations, in the absence of the European Commission. The green genie is out of the bottle. These concerns generated significant debate during the passage of the European Union (Withdrawal) legislation through Parliament The Devolution Agenda in the summer of 2018, and indeed led to a motion by parlia- mentarians to amend the Government’s legislation to address One of the loudest conversations is between UK Government this very point. In what is now section 16 of the European and the devolved administrations. The devolution settlements Union (Withdrawal) Act 2018, there is a requirement placed on in the past 20 or so years were formulated when exiting the EU the Secretary of State to bring forward primary legislation to was low on the agenda and on the fringes of political debate. set down “provisions for the establishment of a public authority At that time (as now) the European institutions set common with functions for taking, in circumstances provided for, by or environmental objectives for the Member States, in many cases under the Bill, proportionate enforcement action (including allowing the Member States to decide how best to achieve them, legal proceedings if necessary) where the authority considers while always ensuring that the common market was protected that a Minister of the Crown is not complying with environ- through common rules about the products placed on the mental law” (section 16(1)(d)). The inserted section also requires market. Against that framework, it was relatively uncontrover- this new legislation to set down the environmental principles sial to devolve the implementation of environmental law to the to which ministers of Government must have regard in setting devolved administrations. However, Brexit would open up the UK policy, and sub-section 16(2) goes as far as to set down a freedom to do much more with environmental law – a point non-exhaustive list, including the “polluter pays” principle, the championed by the UK Government – and this in turn creates a precautionary principle and the principle of sustainable develop- risk (or some might say opportunity) for significant divergence ment. These principles mirror long-established principles of EU within the UK. Business and industry have naturally expressed environmental policy-making, set down in the EU Treaties and concern over the potential for fragmentation of the UK’s own often repeated in the recitals to EU environment directives and common market and the question is causing more than theoret- regulations, but it is a somewhat unusual step within English ical concern. Should deposit return schemes for plastic bottles law to enshrine such principles in Acts of Parliament. The fact be coordinated by Westminster? Should Wales be allowed that this amendment was inserted in the Withdrawal legislation to ban chemicals it considers are harmful to insects? Should during its passage in Parliament shows the strength of feeling thresholds for cadmium in electronics be a matter for Holyrood? within the UK over the protection of environmental law. Of course, the devolution impact of Brexit goes much further To meet this statutory obligation, the Secretary of State than just environmental law, but environmental law is a good published draft Environmental Principles and Governance illustration of some of the issues that now have to be grappled legislation at the end of 2018. The draft legislation proposed a with. new independent body, the Office for Environmental Protection, to hold the Government and other public bodies to account. It Environmental Governance and Principles set down environmental principles, with a mechanism to ensure that decision making by public bodies had “regard” to them, and One of the big debates for environmental lawyers has been it proposed a mechanism to enshrine the 25 Year Environment over how the Government and public institutions will be held Plan, among other provisions. UKELA scrutinised the draft to account for environmental performance outside of the EU. legislation and provided comments, helping to improve the draft Within the EU, Member States that do not meet EU environ- and make it more robust. mental law can be held to account, through complaints to the Then, in October of this year, the Government published European Commission by concerned citizens and, after a period its Environment legislation: with chapters on improving the of warning shots, through the ultimate sanction of a referral by natural environment through environmental improvement the European Commission of non-compliant Member States to plans; revised proposals for an Office for Environmental the Court of Justice of the European Union. These mechanisms Protection; enabling laws for further measures to address waste are flexible enough to tackle different forms of non-compliance, and resource efficiency, including through extended producer from a complete failure to implement a directive through to a responsibility; air quality; water; nature and biodiversity; and

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conservation covenants and executive powers to amend the Innovation chemicals regulation REACH. The Government’s press release accompanying the legislation described it as “ground-breaking”, The debate about the role of regulation and incentives in envi- a “landmark Bill to tackle the biggest environmental prior- ronmental law continued apace in 2019. There is strong support ities of our time, signalling a historic step change in the way in both the EU and the UK for a drive to a circular economy, we protect and enhance our precious natural environment”. with the Earth’s resources used again and again, rather than lost A full exploration of the legislation is well beyond the scope to landfill, or dispersed into the environment. There are good of the note, although rest assured UKELA is already active in economic reasons for a circular economy, but since Blue Planet scrutinising the legislation and we will continue to feed into II shone the spotlight on marine plastics, there is also a ground- the legislative process. Further, the legislation is very much swell of public opinion for change. an enabling provision, allowing a great deal of further law and However, it is also acknowledged that a lot of hard thinking policy to follow from the Government. It has been described needs to be done to solve these issues. The headline-grabbing as an “executive environment Bill”, as it gives a lot of power initiatives, such as bans on plastic straws, or a “latte-levy” tax and discretion to the Government: something of a change from on disposable coffee cups, laudable as they may be, do not really the status quo under European law when the Government had to go to the heart of the issue, which is that the current economic work within the constraints set by the European Union. There model is that it is cheaper to produce and discard. The issues is much debate about whether giving ownership to ministers pervade the whole life-cycle of an object, from poor design to help drive forward environmental improvement is a good through to inadequate recycling options at the end of life. Does thing or not, and indeed much debate about whether the OEP the market need to be corrected to internalise the costs to the as currently envisaged in the legislation will be independent environment of the poor use of our resources and the damage it enough and well enough resourced to speak truth to such execu- can do if released into the environment? tive power. However, whether or not the legislation achieves all The Environment legislation laid the groundwork for signif- that is promised in the fanfare that accompanied its arrival, it is icant changes, such as the potential for extended producer certainly a significant development in the UK’s legal framework responsibility for products on the market where the full life- for environmental protection and one that needs to be watched cycle costs of an item (such as collecting waste streams, recy- carefully. cling, and even dealing with fly tipping) must be factored into At the time of writing, the legislation has fallen with the the cost of the item on the market. It also makes it easier to dissolution of Parliament for the general election, but the introduce laws to impose charges for single use plastic prod- Conservatives have vowed to bring it back, and an Environment ucts, to report on resource efficiency and improve enforcement legislation of some form will be needed whoever forms a powers, among other measures. government. It is therefore a period of significant change for waste and resource management, with a significant opportunity to influ- The 25 Year Environment Plan ence that change for the better. The UK must be careful to incentivise the right behaviours and regulate in an appropriate One of the criticisms of the political world is that it works in manner that facilitates innovation and drives change. We are short electoral cycles that encourage short-term thinking, good at legislating for yesterday’s mistakes, but the solutions of whereas the solutions for environmental concerns require long- tomorrow may be radically different. We need to allow the new term vision and clear and stable policies. Back at the beginning ideas to come through and give them a “regulatory sandbox” to of 2018, the Government launched its (long overdue) 25 Year play in, so that the UK can foster the ideas which not only can Environment Plan for England. The 25 Year Environment Plan provide solutions to the problems that face the world, but also seeks to deliver on the Government’s stated ambition for this nurture and grow the green economy that is one of the pillars of generation to be the first generation to leave the environment in the UK’s industrial strategy. a better state than we found it. Yes, the Plan is light on detail, but that was not necessarily a surprise. It is intended to be read Private Sector Action as a statement of intent, setting the direction of travel for future Government policy and providing promises against which the In a chapter about the future of the UK legal regimes for envi- Government can be held to account. Importantly for business, ronmental protection, it might be thought odd to include a line the Plan lays down a blueprint for policies and legislative inter- or two about private sector voluntary action. However, to solve ventions that will follow. This allows businesses to consider the environmental issues faced by the next generation of environ- how best to adapt and to make the most of opportunities. mental professionals will require all parts of society to play their At the heart of the Plan is the Government’s promise not roles, and some parts of the private sector are already showing just to arrest the decline of England’s natural resources but to leadership. UKELA has been considering the important role that enhance them. The Plan makes it clear that the Government investment policies based on environmental, social and govern- wants to hold the gold standard in environmental protection and ance (“ESG”) factors can play in influencing corporate behav- enhancement on the world stage, maintaining and, where neces- iour and driving change. Such policies go far beyond platitudes sary, increasing EU environmental safeguards after exit from the and green-wash, and indeed beyond concepts of corporate social EU. In making these commitments, the Government seeks to responsibility. Rather, the logic of ESG is that only those busi- answer those who were concerned that Brexit would mean sacri- nesses that combine strong governance with sound strategies for ficing environmental protection for short-term economic gain. resource use, environmental impact, labour relations and a multi- Implementation is, of course, of central importance to the tude of other considerations will truly retain and grow value. Plan’s success. The Environment legislation introduced into Those businesses which only pay lip service to such factors (or Parliament in October 2019 had provisions to put the Plan worse) are exposed to significant risks, such as stranded assets onto a statutory footing (the Plan would be the first “environ- due to abrupt changes in climate change policy, for example. The mental improvement plan” mandated by the legislation) with the game-changing concept of ESG is that investments based on ESG Secretary of State to produce annual reports to be laid before principles are beneficial for both the environment and the return Parliament on progress against the Plan. on investment: it is no longer seen as a choice between the two.

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Strong ESG policies also protect against the rise of share- Conclusion holder activism and a growing trend to hold large international parent companies to account for the actions and inactions of Many environmentalists are saying that the 2020s needs to be their subsidiaries around the world. the “decade of action”: moving from mere rhetoric to the actual In 2019, the UK’s Green Finance Strategy recognised the delivery of results on climate change mitigation, biodiversity importance of ESG factors in both greening finance (ensuring loss and the other environmental issues facing the world. The financial transactions factor in the financial risks presented by same could be said of environmental law in the UK: after many ESG issues) and financing green (ensuring private sector money consultations, bold plans light on detail, and iterations of draft is used to deliver the assets, infrastructure and technology legislation that have not made it to the statute books, we now needed for a net zero carbon economy by 2050). expect 2020 itself to be the year when the UK sets down a new environmental legal regime for the next generation. Another prediction: let’s see if this one comes true.

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Simon Tilling is Vice-Chair of the UK Environmental Law Association and a Partner in Burges Salmon’s market-leading environmental law team. His practice encompasses the full breadth of environmental law, from chemicals regulation to contamination claims. Simon is qualified in England, Wales and Scotland and his experience encompasses UK, EU and international environmental law. He is recommended in Who’s Who Legal: Environment and in Chambers & Partners, where he has been described as an “extremely bright and a very skilled lawyer”, and The Legal 500, where he is nominated for “Real Estate (outside London) solicitor of the year 2020” for his environmental work. Simon’s work with UKELA includes promoting the organisation’s international networks.

Burges Salmon Tel: +44 117 902 7794 One Glass Wharf Email: [email protected] Bristol, BS2 0ZX URL: www.burges-salmon.com United Kingdom

The United Kingdom Environmental Law Association (UKELA) is the UK organise the leading conference in environmental law – join us in June forum which aims to make better law for the environment and to improve 2020 in Plymouth for two days of debate and discussion with experts in the understanding and awareness of environmental law. We were established field. For information about membership and our other activities please in 1988. UKELA is a registered charity and a limited company. Our char- visit www.ukela.org. You will be guaranteed a warm welcome. itable objects include promoting, for the benefit of the public generally, www.ukela.org the enhancement and conservation of the environment in the UK and advancing the education of the public in all matters relating to the development, teaching, application and practice of law relating to the environment. We encourage collaboration between those interested in environmental law, as well as advising and commenting on relevant issues. Membership of UKELA is open to all and we offer a range of entry points to suit all pockets. We offer a comprehensive events programme throughout the year and across the UK on a range of hot topics. Each summer, we

Environment & Climate Change Law 2020 © Published and reproduced with kind permission by Global Legal Group Ltd, London 6 Chapter 2

The Courts as Guardians of the Environment – New Developments

in Access to Justice and Jerzy Jendrośka Environmental Litigation

European Environmental Law Forum (EELF) Lorenzo Squintani

Introduction environmental litigation and at attempts in specific case law to refer States and polluters to court for breach of environmental Around the globe, and in Europe in particular, we are witnessing responsibilities. a dynamic development towards wider judicial protection of environmental laws and resources. Whereas in the past court 12 The Aarhus Convention as a Motor of review was mostly confined to vested individual interests and Access to Justice in Environmental Matters matters of subjective concern, we now see a continuing trend towards public interest litigation and judicial enforcement – including that of merely “objective” environmental laws – Roots of the Convention and its provisions on access to justice with non-governmental organisations (NGOs) playing an ever stronger role as litigators and trustees of the environment. This development comes as a reaction to the fact that most of the The need for legal guarantees of public involvement is increas- important global and collective environmental “goods” – such ingly being reflected in international environmental law and as a stable climate, biodiversity, genetic resources, water quality in the number of instruments adopted after 1990 which have and ambient air quality – are increasingly being jeopardised and, mentioned the necessity of assuring access to information and at the same time, particularly prone to a deficit and disregard public participation in environmental decision-making. The key for enforcement. The extension of judicial control to objective role in this respect has no doubt been played by Principle 10 of environmental law and the widening of court access – especially the Rio Declaration. to NGOs – can thus be deemed a key factor for the effective Although the Rio Declaration belongs to the instruments protection of collective environmental goods and the respec- of so-called “soft law” (i.e. having no binding legal force but tive environmental laws. To date, these developments are still merely constituting recommendations or political declarations), progressing, with a lot of open questions as to how far they will Principle 10 is commonly considered to be significant as a clear go and what consequences they entail for developers, investors, global expression of the developing concepts of the role of the litigators, NGOs, administrations and judges. public in relation to the environment. Soon after its adoption, it This contribution provides an overview of the state of play, was acknowledged as an international benchmark against which chiefly from a European perspective. Europe has positioned the compatibility of national standards could be compared, and itself as a frontrunner in terms of procedural environmental as a forecast of the creation of new procedural rights which rights through the adoption of the so-called Aarhus Convention could be granted to individuals through international law and (United Nations Economic Commission for Europe (UNECE) exercised at the national and possibly international level. Convention on Access to Information, Public Participation Contrary to access to information and public participation, as in Decision-making and Access to Justice in Environmental far as global treaty regimes are concerned, the strongest support Matters). This Convention was adopted as early as 1998 and for access to justice in environmental matters was, for a long entered into force in October 2001. The Convention has a time, to be found in human rights regimes rather than in multi- compliance mechanism which has some distinctive features lateral environmental agreements. Thus, access to justice in differentiating it from the compliance mechanisms of other environmental matters was traced back to such generally recog- international environmental agreements. The Compliance nised principles as the right to be heard and to appeal decisions, Committee is composed of independent experts serving in a as is guaranteed by human rights conventions. The develop- personal capacity and the procedure can, and usually is, trig- ments in national legislation were not immediately followed at gered by communications from the public. Although it is not a the international level and access to environmental justice – as court, its opinions provide an authoritative interpretation of the compared to public participation and access to information – provisions of the Convention. was relatively rarely addressed in international environmental The process of developing access to environmental justice law outside the context of liability regimes and assuring equiva- is still ongoing and far from being completed, as explained lent access to justice in the transboundary context. in section 1 below, where we also provide some insight into The third pillar of the Aarhus Convention appears to be the global development beyond the Aarhus process. In the second most under-developed in terms of the clarity and precision of section we look at the state of affairs in the EU, where the the legal scheme envisaged therein. This stems largely from the Court of Justice of the European Union (CJEU) has strongly fact that – as opposed to the two other pillars of the Convention moved to open national courts’ doors in the light of the Aarhus – it covers an area in which very few prior provisions existed Convention. Thirdly, we take a look at the recent surge in to address environment-specific issues, within a plethora of

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diverse and longstanding traditional approaches in domestic Globally, significant impetus for implementing Principle X and legislation concerning general access to justice. This pillar was the further development of citizens’ environmental rights was thus effectively constructed on the spot (i.e. during the nego- provided by the “Guidelines for the Development of National tiations) out of scarce, fragmented elements and amid intense Legislation on Access to Information, Public Participation debates reflecting totally opposite views as to its content, scope in Decision-making and Access to Justice in Environmental and legal nature. The eventual construction of this pillar, in Matters” adopted in 2010 in Bali, Indonesia by the United particular of paragraphs 2 and 3 of Article 9, provides a basis for Nations Environment Programme Governing Council, Global many interpretations which increasingly interfere with the tradi- Ministerial Environment Forum (Bali Guidelines). They are tional approaches used in the respective legislation of almost considered “an important milestone in international stand- all parties. This has resulted in an increasing number of legal ard-setting and the establishment of good practices related to disputes concerning the way this pillar is implemented, both at application of Principle 10”.4 the national and at the EU level. The Bali Guidelines include a number of provisions The scope of the Convention’s third pillar on access to justice (Guidelines 15–26) related to access to environmental justice. essentially addresses three issues: They are very similar to the above-described provisions of ■ review procedures relating to access to information Article 9 of the Aarhus Convention and include all the respec- (Article 9.1); tive elements of access to the environmental justice legal frame- ■ review procedures relating to access to public participa- work. They are, however, only guidelines and have no binding tion under Article 6 (and possibly other provisions) of the legal force. Convention (Article 9.2); and It must be noted that there is no consensus in the interna- ■ review procedures for public review of acts and omis- tional community that human rights obligations specific to the sions of private persons or public authorities concerning environment have been established in any globally applicable, national law relating to the environment (Article 9.3). binding instrument or as a matter of customary international Moreover, Article 9.4 obliges parties to the Convention to law. In other regions, however, there are some initiatives aimed provide, within the review procedures, for adequate and effec- at following the example of UNECE and developing their own tive remedies, including injunctive relief. Furthermore, the legal instruments to implement Principle 10. procedures shall be fair, equitable, timely and not prohibitively Recently (in March 2018), the Regional Agreement on expensive. Access to Information, Public Participation and Justice in Article 9.5 regulates practicalities, such as the obligation Environmental Matters in Latin America and the Caribbean to provide the public with sufficient information on access to (the Escazú Agreement) was adopted. The Agreement has administrative and judicial review procedures. not yet entered into force but most of the LAC countries have moved quickly to ratify it. Compared to the Aarhus Convention, the Escazú Agreement provides much more specific norms of Implementation in the UNECE region considerable importance for public interest litigation in relation to environmental issues (for example, a dynamic burden of proof The cases in front of the Aarhus Compliance Committee showed and clear reference to the precautionary principle). Without a number of problems, in particular with regard to standing for any detailed analysis, it may be noted that while the Aarhus NGOs and the scope of review in countries which have a system Convention provides generally clear, legally binding interna- of judicial review based on infringements of rights (for example, tional norms, the provisions of the Escazú Agreement, espe- cases ACC/31/Germany, ACC/48/Austria or ACC/50/Czech cially those related to access to justice, leave a large measure of Republic). In some instances, the respective requirements of discretion to the State Parties concerning their implementation. the Aarhus Convention seem to call for fundamental changes of certain well-established arrangements concerning standing. In 22 Access to Justice in EU Law – the CJEU countries with a common law system (i.e. the UK and Ireland), the biggest challenge seems to be related to the issue of costs, Opens National Courts’ Doors Ever Wider in particular related to the obligation to pay the costs of the winning party. Quite common in many countries are prolonged EU legislation on environmental standing and the judicial procedures which do not meet the requirement of time- struggle with the “Schutznorm” approach liness. Other problems relate to minimum standards applicable to access-to-justice procedures and remedies in Article 9, para- In the European Union, the Arhus Convention has triggered graph 4, of the Convention, including fair and equitable proce- far-reaching advancements towards wider access to justice – dures, injunctive relief and costs. particularly as regards environmental NGOs (ENGOs). On the side of the Community, the Convention was essentially trans- Global reception of the Aarhus Convention and posed through Directive 2003/35 amending Directive 87/337/ developments beyond the UNECE region EEC on the assessment of the effects of certain public and private projects on the environment. According to that amendment to the EIA Directive (now codified as Directive 2011/92/ The role of the Aarhus Convention is well recognised in the EU), Member States are obliged to ensure “that in accordance academic literature of this field. It is described as “the first with the relevant national legal system, members of the public multinational environmental agreement that focuses exclu- concerned (a) having a sufficient interest, or alternatively (b) sively on obligations of the nations to their citizens and nongov- 1 maintaining the impairment of a right, where administrative ernmental organizations”, and the first binding international procedural law of a Member State requires this as a precondi- instrument attempting to comprehensively and exclusively tion, have access to a review procedure before a court (…) to address issues of citizens’ environmental rights. Furthermore, challenge the substantive or procedural legality of decisions, it is considered to be a “driving force for environmental democ- acts or omissions subject to the public participation provisions racy” in Europe2 and “at the forefront” of developing the legal 3 of this Directive”. Moreover, it is provided that “what consti- framework in this respect worldwide. tutes a sufficient interest and impairment of a right shall be

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determined by the Member States, consistently with the objec- decided in Trianel and Altrip, the Commission turned against tive of giving the public concerned wide access to justice” and another important and long-standing national restriction to “to that end, the interest of any non-governmental organiza- access to justice, the so-called “preclusion” rules. These regulation meeting the requirements referred to in Article 1(2) shall be tions restrict the right to bring action, and also the scope of the deemed sufficient for the purpose of point (a)” and furthermore court review, to only those objections that were already raised “such Organizations shall also be deemed to have rights capable within the time limit set during the administrative procedure of being impaired for the purpose of point (b)”. A similar provi- which led to the adoption of the contested decision. Since the sion was also included in the Industrial Emission Directive time limit for raising objectives in the administrative procedure 2010/75/EU (IE Directive) extending the above-referenced is rather short in Germany (usually four weeks from the publi- access to justice to permit decisions covered by this Directive. cation of the project plans), this preclusion rule often strongly When these provisions were adopted in 2003, they met with limits the possibilities of ENGOs to thoroughly assess the envi- considerable reluctance among national governments and courts ronmental impacts and legality of a permit decision, and it thus to give the public concerned wide access to justice. Most States, posed a great practical barrier to effective judicial review. In instead, tried to maintain their traditional limitations on public its ruling in this case (C-137/14 of 15 October 2015), the Court interest litigation as far as – seemingly – possible by proclaiming followed the Commission’s complaint and held that the German a very narrow interpretation. Of course, this was not accepted by preclusion rules are not compatible with Article 11 of the EIA the ENGOs, and as a consequence, it was eventually in the hands Directive and Article 25 of the IE Directive – yet another of the CJEU to clarify the intention of both the Convention and victory for access to justice and public interest litigation. the implementing norms of the EIA Directive. It is not a coin- Another ground-breaking victory for ENGO action was cele- cidence that most of the leading cases in this matter have been brated in the famous case of the Slovakian Brown Bear (C-240/09). raised in Germany. The country is widely known for its strong In this case, the court was asked if Member States were to traditional bias against public interest litigation and a strin- grant NGOs standing also with regard to decisions that are not gent observance of the so-called “Schutznormtheorie” (protective subject to an environmental impact assessment – such as those norm approach), according to which standing is only granted regarding species protection under the EU Habitat Directive – to applicants who can reasonably claim the violation of a law and thus not covered by the above-mentioned European norms that is protecting their individual interest. With its reluctance on NGO action. In its ruling, the CJEU clarified that these to overcome this “subservient” tradition on the one hand and EIA-related EU norms transpose the Aarhus Convention only its active environmental ENGOs and judiciary on the other, partially, and that it remains the responsibility of the Member Germany has indeed served as a major instigator of a remarkable States to implement the Convention in other fields of environ- yet continuing series of leading cases by which the CJEU has mental decision-making through national legislation. Moreover, rejected almost all essential containments the country has tried the Court indicated that all EU environmental laws must be to uphold against NGO action and public interest litigation. applied in conformity with the Aarhus Convention. With regard to Article 9(3) of the Convention, this implies, according to the court, an obligation of the national courts to interpret the Landmark decisions towards wide court access for ENGOs national procedural rules, as far as possible, in a way that allows NGOs standing with regard to all (national) environmental norms flowing from European law. However, the CJEU did not The first of these landmark decisions concerned the applica- go further to conclude that conflicting national procedural laws bility of the protective rights doctrine to ENGO action. As a are effectively overruled by EU law and thus to be waived by the first attempt to transpose Directive 2003/35, Germany adopted national courts if they find no room for compliant interpreta- in 2006 its first edition of a “Law on actions in environmental tion. To that extent, the court left the interpretation of Article matters” (Umweltrechtsbehelfsgesetz). With this Act, NGO action 9(3) to the discretion of the Member States. was introduced with regard to all permit decisions subject to environmental impact assessment as demanded by the Directive. However, far-reaching restrictions on standing and scope of On our way to actio popularis? – The Protect judgment review were maintained and, most notably, this included the subjective rights doctrine. This means that NGOs could effec- This “last resort” of the national legislators was eventually tively only bring an action if – and as far as – individual rights conquered in the latest path-breaking CJEU judgment on envi- are affected, and they were not permitted standing with regard ronmental standing, which was handed down in the Austrian to “objective” environmental laws. ENGOs had to wait until Protect Case in December 2017 (C-664/15). In this case, the 2011 for this fundamental restriction to be turned down by the referring Austrian Court had asked the CJEU whether it follows CJEU in its famous Trianel judgment (C-115/09). The German from its previous adjudication that NGOs must be able to law needed to be revised accordingly – but, again, major restric- contest before a court a decision granting a permit for a water tions on ENGOs’ court access continued. Two years later, the use that may be contrary to the obligation to prevent the dete- CJEU had to clarify in Altrip (C-72/11) that Germany could not rioration of the status of bodies of water as set out in Article 4 limit standing on EIA issues to cases in which no environmental of the EU’s Water Framework Directive. Again, this concerns a impact assessment was carried out at all, while not extending it decision outside the scope of the EIA and IE Directives, i.e. the to cases in which such an assessment was carried out but was areas where EU law explicitly provides court access to ENGOs. irregular. As to the consequences of such procedural defects, In its judgment, the deciding Chamber gave up the cautious the Court declared, however, that the national court may uphold position of the Brown Bear judgment, and eventually attributed the administrative decision if it is conceivable, having regard to direct effect to its wide interpretation of Article 9(3) of the the circumstances of the case, that the contested decision would Aarhus Convention as a measure for access to justice in relation not have been different without the procedural defect invoked to the (implementation of) EU environmental law. The Court by the applicant. based this result on the fundamental right to judicial protection By that time, the EU Commission had also filed an infringe- as provided in Article 47 of the Charter of Fundamental Rights ment procedure against Germany. In addition to the points of the European Union. It found that this directly applicable

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right was breached by any national procedural law that hinders concerns administrative acts of the EU itself, e.g. authorisation adequate implementation of Article 9(3) of the Aarhus of pesticides and chemicals or genetically modified organism Convention. What remains unclear, however, is whether the (GMO) products. In this regard, access to the General Court and wider standing derived from the court’s interpretation is strictly the CJEU is strictly limited by Article 263(4) of the Treaty on the limited to ENGOs or whether and to what extent it must also Functioning of the European Union (TFEU) to applicants who be applied to individual “members of the public concerned” in are individually and directly concerned by the contested act. the meaning of Article 9(3) and 2(5) of the Aarhus Convention. In a long line of judgments, the CJEU has always interpreted The judgment does not explicitly address this question but it this provision very strictly and – according to its “Plaumann contains some indications that the court may well include quali- doctrine” – allowed standing only to applicants alleging a direct fied individuals in the scope of this Article. breach of their vested individual rights. It appears that this The latter was recently confirmed by the ECJ, to some degree, strict interpretation is not compatible with what the court has in the Case (C-197/18) of some Austrian land-owners and water decided in the above-reported judgments. Consequently, the providers who complained against the fact that their (private) Plaumann doctrine is subject to growing criticism, and it has been wells where polluted by nitrates from agricultural sources. In impugned as incompatible with the Aarhus Convention by the this case, the ECJ confirmed that these natural and legal persons Aarhus Compliance Committee. Only recently, the Plaumann should be in a position to require the competent national author- doctrine has been challenged, again, by a complaint from several ities to draw up, amend as necessary and enforce nitrate action families who claim that insufficient and unlawful EU climate programmes as provided by the Union’s Nitrate Directive policies are jeopardising their fundamental rights to health and 91/676/EEC. From this judgment it follows that individuals property, as further discussed in the next section. must also be allowed to contest breaches of environmental laws as far as they are de facto affected. Hence, it seems that the ECJ 32 Climate Change Litigation in the EU: the has essentially rejected the strict subjective-right doctrine in Urgenda Legacy favour of a mere “subjective concern” requirement. The Court will have an opportunity to continue and further clarify this line in a pending reference by the German Federal The global surge of climate litigation reaching Europe – the Urgenda case Administrative Court that is equally about the right of land- owners to invoke laws protecting ground water quality. In the German case, however, the applicants referred to the ground While access to justice in environmental litigation in Europe is water quality objectives of the Water Framework Directive mostly linked to public law proceedings, private law proceed- which the German Administrative Court wants to see as purely ings can also play an important role. Arguably inspired by devel- “objective” norms that do not confer individual rights. The opments in the United States of America and Australia, climate German Court takes the view that both the Aarhus Convention change litigation in the EU is witnessing an increasing reliance and EU law do not preclude national legislators from confining on tort law. individual standing to laws that clearly protect individual inter- The Urgenda case can be seen as the landmark case in this field. ests and – respectively – to applicants who reasonably claim that As this case has been extensively covered in academic litera- such a norm was breached. Meanwhile, Advocate General (AG) ture, it needs little introduction here. In short, the The Hague Hogan has advised the Court to transfer its abovementioned adju- District Court (the Netherlands) on 24 June 2015 upheld the dication to the German case and to the quality objectives of the claim of an NGO called Urgenda against the Dutch State and Water Framework Directive respectively. Moreover, he suggests ordered the latter to take additional measures to ensure that the that these quality objectives do not only protect land-owners Netherlands will reach the target of lowering its greenhouse gas and water providers but also consumers of drinking water emissions by 25% by 2020 in comparison to its 1990 emissions served from the affected ground water bodies. With this, the (ECLI:NL:RBDHA:2015:7145). This judgment was confirmed AG draws wide lines on individual standing. However, it should in appeal on 9 October 2018 (ECLI:NL:GHDHA:2018:2591) and be noted that the AG still argues on the basis of the protective in cassation on 20 December 2019 (ECLI:NL:HR:2019:2006). purpose of the norm – which he defines very widely in the case The Urgenda case is facilitated by the fact that, under Dutch of the water quality objectives – whereas in the Austrian case, tort law, environmental organisations can bring proceedings to the ECJ seemed to be satisfied by the fact that the applicants protect the interests of third parties, including future genera- were suffering factual detriments from the alleged infringement tions, under Article 3:305 a-b of the Dutch Civil Code. From of (be it merely objective) environmental laws. a substantive perspective, this case rests on the claim that the It is now in the hands of the CJEU to clarify whether indi- Dutch State is breaching its duty of care to comply with the vidual standing shall be bound to a protective purpose of the greenhouse gas emissions reduction target for the Netherlands relevant norm or widened towards a mere “interest-action”. It associated with the international commitment made under the is self-evident that these developments are of tremendous rele- Paris Agreement to keep global warming well below 2 degrees vance for the national judicial systems, investors and relevant Celsius, thereby impairing the right to life (Article 2, European administrations, and – above all – for the effectiveness of envi- Convention on Human Rights) and the right to respect for ronmental law. family and private life (Article 8, European Convention on Besides this, there are two further grand bastions of “judicial Human Rights). calm” that have not been taken by the Aarhus movement. The Whether from a substantive perspective this judgment will above openings for ENGO action and public interest litigation indeed lead to better performance by the Netherlands in the have, so far, only been discussed with regard to land-use related fight against climate change is unclear. Four years have passed decisions and procedures. However, the principles established since the date of the first degree judgment and no substantive by the Aarhus Convention and CJEU jurisdiction are also appli- melioration can be seen. The Dutch legislator has adopted cable to the wide field of product- and substance-related regula- a Climate Act, but its content is programmatic in nature and tion, including the various registration, certification and author- hence it has yet to be translated into concrete actions and isation regimes. As a consequence, we should expect this field results. The Urgenda case certainly has strong symbolic value. It to become subject to NGO action as well. The second bastion inspires NGOs to undertake similar actions at national level, as

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discussed in the next section, and at EU level, as discussed in Environment (FIE) case, against the Irish High Court dismissal of the following section. Yet, it also has a negative connotation. It the claimants challenge of the National Mitigation Plan in 2017, shows that public law is failing to address this major inter-gen- considered as not being able to achieve the targets set out under erational challenge. the Ireland’s Climate Action and Low Carbon Development Act 2015, therefore also breaching the Irish Constitution and the European Convention of Human rights (High Court of Ireland, The legacy of Urgenda at national level: Milieudefensie, RWE and Plan B Friends of the Irish Environment v. Ireland, 2017 No. 793 JR). In the latter two cases, an appeal has been launched. Further developments are thus awaited. It is, in any case, already possible With the Urgenda case as a source of (legal) inspiration, other to recognise an initial trend. First of all, the legacy of Urgenda at NGOs have started tort law-based proceedings to protect the national level has been quite unsuccessful so far. This picture, environment in the Member States of the EU. With more cases however, might be less negative than it appears at first glance. pending or in preparation (for an overview see http://www. Indeed although, until Urgenda, the main hurdle for initiating lse.ac.uk/GranthamInstitute/countries/), four cases reached a this kind of case came from standing requirements, obstacles diametrically opposite outcome to the one seen in Urgenda, thereby now come from other elements of the tort-law doctrine, such as highlighting the difficulties characterising tort law-based environ- causation and the burden of proof.5 The initial hurdle (standing) mental litigation. seems to have been overcome, at least in certain Member States. First of all, in the Netherlands, an environmental associa- Accordingly, we can speak of a development in the judicial prac- tion called Milieudefensie initiated two actions based on tort law tice concerning this kind of action. against the State for failure to protect human health at several locations. The argumentation scheme of the plaintiff in this case resembles that used in the Urgenda case in many aspects. The legacy of Urgenda at EU level: German Farmers’ This notwithstanding, despite it being undisputed that the Complaint to the CJEU Netherlands is not complying with EU standards on air quality, the The Hague District Court ruled in December 2017 that The Urgenda case has not only been a source of inspiration for Milieudefensie did not provide enough evidence to support the proceedings at national level; it has also served as an example for claim that a specific damage was caused by the State’s failure starting proceedings at EU level. In May 2018, Mr. Carvalho to comply with air quality thresholds (ECLI:NL:RBDHA: and 36 other claimants lodged a case challenging the lawful- 2017:15380). It therefore dismissed the claim. ness of several legislative acts of the EU in the field of climate Secondly, in the Plan B case in the United Kingdom (Royal change, namely the 2018 amendments to the ETS Directive, the Courts of Justice, Plan B and Others v Secretary of State for Business, Effort Sharing Regulation, and the Land Use, Land-Use Change Energ y and Industrial Strateg y, [2018] EWHC 1892 (Admin)), at the and Forestry (LULUCF) Regulation. moment of writing this chapter, a Member State reliance on tort The relevance of the Urgenda case for these proceedings is law to protect the environment was rejected. The main claim of evident in the two main pillars of this action. First, Carvalho the applicants was that the UK government should go beyond and others rely on the provisions on non-contractual liability of the targets stipulated under the Climate Change Act 2008 in the Union (Articles 268 and 340 TFEU) to seek an injunction order to meet its Paris Agreement target. The national court requiring the Union to set deeper emissions reduction targets dismissed all grounds of appeal because, among other reasons, at the level required by international law. Second, and as indi- the executive has wide discretion to assess the advantages and cated above, they rely on human rights in order to broaden the disadvantages of any particular course of action and the statu- standing requirements in force under the action for annulment tory Climate Change Committee had advised that it was not yet of binding EU acts (Article 263 TFEU). necessary to amend the 80% target in force today. In January Both pillars can, independently from one another, potentially 2019, the appeal was rejected by the Court of Appeal, marking revolutionise the field of environmental litigation at EU level. the end of the appeal process. A different outcome might be Yet, in May 2019 the General Court rejected all grounds (Case obtained by a Peruvian farmer who brought a lawsuit before the T-330/18, Armando Carvalho and Others, ECLI:EU:T:2019:324). Higher Regional Court of Essen, Germany (Landgericht Essen An appeal has been launched and it is difficult to predict how [Essen District Court], Lliuya v RWE AG, 15 December 2016 – the CJEU will rule on each of these pillars. The pillar based on No. 2 O 285/15). In contrast to Urgenda, the Peruvian claimant non-contractual liability of the Union is a novelty in climate law, targets a private party, the energy concern RWE. The claimant’s and, more generally, non-contractual liability is an action not main argument is that RWE knowingly contributes to climate extensively discussed in academic literature. The pillar based change, resulting in the melting of a glacier in Peru, which puts on the broad interpretation of the standing requirements under the claimant’s house at risk of flooding. As in the Milieudefensie Article 263 TFEU will face the traditionally restrictive approach case, the National Court of First Instance ruled against the by the CJEU in this area, as discussed in section 2 above. Still, claimant and held that the causal linkage between RWE’s green- (environmental) lawyers have been putting pressure on the house gas emissions and the damage threatening the claimant Court to change its approach for years. The possibility cannot was not (sufficiently) proven. The importance of establishing a be ruled out that the importance of climate change will make the causal link was confirmed in the appeal (Oberlandesgericht Hamm, Court change its approach, once and for all. 30.11.2017 – 5 U 15/17). However, the appeal court overruled the decision of the court of first instance and ordered the plain- Endnotes tiff to provide further evidence in order to sufficiently establish the alleged causal linkages. The case is still pending, and it 1. S. Kravchenko, ‘The Aarhus Convention and Innovations in remains to be seen whether the claimant is going to succeed. An Compliance with Multilateral Environmental Agreements appeal has also been launched in Ireland in the Friends of the Irish Compliance Mechanisms’, Yearbook of European Environmental Law, Oxford University Press, Volume 7, 2007.

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2. J. Wates, ‘The Aarhus Convention: a Driving Force for Acknowledgment Environmental Democracy’, JEEPL, Volume 2, Number 1. 3. J. Ebbeson, ‘Public participation’, (in) The Oxford Handbook This contribution is co-authored by Dr. Moritz Reese, Senior of International Environmental Law, D. Bodansky, J. Brunnee Researcher of the Department of Environmental and Planning and E. Hey, Oxford University Press, 2007, p. 686. Law, Helmholtz Centre for Environmental Research, Leipzig, 4. S. Stec, ‘Developing standards for Procedural Environmental Germany, and Chairman of the managing board of the European rights through Practice’, (in) Procedural Environmental Rights: Environmental Law Forum. Principle X in Theory and Practice, J. Jendrośka and M. Bar (eds), European Environmental Law Series, Intersentia, p. 5. 5. A. Aragão, and A. C. Carvalho, Taking access to justice seriously: diffuse interests and actio popularis. Why not?, ELNI Review, 2017, Issue 2, pp 42–48.

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Dr. Jerzy Jendrośka Ph.D. is a Managing Partner at Jendrośka Jerzmański Bar and Partners Environmental Lawyers (JJB), and Adjunct Professor and Director of European Environmental Law Post-Graduate Studies at Opole University. He obtained his Master of Laws from Wrocław University and his Ph.D. from the Institute of Law at the Polish Academy of Sciences. He also received a Diploma in International Law from the Vienna University Summer School. Jerzy served as an arbitrator at the Permanent Court of Arbitrage in The Hague, a member of the Implementation Committee of the Espoo Convention, and a member of the Aarhus Compliance Committee. In Poland he served as Vice-Chair of the State GMO Commission, a member of the National EIA Commission in Poland, and a member of the State Environmental Protection Council. Jerzy has been involved in drafting environmental legislation in Poland and in other countries in the EU, Eastern and South-Eastern Europe, the South Caucasus, Central Asia and Latin America.

Jendrośka Jerzmański Bar and Partners Tel: +48 71 337 97 45 ul. Ofiar Oświęcimskich 41/43 Email: [email protected] 50-059 Wrocław URL: www.jjb.com.pl Poland

Dr. Lorenzo Squintani, Senior Lecturer in European Law. Department of European and Economic Law, University of Groningen. Chief-editor of the Journal for European Environmental and Panning Law (Brill) and of the European Environmental Law Forum Book Series (Intersentia). Member of the Managing Board of the European Environmental Law Forum (EELF) and of the U4 Environmental Law Network. Founder and Co-director of the Like!Me Living Lab Project: https://www.rug.nl/about-us/collaboration/research-collaboration/onderzoek energietransitie/. Member of the University Council of the University of Groningen (Science Faction). Professional web page: https://www.rug.nl/staff/l.squintani.

University of Groningen, Faculty of Law Tel: +31 503 635 602 Oude Kijk in ‘t Jatstraat 26 Email: [email protected] 9712 EK Groningen URL: www.rug.nl Netherlands

The authors contribute to this Guide in their honorary capacity as members of the advisory and managing boards of the European Environmental Law Forum (EELF). The EELF is a non-profit network of environmental law scholars and practitioners from across the continent aiming to support intellectual exchange on the development and implementation of international, European and national environmental law in Europe. The EELF serves as an organisational platform to facilitate, inter alia, an Annual European conference. www.eelf.info

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The Impact of a UK Legislative Commitment to Net Zero by 2050

Burges Salmon LLP Simon Tilling

Prime Minister Theresa May’s premiership might have been unrealistic goal; a legal inconvenience for another Parliament dominated by Brexit negotiations, but its legacy may yet lie in to overturn once reality kicks in. But the architects of the 2008 a small amendment to existing UK climate change legislation. Act foresaw the potential for procrastination and the shirking of The Climate Change Act 2008 (2050 Target Amendment) the responsibility imposed by the 2008 Act (describing it as the Order 2019, one of the shortest legislative instruments in UK “tragedy of the horizon”) and constructed a system to ensure parliamentary history, passed through an otherwise dead- that Parliament and the wider public can track progress and hold locked Parliament in the summer of 2019, during Mrs May’s the Government of the day to account. “lame duck” period, coming into force shortly before Prime Independent oversight is one important aspect, and this has Minister Boris Johnson picked up the keys to No. 10 Downing been achieved through the establishment of the Committee on Street. However, this modest tweak to the UK statute book Climate Change (the CCC). has enormous implications for the whole UK economy, and for The CCC is an independent, non-departmental body formed all businesses who have operations in the UK. Lawyers of all under the 2008 Act and has a statutory duty (under section 1(1) stripes need to sit up and take note. of the Act) to advise the Secretary of State in setting the GHG emissions reduction target. In turn, the Secretary of State must The Change to Net Zero take the CCC’s advice into account when discharging its own duty to set that target. These interlocked duties, and the CCC’s The story begins over a decade ago with a cross-party initi- reputation as a truly independent body of experts, lends credi- ative by which the Parliament and Government of the day bility to the UK’s climate policies despite the political turmoil of sought to bind successive Governments into long term plan- recent years. Indeed, it was this specific mechanism that led to ning and decision-making for carbon reduction. It was recog- the 2019 Order, as we discuss below. nised that short-term electoral cycles did not sit well with the To ensure forward planning to meet the targets by 2050, the inter-generational challenge of global climate change. The solu- 2008 Act establishes the concept of carbon budgets. These tion was the Climate Change Act 2008, a seminal piece of legisla- carbon budgets must be set by the Secretary of State, based tion that placed a duty on the Secretary of State to ensure a reduc- upon the recommendations and advice of the CCC. Carbon tion in net UK emissions of greenhouse gases (GHG). The 2008 budgets restrict the amount of GHG the UK can emit in a five- Act took 1990 emissions levels as its base-line and legislated for year period. The Secretary of State must then prepare proposals an 80% reduction by 2050. At the time, this was seen as ambi- and policies to meet those carbon budgets and deliver a report tious, and rightly so. setting these out. Section 14(1) of the 2008 Act requires that All the 2019 Order did was to substitute “100%” for “80%”. the report is laid before Parliament “as soon as is reasonably Another 20% might not sound like much, but that under- practicable after (…) setting the carbon budget”. It is worth estimates the decarbonisation efforts that the 20% repre- noting that, in 2017, the Government attracted strong criticism sents. That final 20% represents the emissions that are most for delays in the publication of its “The Clean Growth Strategy” deeply embedded in industry, agriculture and society and that (published in accordance with its obligations under the 2008 are most challenging to eliminate, as we explore below. A Act), so it is clear that there is political pressure to see action, hundred per cent (100%) is also hugely symbolic: it makes the and for the mechanisms of the 2008 Act to be followed. UK economy a (net) zero emissions economy, with those limited The 2008 Act also requires regular accountability for progress residual, unavoidable emissions which are still necessary in 2050 made against the country’s emissions reduction. An annual state- balanced out by offsetting schemes such as carbon sequestra- ment must be delivered by the Secretary of State detailing the tion or carbon capture, use and storage. There may have been amount of UK emissions and removals in that year and how this enough political consensus to amend the target, but even those compares to the previous year. A similar statement must also be who support it point out that this is an enormous challenge: delivered to Parliament in respect of each carbon budget period. rather famously, as the Government was pressing ahead with If the UK does not meet its fourth carbon budget (as is predicted the amendment, the then Chancellor of the Exchequer Philip to happen), the Secretary of State will need to issue a statement Hammond went public with a Treasury figure that put the cost explaining why that is and deliver an additional report, setting of transition at “well in excess of a trillion pounds”. out the policies and proposals to compensate, in future budgetary periods, for the excess emissions. This mechanism is designed to How Will the Obligation be Enforced? ensure a regular review of progress, with full transparency, and that accountability for progress rests with the Secretary of State There are those who argue that 100% reduction from 1990 throughout. levels by 2050 is just aspirational: a problem for another day; an

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Obviously, much depends on the politics, and the direction from its 29 March 2018 report “2017 UK Greenhouse Gas of the country can change with the composition of Parliament. Emissions, Provisional Figures”, which places the reduction at However, polling carried out by YouGov during the campaigning 43%). for the UK’s general election on 12 December 2019 found that Most influential in that drop has been the de-carbonisa- 27% of voters put the climate as one of the top three issues, and tion of the energy supply sector, driven by the closure of coal- an Opinium poll found that more than half of voters said that fired power stations and the push for renewables to become the climate emergency would influence how they vote. As long a dominant feature of our energy mix. As far back as 2002, as climate change remains an issue of concern for voters, pres- the Renewables Obligation (RO) was introduced as the UK sure will be placed on politicians to meet obligations under the Government’s main mechanism for encouraging renewable 2008 Act. energy. It enabled large-scale renewable electricity production by placing an obligation on electricity suppliers in the UK The Influence of the Committee on Climate to source a certain proportion of the electricity they supplied Change from renewable sources. While the RO is now closed to new projects (having been replaced by the Contracts for Difference The CCC was instrumental in the process of legislating for a net (CFD) regime), it will continue to support existing projects until zero target. 2037 under grandfathering arrangements. CFDs are now the In 2018, the Intergovernmental Panel on Climate Change Government’s main policy mechanism to provide financial (IPCC) published its Special Report, which (as is well known) support to the low-carbon electricity generation. CFDs fix the warned of the significant impacts of global warming above 1.5 “strike price” that generators receive for their electricity for a set degrees Celsius. period, usually 15 years. This is intended to provide renewable On 15 October 2018, in response to the IPCC special report, projects with stable income to weather the peaks and troughs the UK Government and the governments of Scotland and Wales of actual market prices. In recent years, however, the closure asked the CCC to provide advice on long-term targets under the of the RO and other schemes designed to prop up renewable 2008 Act and in particular: “when the UK should reach net zero emis- energy generators has come under criticism in the context of sions of carbon dioxide and/or greenhouse gases as a contribution to global the CCC’s urge to accelerate the pace of GHG emissions reduc- ambition under the Paris Agreement; if that target should be set now; the tion. There is a balance to be struck, of course, on the use of implications for emissions in 2050; how such reductions can be achieved; and public money to incentivise new technologies, and the timing of the costs and benefits involved in comparison to existing targets”. when to reduce or withdraw the money as the markets mature In May 2019, after extensive consultation and a consider- and renewable energy moves into the world of the subsidy-free ation of the evidence, the CCC published its response to this generation. However, the UK continues to innovate, and as request in the form of the report “Net Zero – the UK’s contri- technologies such as floating wind become technically feasible, bution to stopping global warming” (and accompanying detailed questions will be asked over how much the UK Government is “Technical Report”). The report recommended that the 2008 prepared to back these technologies financially. Act be amended to set a net zero target for 2050, concluding that Hydrogen is a great example. Hydrogen fuel cells can provide it is “necessary, feasible and cost-effective” to do so. the power for heavier vehicles that struggle with electric, and In part, the CCC’s conclusion was based on the UK’s track record offer the potential to be more flexible for all vehicles, provided in achieving the carbon budgets that it has been setting itself since there is a roll-out of fuelling stations. Hydrogen can also be 2008, and the significant progress the UK has already made in used in domestic and commercial heating (at the moment, as part reducing emissions. The first two carbon budgets have been met, of a fuel mix, but this may evolve with technological advance- and the UK is currently on track to meet the third (namely a 37% ments). The CCC is clear that hydrogen will be an essential part reduction in GHG from 1990 levels by 2020). Notwithstanding the of a net zero UK economy. The intermittency of certain renew- UK’s performance so far, the CCC also makes it clear that achieving able energy sources such as sun and wind also dovetails with a net zero is “only credible if policies are introduced to match” and that “chal- hydrogen economy: at times of excess electricity, that electricity lenges that have so far been out of scope must now be confronted”. can be used to produce hydrogen, providing a useful energy The measures identified in the CCC’s report on net zero storage function. But such a major change to our fossil-fuel to deliver the target span a vast array of sectors including based economy requires significant policy support. power generation, transport, land use, food production, waste Power generation is only one of the many sectors being management and energy efficiency and a lower carbon built re-shaped by climate change legislation. In the transport sector, environment. legal mechanisms exist to encourage a move away from high Some of these are obvious, and indeed sectors such as power GHG emissions. Key among these is the Renewable Transport generation have already seen a decade (and more) of change, Fuel Obligation, which aims to reduce GHG emissions by both as a result of the 2008 target and policies pre-dating the obliging suppliers of transport fuels to source a percentage of it 2008 Act that were necessary to meet international legal commit- from sustainable sources, including, sometimes controversially, ments, dating back to the UNFCCC Kyoto Protocol in 1997. biofuels. But that then leads us to another sector: land use. The For these sectors, the CCC’s recommendation was (in summary) CCC notes that land use is both a cause of the current problem “more, please, and faster”. But the CCC report was frank in and a potential solution. Productive land could be used for live- highlighting that “challenges that have so far been out of scope must now stock, for feed for livestock, for food, for biofuels, or turned be confronted” and that “there is less flexibility and less scope for under-de- over to become carbon sinks (for example, through afforesta- livery in areas that prove difficult to change” – many of which make up tion). The balance that needs to be struck in 2050 requires a the critical, final 20% required to meet net zero. significant shift from the land use of today. The question of how that shift will be effected remains to be answered. Will it be Existing Legal Tools to Reduce GHG Emissions by the carrot of incentives, or by the stick of regulatory action? In the business and industry sphere, players have had to Thanks to a host of policies and accompanying legislation, the comply with various climate-change-related obligations for UK has already seen its GHG emissions drop considerably since a number of years. Some of these, such as the EU Emissions 1990 levels (see, for example, the official Government figures Trading System (EU ETS), impose limits on emissions of

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carbon dioxide (and some other GHGs) from installations in One major technology of the future will be carbon capture, certain energy-intensive sectors. Others, such as the recently use and storage (CCUS). The CCC is clear that a zero emis- introduced Streamlined Energy and Carbon Reporting obliga- sion economy is not feasible by 2050, and that CCUS is vital to tions, require businesses in all sectors to report on their emis- ensure that residual carbon emissions, for example, from heavy sions and to draw up plans for emissions reduction. industry, are captured at source and used or safely stored. The The built environment has also been subject to energy effi- UK has not fared well with CCUS pilot projects to date, with ciency requirements. Statistics on this abound, but it is common concern over costs and feasibility, but CCUS will be a tech- ground that our building stock is responsible for a significant nology of the future, so we are anticipating a renewed focus on proportion of our carbon footprint. Obligations to achieve UK CCUS projects in the near future. greater energy efficiency in buildings have therefore formed part of the UK’s legislative landscape, notably the Minimum Energy Who Pays? Efficiency Standard (MEES) which makes it an offence to grant or renew tenancies in buildings with a poor energy rating. The Government recognises that it is impossible for public money to fund the transition. The role of the financial sector Legislative Changes on the Horizon to Help is key. The Government’s Green Finance Strategy, released in July 2019, addresses this through its emphasis on three Meet Net Zero pillars: financing green; greening finance; and capturing the The CCC’s report makes it clear that, for all the past successes opportunity. of the UK in growing the economy while reducing GHG “Financing green” is “mobilising private finance for clean and resil- emissions, new legislation is required to deliver the ambi- ient growth”: in other words, the familiar territory of direct invest- tious net zero target. Some may emerge on the back of the ment in the technologies and businesses that are needed for the Government’s “Clean Growth Strategy”. Published in 2017, the transition (for example, investing in clean hydrogen production). UK Government set out its detailed proposals for decarbonising The Government recognises that it needs to establish robust, all sectors of the UK economy for the next 20 years. In its net long-term policy frameworks, make sure there are no barriers zero report, the CCC said of the Clean Growth Strategy that between the green ideas and the capital, and to look at innova- “Although [it] does not fully close the policy gap to the UK’s existing carbon tion in the provision of capital. The considerable investment in budgets, it represents a material step forward in the UK’s approach to emis- the UK renewables sector, both under subsidies and increasingly sions reduction” and that it covers “most of the areas where action is subsidy-free, is a good example, but much more capital is needed needed to deliver a net-zero target”. to achieve net zero by 2050. While black letter law will be required to underpin the ambi- “Greening finance” is “mainstreaming climate and environmental tions of the Clean Growth Strategy, the strategy is nevertheless factors as a financial and strategic imperative”: in other words, this is expected to trigger an intensification in carbon reduction efforts about the role that law and policy can play in making sure that in the interim. It places great emphasis on designing compet- the capital deployed in the UK and around the globe supports itive markets and supporting the private sector in developing positive environmental endeavours. There have been numerous and growing new technologies in order to bring down the cost initiatives around greening finance, with the Bank of England’s of clean energy. It also sees “better buildings” as an important Governor Mark Carney becoming a leading voice on the need factor in reaching net zero. Some progress is being made on for businesses to beat the “tragedy of the horizon” by acting both these fronts. now on climate risk. The Green Finance Strategy accepts that We are seeing some movement towards legislating for a shift there is more to do here, including ensuring that the financial to electric vehicles – viewed by CCC as vital for achieving sector has a shared understanding of the important concepts net zero. The Vehicle Excise Duty (Taxi Capable of Zero around climate risk, with clear accountability for those with Emissions) Regulations 2019, for example, exempt taxis capable roles and responsibilities for addressing these issues. The rise of of zero emissions from higher vehicle excise duty and the latest ESG (environmental, social and governance) factors as elements Finance Bill exempts zero emission cars from company car tax to be taken into account in investment decisions has also entered in 2020–21. The Automated and Electric Vehicles Act 2018 also the mainstream in the UK in 2019, backed by UK law and policy grants powers on the Government to insist that charging points that requires more disclosure from corporates, asset managers are rolled out and “smartened”. and pension trustees on their activities in this area. The warn- In relation to buildings, the Government is consulting on ings for those still ignoring these issues are stark: Mark Carney two options for further improving the energy efficiency of put it bluntly in a television broadcast: “Companies that don’t adapt rented commercial properties (simplistically put: the choice is will go bankrupt – without question.” between imposing one of the highest standards of energy effi- The third pillar, “capturing the opportunity”, is the UK’s ciency on all commercial privately rented properties (referred policy to ensure that, with a world-class financial capital, UK to as “EPC band B”), or a slightly lower standard (“EPC band businesses become leaders in green finance and can export those C”)). The Government’s stated preferred option is for build- skills around the world, for the benefit of the global transition ings to achieve EPC band B by 2030, on the basis that this will as well as the UK economy: this pillar recognises that climate be required to achieve adequate progress towards the net zero change is not just a challenge to be confronted, but an opportu- objective. In addition, the announcement of the Future Homes nity for those ready and willing to adapt. Standard during this year’s Spring Statement sets the ambition for all new homes from 2025 to have “world-leading” efficiency Devolution and low-carbon heating systems. Reading between the lines, This article has addressed the UK-wide target in the UK-wide this could mean a ban on natural gas heating in all new homes 2008 Act, but it would be remiss not to mention that Scotland from 2025. Given the heating needs of around 80% of domestic has its own Climate Change (Scotland) Act 2009 and its own properties in the UK are met by gas, this is a huge change to target to reach net zero by 2045. The slightly more ambitious the status quo, and requires the public to “buy into” the tech- target reflects the recommendations of the CCC, which advised nology shift.

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in its net zero report that Scotland was better placed than the UK as a whole to decarbonise its economy and recommended setting the obligation for 2045. The Scottish Parliament has duly amended its own legislation to make this target legally binding. As with UK ministers, the Scottish Act creates obligations on Scottish Government to progress towards these targets, so policy that is devolved to Scotland, such as land use planning, is subject to climate change considerations.

What Does This Mean for Lawyers? It should be clear that this one, small legislative change in the 2008 Act in the middle of 2019 will have repercussions across the whole of the UK for decades to come and most – if not all – sectors of the economy will be impacted in some way. In one sense, many more lawyers will need to become familiar with environment and climate change law in their practices, as finance lawyers grapple with climate change risk, corporate lawyers deal with increased disclosure, real estate lawyers build in protections for changing land use, and transport lawyers assist with procuring new technologies. Public sector lawyers will find “net zero” pervading many aspects of their clients’ lives, and litigators will identify new weapons to bring to bear in disputes. But to truly understand these seismic changes, and the implications for projects, transactions, corporate affairs, litigation and the other areas of legal practice, we will need specialist environment and climate change lawyers, with a holistic understanding of the issues and of the related layers of law and regulation that have built up to date, and that will continue to accrue in the years to come.

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Simon Tilling is a partner at UK independent firm Burges Salmon and is head of the market-leading environmental law team. His practice encompasses the full breadth of environmental law, from the regulation of chemicals and products to contamination claims and regulatory appeals. Simon is qualified in England, Wales and Scotland and his experience encompasses UK, EU and international environmental law. He is recommended in Who’s Who Legal: Environment and in Chambers & Partners UK, where he has been described as an “extremely bright and a very skilled lawyer”, and he is nominated in The Legal 500 UK Awards for “Real Estate (outside London) Lawyer of the Year 2020” for his environmental work. Simon is also the Vice-Chair of the UK Environmental Law Association and his role includes promoting the organisation’s international networks.

Burges Salmon Tel: +44 117 902 7794 One Glass Wharf Email: [email protected] Bristol, BS2 0ZX URL: www.burges-salmon.com United Kingdom

Burges Salmon LLP is a UK independent firm with a market-leading repu- Protection Agency). The team is regularly instructed by international and tation in energy, transport, infrastructure and environmental law. The envi- overseas law firms seeking genuine expertise in the UK market for support ronment team is ranked in the top tier in the UK directories and has three on transactions or for troubleshooting environmental issues. environmental lawyers recommended in Who’s Who Legal: Environment for www.burges-salmon.com England, more than any other UK firm. The Legal 500 testimonials include “This is a great and genuinely international environment practice” and “The practice has an amazing strength in depth, and all team members are exceptional”. The size and strength of the practice allows it to tackle some of the biggest environmental law cases and most complex challenges. The team acts for a spectrum of clients, from large FTSE corporates, multinational businesses with UK or EU footprints, and high hazard industries, to government bodies (the firm is appointed to the panel of the Scottish Environment

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Michael Winram

Maddocks Patrick Ibbotson

12 Environmental Policy and its 1.2 What approach do such agencies/bodies take to the enforcement of environmental law? Enforcement

The approach taken varies between and within jurisdictions. 1.1 What is the basis of environmental policy in your jurisdiction and which agencies/bodies administer and Typically, government agencies take a risk-based approach enforce environmental law? to the enforcement of environmental law. Because of limited resources, they will usually enforce more serious offences through the courts and issue penalty notices for offences with Environmental law is based both on common law principles (e.g. minor consequences. negligence, nuisance and trespass) and legislation. Increasingly, Many environmental laws have ‘open standing’ provisions, legislation is influenced by or implements international trea- which allow any person to bring enforcement proceedings in ties. Governments have adopted ecologically sustainable devel- a civil jurisdiction to ensure compliance with those laws. For opment (ESD) principles and implemented them into various example, an individual that seeks orders from a court to rectify degrees. development on neighbouring land if it is carried out in breach There are three tiers of government – Commonwealth, State/ of conditions. Similarly, environmental groups can seek civil Territory and Local. The Constitution gives the Commonwealth orders against offences of environmental law. Government limited jurisdiction in environmental issues, typically: external affairs (international treaties); Commonwealth land; some aspects of heritage; aspects of water; and matters that 1.3 To what extent are public authorities required to affect aboriginal peoples. The Commonwealth has the power provide environment-related information to interested to legislate in respect of trading and financial corporations and persons (including members of the public)? could use this power to increase the scope of its environmental regulation. To date, it has generally not done so. There are very extensive public disclosure requirements. There The Commonwealth Government can implement policies is a wealth of information available to the public either online in cooperation with the States/Territories. For example, the or on request. Commonwealth has established a number of new bilateral agree- Typically: ments between itself and the States/Territories which allow the ■ Approval processes for new developments will include Commonwealth to ‘accredit’ particular State/Territory environ- some form of public notification. Major developments mental assessment and approval processes. may need to exhibit detailed environmental assessments. The Commonwealth government agency responsible ■ Material pollution incidents are required to be reported for administering and enforcing environmental law is the and the reports can be publicly available. Department of the Environment and Energy. ■ There are registers kept of environmental approvals. State/Territory legislation is the predominant form of environ- ■ There are registers or publicly available records relating to mental legislation. There are eight State/Territory Governments. contaminated land. In each State/Territory, there is legislation relating to all relevant ■ Approvals may impose obligations on the approval holder environmental aspects and to all economic sectors. State envi- to make certain information available to the public or the ronmental legislation is generally administered by the govern- local community. ment department responsible for environmental issues and the The Commonwealth Government also has publicly avail- State ‘Minister for the Environment’. able records of greenhouse gas (GHG) emissions through the Local Councils are established under State/Territory legis- National Greenhouse Gas and Energy Reporting Scheme and lation and are responsible for administering local government of other emissions through the National Pollution Inventory. areas. Generally, local government powers relate to: local land In all jurisdictions, there is also legislation that entitles any use planning; development controls; local roads and traffic person to seek access to information under the control of the control; building regulations; community waste management; Government, typically with a presumption in favour of granting minor pollution incidents; or nuisances and public health. access to information.

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22 Environmental Permits 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 2.1 When is an environmental permit required, and may contained in an environmental permit? environmental permits be transferred from one person to another? An applicant for an approval usually has a right of appeal to a court or administrative tribunal. In some circumstances, a At the Commonwealth level, an environmental approval is person who objected to the granting of the permit will also have required under the Environment Protection and Biodiversity a right of appeal to the grant of the permit. Conservation Act 1999 (Cth) for actions that are likely to have Typically, appeals may be: a significant impact on matters of national environmental ■ merits appeals; or significance. ■ administrative law (i.e. judicial review) appeals. At a State/Territory level, approval requirements vary between The nature of appeal rights vary for different approvals and the different States/Territories but generally: jurisdictions. ■ an environmental approval and environmental impact assessment is required for major projects, such as a new mine or major infrastructure project; 2.3 Is it necessary to conduct environmental audits ■ environmental licences are required for specified indus- or environmental impact assessments for particularly trial activities, e.g. chemical industries; and polluting industries or other installations/projects? ■ various specific approvals may be required, depending on the nature of the activity and its impacts. Typically, these requirements arise in the following ways: ■ when seeking approval for a new development; The following approval requirements are typical: ■ as a condition of an approval; ■ by regulatory order during the operation of the development; New development Planning approval e.g. ■ as an order of a court consequent upon prosecution; ‘development consent’ ■ by a voluntary scheme; or ■ by industry- or activity-specific legislation. Mining Exploration or Mining Lease or similar New developments Pollution or specified Environment Protection For all new developments, other than the most minor, an envi- polluting activities Licences, Water Pollution ronmental assessment is carried out to obtain an environmental Licences approval (which in some jurisdictions is integrated with the plan- Waste Authorisations for transport ning approval). The level of detail required will vary with the and disposal and sometimes for jurisdiction, the nature of the activities and the risks presented generation by the activities. Hazardous substances Licences to store or use above For major industrial facilities, major infrastructure, large-scale certain quantities or in certain chemical storage, large generation facilities and mines, a very situations detailed environmental assessment will normally be required. Threatened species Licences to damage, disturb or Typically, applications and assessments are made publicly take available. Water use Licences for extraction and use and to establish works to extract Approval conditions The conditions of an approval may require management plans, water assessments, environmental audits and reporting. Many envi- Radiation Licences for certain devices ronmental licences and permits will require periodic review and Ozone Licences for keeping, use, reporting of compliance. maintenance and disposing of prescribed ozone-depleting Orders substances Typically, regulatory authorities can order that an operator of a Aboriginal objects or Licences to disturb or enter facility conduct audits or a review. A court can also do this if areas a person is prosecuted and found guilty of a pollution offence. Specific locations Specific licences for entry, use or to disturb 2.4 What enforcement powers do environmental regulators have in connection with the violation of Typically, the benefit of planning approval can be relied on permits? by any person carrying out the approved development on the land to which the approval requires – they do not need to be There are very broad enforcement powers across each jurisdic- transferred. tion. For example, environmental regulators can: Most other environmental approvals are personal to the ■ investigate; holder. These can usually be transferred with the consent of ■ demand information; the relevant agency. However, the agency is not required to ■ serve infringement notices; consent. In some jurisdictions, the agency could refuse consent ■ prosecute; because, for example, the transferee or its directors are not a fit ■ suspend approvals; and proper person to hold the approval. ■ cancel approvals;

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■ impose new approval conditions; New South Wales (NSW), for example, s115 and s116 of the ■ serve investigation, clean-up or abatement orders; Protection of the Environment Operations Act 1997 create ■ serve orders requiring works; offences relating to the unlawful disposal or escape of waste. ■ obtain court orders requiring compliance, response, auditing; Both the person causing the incident and the person who is the and owner of the waste commit an offence. The producer of the ■ claim against bonds or other security provided. waste will be the owner of the waste unless they have transferred ownership to another person. This is possible with prop- 32 Waste erly documented transfer documents. Where the incident occurs in the transport of waste, then the producer of the waste may retain liability under transport safety 3.1 How is waste defined and do certain categories of legislation as a consignor of the waste. waste involve additional duties or controls? The common law principles of negligence may also apply to create liability for the producer of the waste. Typically, waste is very broadly defined to include any discarded, rejected, unwanted, surplus or abandoned substance, whether 3.4 To what extent do waste producers have or not it is intended to be (or can be) reprocessed, re-used or obligations regarding the take-back and recovery of their recycled. waste? Waste classification processes or categories are also defined on the basis of either some or all of: ■ the source of the waste; There are some voluntary waste take-back schemes. ■ the risks presented by the waste; For packaging waste, there are some industry waste reduc- ■ the physical characteristics of the waste; and tion plans that require waste reduction initiatives. These can ■ the content of the waste. be imposed if the industry participants do not sign up to and Certain types of waste do have significant additional controls. comply with the national packaging covenant, which is a volun- The controls may include restraints on generation, storage, tary scheme for the reduction of packaging waste. transport, handling and disposal. The Commonwealth and States have agreed to a National Waste Policy. Under this policy, there is a national television and computer recycling scheme which is currently being imple- 3.2 To what extent is a producer of waste allowed mented where consumers can return items to designated free to store and/or dispose of it on the site where it was drop-off points. Under the scheme, liable parties (importers and produced? local manufacturers) must be members of an approved co-regulatory arrangement, and commitments are made to certain These controls vary with location, industry type and the risks collection and recycling targets. Some States have also intro- presented. Controls are imposed by: duced container deposit schemes, such as the ‘Return and Earn’ ■ approvals/licences – in particular, planning approvals and scheme in NSW. Other initiatives proposed include co-regula- licences to store or dispose of waste; tory schemes for mercury (containing lamps, tyres and plastics). ■ specific legislative requirements; and ■ community concerns and pressures. In all jurisdictions, it is an offence to dispose of waste in a 42 Liabilities manner that harms or is likely to harm the environment. Often, the owner of the waste, as well as the person disposing of it, will 4.1 What types of liabilities can arise where there is a be held liable. breach of environmental laws and/or permits, and what defences are typically available? Typically, waste produced on-site can be stored on-site temporarily, pending its treatment, off-site disposal or reuse. The volumes and types of waste allowed to be stored will depend on There are both civil and criminal penalties for breach of envi- the location, the waste and the risks. There will be both environmental laws. Penalties include remediation orders, fines and, ronmental controls and safety controls that apply. There will be for the most serious cases, imprisonment. very few opportunities for on-site disposal of waste on the site Maximum penalties can be severe, with the maximum penal- where it is produced unless the waste is demonstrated to be inert ties in most jurisdictions for the worst offences exceeding $1 and suitable to be used, for example, as fill. million for each separate offence. Further, penalties can be imposed for each day an offence continues. Typically, the courts do not impose the maximum penalty, but set out in their judg- 3.3 Do producers of waste retain any residual liability ments principles that will be followed to determine an appro- in respect of the waste where they have transferred it to another person for disposal/treatment off-site (e.g. priate penalty in the circumstances. if the transferee/ultimate disposer goes bankrupt/ Where a natural person commits an offence, gaol terms can disappears)? also be imposed. The offence provisions fall into one of four types: ■ absolute liability – there is no defence if the defendant is Generally, producers of waste do not retain residual liability in found to have breached the requirement; respect of waste where it has been lawfully disposed of. Typically, ■ strict liability – a defence is available if the offence occurred each of the producers (often called generators), consignors, because of an honest and reasonable mistake of fact; transporters or receivers of the waste can have some liability for ■ qualified strict liability – a defence is available if the person the waste if an incident occurs before waste is lawfully disposed exercised due diligence and exercised reasonable precau- of. However, once waste is lawfully disposed at a waste facility, tions or in other circumstances set out in the legislation; and the liability of the generator and transporter cease. ■ offences requiring proof of intent, negligence, recklessness However, the producer may have liability where it acted or other deliberation. contrary to law in consigning waste to a particular facility. In

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Other liabilities include: The acquired company may still be prosecuted, sued or incur ■ infringement or penalty notices; orders in the future for those pre-acquisition acts. ■ clean-up or response orders; There are (limited) circumstances in some States where the ■ compensation; seller could remain liable for the performance of the clean-up ■ publication of offence; obligations, even after the sale. For example, in circumstances ■ contribution to environmental funds; where a clean-up order has been served on the polluting company, ■ common law claims for damages; and this is subsequently sold as part of a scheme to avoid compliance. ■ civil penalties (which are pecuniary penalties imposed by a A further exception is for offences occurring prior to a sale. If court exercising civil rather than criminal jurisdiction). a pollution incident occurs and the polluting company’s shares are sold, the seller and the people who were directors, officers and managers of the polluting company remain potentially 4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is exposed to prosecution on the basis of the derivative liability operated within permit limits? provisions discussed in question 4.3 above. When assets are purchased, normally the liability for the past actions of the seller stays with the seller. However, in an asset The purpose of some licences is to specifically permit certain sale, if the assets acquired include land that is contaminated, types of pollution. For example, an environment protection then the people who might be liable for the contamination and licence in NSW may specifically permit the pollution of water ordered to clean it up include the owner and occupier of the land by specified substances at specified points up to specified limits. at the time that regulatory action is taken. As a result, an order However, there remain risks, such as: might be served on both the seller if they caused the contamina- ■ the pollution might breach other legislation or another tion and the purchaser of the assets in respect of the contamina- approval – for example, planning approval; tion that was caused prior to the acquisition, but which persisted ■ the circumstances giving rise to the pollution might consti- after the acquisition. tute a breach. For example, if there is a failure to operate in a proper manner; or ■ the circumstances of the incident may fall outside the spec- 4.5 To what extent may lenders be liable for ified controls in the licence. environmental wrongdoing and/or remediation costs? It should not be assumed that the fact that a licence is held will be a defence for a claim for damages under the common law Generally, lenders are not liable for environmental harm or principles of negligence or nuisance. remediation costs. However, lenders may be at risk if they are: ■ concerned in the management of the defaulting company; 4.3 Can directors and officers of corporations attract ■ directly involved in decisions that cause a pollution personal liabilities for environmental wrongdoing, and incident; to what extent may they get insurance or rely on other ■ aiding, abetting, counselling or procuring the offence; indemnity protection in respect of such liabilities? ■ a ‘shadow director’ – being (in loose terms) a person whose instructions the directors follow; In all jurisdictions, there are provisions that have the effect that ■ in occupation of land on which or from which a pollution directors and some other officers or managers are personally incident occurs; or liable for some offences committed by the corporation. ■ in control of or an owner of plant, equipment or substances Generally, a defence is available if the director can demon- involved in a pollution incident. strate that they exercised due diligence to prevent the commis- Particular care needs to be taken in NSW and Victoria. sion of the offence by the corporation. In some instances, the due diligence defence has multiple other elements beyond the 52 Contaminated Land mere exercise of due diligence, including, for example, establishing that the director was not in a position to control or influ- 5.1 What is the approach to liability for contamination ence the relevant conduct of the corporation. (including historic contamination) of soil or A company can indemnify its directors and officers. However, groundwater? s199A(2) of the Corporations Act 2001 prohibits a company from indemnifying its directors and officers against certain Contaminated land is generally regulated by State/Territory liabilities, including those which did not arise out of conduct legislation. in good faith. Most legislation adopts a ‘polluter pays’ principle but this In addition, an indemnity against a criminal sanction is gener- might be read as a ‘government pays last’ principle. The range ally not enforceable under the common law (although that prop- of people who may be liable for contaminated land varies from osition may be doubtful for strict and absolute liability offences). State to State, but includes: Insurance is available for directors and officers, however ■ the person responsible for the contamination; it will usually exclude cover in the case of wilful harm to the ■ the person who carried out activities on the land of a sort environment. that are likely to cause the contamination; ■ the occupier of the land; 4.4 What are the different implications from an ■ the owner of the land; environmental liability perspective of a share sale on the ■ a person who exacerbates the risk from the contamination; one hand and an asset purchase on the other? and ■ certain public authorities (as a last resort). A company remains liable for its acts and omissions regard- There is a National Environment Protection Measure on less of what happens to its shares or assets. When shares are contaminated land that seeks to provide a consistent framework for acquired, the liability usually stays with the acquired company. assessing contaminated land and making management decisions.

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Contaminated land issues also need to be considered in the 5.5 Does the government have authority to obtain from process of obtaining planning approval for new developments. a polluter, monetary damages for aesthetic harms to This can result in requirements for environmental assessments public assets, e.g. rivers? to be carried out before approvals are granted and possibly for remediation to be carried out either prior to the approval or as a Generally, relevant government agencies’ rights will be limited condition of the approval. to the costs of responding to and mitigating the environmental impacts of incidents. Penalties may apply if the ‘aesthetic’ harm also 5.2 How is liability allocated where more than one amounts to pollution under the relevant State/Territory legislation. person is responsible for the contamination? 62 Powers of Regulators The rules for apportioning liability are different amongst the States and Territories. However, as a general proposition, an 6.1 What powers do environmental regulators have to order can be served on one person (usually the person most require production of documents, take samples, conduct responsible or the owner or occupier) and they have a right to site inspections, interview employees, etc.? recover costs against a person who may have contributed to the need to remediate. For example, in NSW, the EPA can serve Environmental regulators have very broad investigative powers orders on either the person responsible for the contamination, to: the owner of the land, the person carrying on activities on the ■ enter premises; land or a public authority. ■ take samples, photographs and videos; Contracts can apportion liability between parties as well. ■ inspect premises, plants and equipment; ■ seize offending articles or other evidence; 5.3 If a programme of environmental remediation ■ carry out monitoring and assessment; is “agreed” with an environmental regulator, can the ■ require the production of documents; regulator come back and require additional works or can ■ interview employees; a third party challenge the agreement? ■ require responses to questions; and ■ require notification of incident. Generally, yes. In some States/Territories, voluntary environmental audits The powers of the authorities are different in each State and cannot be required to be produced. Territory but, for example, an authority may well be able to require additional work if the land use changes, there is new informa- 72 Reporting / Disclosure Obligations tion, the original information was incomplete or there is a risk to human health or the environment. To the extent that an authority does enter into an ‘agreement’ with a person, the agreement only 7.1 If pollution is found on a site, or discovered binds the parties to it – it does not bind other authorities. to be migrating off-site, must it be disclosed to an environmental regulator or potentially affected third The rights of a third-party challenge will depend on the context parties? in which the ‘agreement’ is made and implemented. There may be rights to obtain review of administrative decisions, for example, on the grounds of irrationality or want of jurisdiction. In the context The obligation is different in each State, but the triggers are of remediation proposed as part of a new development, objectors typically: might, in limited circumstances, have rights to appeal on the merits. ■ pollution incidents (including soil or groundwater pollution) that have a prescribed level of materiality or significance; 5.4 Does a person have a private right of action to ■ in circumstances set out in approval conditions; and seek contribution from a previous owner or occupier of ■ when contamination exceeds certain levels as set out in contaminated land when that owner caused, in whole or guidelines or regulations. in part, contamination; and to what extent is it possible for a polluter to transfer the risk of contaminated land Normally, notification must be made to the regulator. It may liability to a purchaser? be prudent to notify adjoining land owners or occupiers if there are health risks or a risk of property damage. In some States/Territories, if a person carries out a remediation order but is not responsible for the contamination of the land, 7.2 When and under what circumstances does a person they may recover a portion of the costs of carrying out the order have an affirmative obligation to investigate land for from each person responsible for the contamination. contamination? Generally, a polluter cannot transfer the risk of liability contractually. The legislative position is different in each State. Generally, the In respect of contractual liabilities, it is possible to agree affirmative obligation will arise if: to novate these with the consent of all parties. It is possible ■ there is evidence of impact on groundwater or surface to obtain releases as between the parties to the contract, for water resources; example, a polluter could obtain a release from the purchaser. ■ there is off-site migration; However, the polluter would still be potentially liable under ■ there is a risk to the safety of people (in particular workers); legislation and, to manage that, should obtain an indemnity ■ there is an order; or from the purchaser as well. ■ new development is proposed on the land. Of course, as a general rule, the polluter cannot contract out of any criminal liability for offences that may have caused the contamination.

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7.3 To what extent is it necessary to disclose ■ where a company holds an environment protection licence, environmental problems, e.g. by a seller to a prospective there may be restrictions on surrendering the licence and purchaser in the context of merger and/or takeover the licence may prevent the dissolution of the company; transactions? and ■ there are provisions requiring directors to certify solvency Transfer of land before voluntary winding up occurs. The obligations are different in each State, but generally it is prudent to disclose contamination and asbestos. In some States, 8.3 Can a person who holds shares in a company there are obligations to disclose contamination and asbestos. be held liable for breaches of environmental law and/ or pollution caused by the company, and can a parent Merger and/or take-overs company be sued in its national court for pollution There is not an express obligation to notify environmental liabil- caused by a foreign subsidiary/affiliate? ities upon the sale of shares. However, in all transactions, there is a possibility that state- Generally, the ‘corporate veil’ operates to shield shareholders ments about the site conditions or other environmental aspects from liability, so a shareholder in that capacity is not liable for may be misleading or deceptive, resulting in potential offences the environmental liabilities of the company. and claims for compensation or damages. Silence about a state A parent company generally is not liable for the environ- of affairs may also constitute a misrepresentation. mental liabilities of its subsidiary unless: ■ the parent company has such a level of control over the 82 General management of the subsidiary that the subsidiary company is properly an agent of the parent company; ■ where the corporate structure perpetrates a fraud; 8.1 Is it possible to use an environmental indemnity ■ if there is insolvent trading; or to limit exposure for actual or potential environment- related liabilities, and does making a payment to another ■ if the parent company is in fact a shadow director. person under an indemnity in respect of a matter (e.g. remediation) discharge the indemnifier’s potential 8.4 Are there any laws to protect “whistle-blowers” who liability for that matter? report environmental violations/matters?

An indemnity will not operate to remove the primary liability. There are limited protections in some jurisdictions, mostly What an indemnity does is enable the indemnified party to relating to public sector workers and public and large propriety recover the amount of the primary liability once it is incurred. companies. The traditional view is that an indemnity against fines would Typically, EPAs will keep confidential the identity of a person not be enforceable. who provides them with information on an environmental The payment of an amount under an indemnity would not incident. relieve the paying party from liability except from liability under There are some protections for whistleblowers in companies the indemnity itself and then to the extent of the payment only under the Corporations Act 2001 (Cth) which was amended in and subject to the terms of the indemnity. 2019 to include additional protections (including the requirement for all public companies and large proprietary companies 8.2 Is it possible to shelter environmental liabilities off to have a compliant whistle-blower policy in place). However, balance sheet, and can a company be dissolved in order these protections are limited in relation to environmental to escape environmental liabilities? obligations.

The Corporations Act 2001 (Cth) and Australian accounting 8.5 Are group or “class” actions available for pursuing standards establish requirements for financial records and environmental claims, and are penal or exemplary reports. Environmental liabilities that are either actual or damages available? contingent liabilities within the meaning of relevant accounting, auditing and reporting standards need to be dealt with in accord- There are provisions for ‘class actions’ or ‘representative ance with those standards. actions’. These are generally in the Federal Court of Australia Section 299(1)(f) of the Corporations Act 2001 requires or the Supreme Court of Victoria. In other jurisdictions, these reporting ‘subject to any particular and significant environ- forms of proceedings are less well established. mental regulation’ to address environmental performance in The Federal Court has limited jurisdiction in environmental corporations’ annual Directors’ Reports. matters. There are situations in which a company could be dissolved There are ‘open standing’ provisions in many environmental to avoid environmental liabilities and this has occurred before. statutes which permit any person to bring an action to restrain However: breaches of the relevant legislation. These provisions often ■ liabilities are usually referable to the date of the relevant facilitate ‘public interest litigation’, where not-for-profit envi- environmental harm. As a result, directors and managers ronmental organisations or action groups can bring matters of corporations may remain liable for offences committed before the courts. by the company prior to its dissolution; Exemplary or punitive damages can be awarded by the courts ■ there are anti-avoidance provisions in some environmental for nuisance or negligence. However, these are extremely legislation (notably the Contaminated Land Management unusual. They are generally not available in claims for personal Act 1997 in NSW) that would have the result that direc- injury. The practice is not the same as in the USA. tors and holding companies may be liable if companies are wound up as part of a scheme to avoid compliance;

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8.6 Do individuals or public interest groups benefit It is proposed through the ERF that the Government will from any exemption from liability to pay costs when call for tenders for emissions abatement beyond baseline levels. pursuing environmental litigation? Funds will be allocated through a reverse auction, starting with the lowest priced abatement. The ERF will only purchase emis- There are very limited circumstances in which individuals and sions abatement when the emissions savings have been inde- public interest groups benefit from any exemption from liability pendently verified. While long-term contracts for abatement to pay costs when pursuing environmental litigation. will be available to assist organisations to secure finance to The general rule is that costs follow the event and the unsuc- undertake projects, payment from the ERF will only occur once cessful party will be ordered to pay the reasonable costs of the it has been proved that genuine abatement has occurred. successful party. The mere categorisation of litigation as having Under the scheme, there will be an expansion of the Carbon been brought in the public interest is, on its own, not suffi- Farming Initiative, which permits land managers to earn carbon cient to justify departure from the usual order that costs should credits by storing carbon or reducing GHG emissions on the follow the event. land. To succeed in justifying a departure from the usual costs order, a party needs to establish that special circumstances 9.2 Aside from the emissions trading schemes apply. Examples of special circumstances include: mentioned in question 9.1 above, is there any other ■ Where the matter litigated raised questions concerning requirement to monitor and report greenhouse gas individuals who are unable to take action on their own emissions? behalf to determine their rights. ■ The pursuit of the litigation was motivated by the desire to In 2007, Australia introduced the National Greenhouse and ensure obedience to environmental law and preserve the Energy Reporting Scheme (NGER). This scheme allows for habitat of endangered species. the registration and deregistration of corporations for reporting, ■ A significant number of members of the public share the management of the National Greenhouse and Energy Register, concern such that it can truly be said that there is public receiving reports, monitoring compliance and enforcing interest in the outcome of litigation. external audits and publishing and management of security of ■ The basis of the challenge is arguable and has raised and NGER data. resolved significant issues in relation to the interpretation Corporations that meet a National Greenhouse and Energy and future administration of statutory provisions relating Reporting threshold must register and then report GHG emis- to environmental law. sions, energy consumption and energy production from facilities Establishing one of these special circumstances will generally for which they have operational control every year. Emissions, not be enough. The courts are not usually willing to deprive a energy consumption or energy production associated with successful party of the benefit of a costs order. buildings are included. An example of where a costs order has been made include In addition to the Commonwealth scheme, each State has its where the Government has amended legislation or otherwise own legislation in relation to the monitoring and reporting of used legislative powers to defeat the litigation once litigation has GHG emissions. For example, in NSW, the Electricity Supply commenced. Act 1995 and the Electricity Supply (General) Regulation In NSW, the Land and Environment Court (LEC) has granted 2001 establish a Greenhouse Gas Reduction Scheme. The maximum or protective costs orders (PCO) in accordance with Greenhouse Gas Reduction Scheme establishes State-wide Rule 42.4(1) of the Uniform Civil Procedure Rules to facilitate greenhouse gas reduction targets, and requires individual elec- access to justice in environmental matters. tricity retailers and certain other parties who buy and sell electricity, to meet certain benchmarks. Organisations that fall 92 Emissions Trading and Climate Change within the Greenhouse Gas Reduction Scheme are required to monitor and report GHG emissions. Occasionally, licences to pollute will include conditions that 9.1 What emissions trading schemes are in operation require monitoring. Industry groups also voluntarily monitor in your jurisdiction and how is the emissions trading market developing there? GHG emissions.

On 17 July 2014, the Commonwealth Government repealed 9.3 What is the overall policy approach to climate the existing carbon pricing scheme under the Clean Energy change regulation in your jurisdiction? Act 2011 and replaced it with the ‘Direct Action Plan’. On 24 November 2014, the Australian Parliament passed the Carbon Australia’s approach to climate change policy and regulation has Farming Initiative Amendment Bill 2014, which gave legislative been in a state of flux due the importance of resources to the effect to the Emissions Reduction Fund (ERF), the centrepiece country’s economy. The repeal of the carbon pricing scheme of the Commonwealth Government’s Direct Action Plan. under the Clean Energy Act 2011 marked a shift in the overall The aim of the ERF is to reduce Australia’s emissions five per policy approach to climate change regulation; however, there cent below 2000 levels by 2020 by crediting emissions reduc- has been some progress and the primary objective of Direct tions, purchasing emissions reductions, and safeguarding emis- Action continues to be to reduce carbon emissions. sions reductions. In 2016, Australia ratified the Paris Agreement and the Doha The ERF is administered by the Clean Energy Regulator and Amendment to the Kyoto Protocol. The Commonwealth seeks to provide an incentive for low-cost emissions reductions Government has committed to reduce carbon pollution by five by crediting and purchasing those emissions reductions in the per cent of 2000 levels by 2020. form of Australian carbon credit units (ACCUs) on the basis The main mechanism for achieving this goal is through the of least cost, through reverse auctions or other competitive purchase of carbon abatement from businesses that reduce their tendering processes. emissions below their baseline levels. The central goal of the

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Direct Action Plan is to provide incentives to companies who 11.2 What is the environmental insurance claims reduce their emissions. On this basis, there are no penalties for experience in your jurisdiction? continuing to operate at baseline levels (both actual and baseline emissions are measured using data reported under the National As far as we are aware, claims have been limited. Greenhouse and Energy Reporting Scheme). Where companies emit above baseline levels, financial penalties may be incurred. Certain key activities will have support from the Emissions 122 Updates Reduction Fund, including energy efficiency, land sector abatement, cleaning up waste coal mine gas, cleaning up power stations 12.1 Please provide, in no more than 300 words, a and landfill gas. summary of any new cases, trends and developments in States and Territories have implemented their own climate environment law in your jurisdiction. change policies; for example, NSW and Victoria have Climate Change Policy Frameworks in place to achieve net-zero emissions GHG emissions and mining projects by 2050. In February 2019, the NSW Land and Environment Court delivered the landmark decision in Gloucester Resources Limited v 102 Asbestos Minister for Planning [2019] NSWLEC 7 which held that “down- stream” emissions from burning coal (Scope 3 emissions) must be considered as an impact in determining applications for 10.1 What is the experience of asbestos litigation in your jurisdiction? new open cut coal mines. This decision has been applied by the Independent Planning Commission (IPC) in determining subsequent development applications. Asbestos has been a significant issue in Australia for a number In August 2019, the IPC granted consent to expanding a mine of decades. There has been a large volume of asbestos-related and developing a new mine, subject to a condition that the appli- litigation. A number of specialist tribunals or specialist court cant prepare an Export Management Plan to ensure that any lists have been established to manage these cases; for example, coal exported from Australia is only exported to countries that in NSW the Dust Diseases Tribunal. These typically have are parties to the Paris Agreement or have similar policies for procedures that are designed to deal with the particular diffi- reducing GHG emissions. culties of these claims. Asbestos continues to attract significant The NSW Government has introduced legislation that, if media and policy attention. passed, will remove the requirement for proponents to carry out an assessment of the quantity or impact of Scope 3 emis- 10.2 What are the duties of owners/occupiers of sions arising from the combustion of coal either domestically premises in relation to asbestos on-site? or overseas.

In each State/Territory, there are laws that seek to protect people PFAS contamination from the hazards of asbestos. These typically require identifi- The impacts of per- and poly-fluoroalkyl substances (PFAS) cation of asbestos materials, labelling, risk assessment, control in fire-fighting foam continues to be an important issue. measures (e.g. asbestos management plans) and in some circum- Three class-actions have been commenced against the stances, health monitoring. Commonwealth in different locations in Australia claiming People who work with asbestos products need training, and, that the Commonwealth’s use of aqueous film forming foam in some instances, also an accreditation certification. containing PFAS at defence bases, which has contaminated In some jurisdictions, for example, Queensland, an asbestos surrounding land, was negligent and is a continuing nuisance. audit must be provided to the purchaser in respect of the sale of certain property. China’s National Sword Policy The Chinese Government’s ban on the import of certain recy- clables and waste (known as the China National Sword Policy) 112 Environmental Insurance Liabilities is impacting the Australian recycling industry. The restrictions, which came into force on 1 January 2018, have resulted 11.1 What types of environmental insurance are in stockpiling as processors try to find new markets. In many available in the market, and how big a role does cases, material that was previously recycled is being sent to land- environmental risks insurance play in your jurisdiction? fill. The State and Territory Governments have made funding available to enable local Councils to offset extra costs, but Environmental insurance plays a limited role in Australia. local Councils and processors continue to be under significant Various insurance policies are available in Australia. However, pressure. the market in Australia is not well developed.

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Michael Winram is a leading planning and environment lawyer, with more than 15 years of experience. Michael has particular expertise advising on the regulation and remediation of contaminated land, the removal and handling of hazardous materials and waste, biodiversity conservation, native title, approval pathways and strategies, development applications (including environmental impact statements) and land access issues. Michael regularly appears in the Land & Environment Court, NCAT, the Federal Court and Supreme Court (including as an advocate) on a wide range of environmental and public law issues. Michael advises all levels of government, including Commonwealth State and local government agencies, as well as private sector clients spanning a broad range of sectors. Michael has been recognised in the area of planning and environment Best Lawyers in 2019.

Maddocks Tel: +61 2 9291 6228 Level 27, 123 Pitt Street Email: [email protected] Sydney NSW 2000 URL: www.maddocks.com.au Australia

Patrick Ibbotson is an internationally recognised expert in development and environmental law, having practised in the field since 1988. He is particularly well regarded for his focus on delivering innovative, efficient and practical solutions to clients. Patrick’s extensive experience includes advising on environmental compliance, contaminated land, resources conservation, waste, biodiversity, major project approvals, land access, planning and development and contracting for environmental projects. Patrick advises Commonwealth, State and local government agencies and Australian and international private sector corporations. His experience acting for the public and private sector brings his clients an unparalleled understanding of the multiple perspectives that are often necessary to efficiently resolve and manage infrastructure, development and environmental issues. Patrick is recognised by The Legal 500 Asia Pacific, Chambers Asia- Pacific, Best Lawyers Australia and Doyle’s Guide for Planning & Environment.

Maddocks Tel: +61 2 9291 6169 Level 27, 123 Pitt Street Email: [email protected] Sydney NSW 2000 URL: www.maddocks.com.au Australia

Maddocks provides premium legal services to corporations, businesses strong, sustainable relationships – our longest is now more than 100 years and governments throughout Australia and internationally. We advise old. Our lawyers aim to deliver consistently high standards of service, and clients across the education, government, infrastructure, healthcare and we understand the importance of accessibility, responsiveness and trans- technology sectors, from our Canberra, Melbourne and Sydney offices. parency. Working with us, you’ll enjoy open communication, meaning well- Maddocks is one of the leading environmental law teams in Australia. scoped, appropriately resourced and effectively managed matters. Some of our partners have specialised in environmental law for over 30 www.maddocks.com.au years and are recognised leaders in this field. Our practice covers the entire field of environmental matters, from policy issues on climate change and major infrastructure projects to M&A transactions and operational compliance. We’re committed to our clients. Our service is based on a deep understanding of our clients’ legal requirements in the context of their business objectives. We’re highly regarded for exceptional, practical legal services that genuinely add value. We work collaboratively with our clients to build

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Brazil Brazil

Antonio José L.C. Monteiro

Pinheiro Neto Advogados Mariana Gracioso Barbosa

12 Environmental Policy and its 1.3 To what extent are public authorities required to provide environment-related information to interested Enforcement persons (including members of the public)?

1.1 What is the basis of environmental policy in your Access to information is a fundamental and constitutional jurisdiction and which agencies/bodies administer and right (article 5, XIV, Federal Constitution). Federal Law No. enforce environmental law? 12,527/2011 regulates the administrative procedure through which anyone can request access to public information and Article 225 of the Brazilian Federal Constitution provides the documents to governmental bodies, so long as these do not basis of environmental policy in Brazil, establishing that “all the include classified information. people have the right to an ecologically balanced environment”. The environmental licensing process is generally available to To assure the effectiveness of that right, the Government shall the public. In this regard, CONAMA Resolution No. 9/1987 define protected areas, control production and use of hazardous establishes that enterprises that cause significant environmental substances, promote environmental education, and require impact must hold public hearings during the environmental impact assessment for installation of potentially pollutant activi- licensing procedure, to present the Environmental Impact ties, amongst other actions (article 225, First Paragraph). Report. CONAMA Resolution No. 237/1997 also provides that Federal Law No. 9,638/1981 statutes the Environmental requests for environmental licences must be disclosed to the National Policy, whose objective is preservation, improvement public. Decisions granting or denying environmental licences and repair of environmental quality, to assure socioeconomic shall also be made public by regulatory agencies. development, national security and protection to human quality of life. This law also creates the National Environment System (SISNAMA), which is constituted by: (i) the Environmental 22 Environmental Permits National Council (CONAMA), an advisory and delibera- tive body to assess and propose policy guidelines; (ii) the 2.1 When is an environmental permit required, and may Environmental Ministry, responsible for controlling and coor- environmental permits be transferred from one person to dinating environmental national policy; (iii) executive bodies, another? including the Brazilian Institute for the Environment and Natural Renewable Resources (IBAMA) and the Biodiversity According to Federal Law No. 6,938/81, companies engaged Conservation Institute (ICMBio); and (iv) State and local in potentially polluting activities are subject to environmental agencies, responsible for policy implementation in respective licensing. CONAMA Resolution No. 237/1997 contains jurisdictions. a non-exhaustive list of activities subject to environmental licensing, including mining, mechanic, manufacturing, chem- 1.2 What approach do such agencies/bodies take to ical, and pipeline industries, amongst others. State and local the enforcement of environmental law? regulation may establish further regulation, submitting other enterprises to environmental licensing. Environmental licensing in Brazil contains three steps Environmental agencies take mostly a command-and-control according to the stage of development of the enterprise: (i) approach. Breach of an environmental protection rule leads to Preliminary License; (ii) Installation License; and (iii) Operation the imposition of warnings, fines and interdiction, as well as other License. Pursuant to Federal Law No. 140/2011, licensing is administrative penalties provided for in the applicable law. It may generally subject to State jurisdiction, except for establishments also lead to criminal liability, which consists of the imposition of located in more than one State and other cases subject to specific sanctions that include loss of liberty and restriction of rights. Federal environmental licensing, and establishments that have Governments have started to take a conciliatory approach local environmental impact, which are subject to municipal towards environmental law enforcement. As an example, Federal environmental licensing. Some activities or enterprises can also Decree No. 9,760/2019 establishes that conciliation must be be waived from an environmental licence. stimulated in federal government as a means to solve adminis- Depending on State and local regulation, an environmental trative procedures, and created the Environmental Conciliation licence can be transferred in case of a mere change of ownership Center (NCA), which aims to facilitate agreements in adminis- of the enterprise, as long as no other changes to the enterprise are trative procedures related to environmental infractions. made. This is the case, for example, for the State of São Paulo.

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2.2 What rights are there to appeal against the as environmental and human health risk. Thus, for the purposes decision of an environmental regulator not to grant an of specific duties and controls regarding adequate destination, environmental permit or in respect of the conditions waste is classified as hazardous and non-hazardous waste, waste contained in an environmental permit? from civil construction, or from health services, amongst others.

According to article 5, LV of the Federal Constitution, anyone 3.2 To what extent is a producer of waste allowed is ensured the right to the adversary system and full defence, to store and/or dispose of it on the site where it was with the means and resources inherent to it. Federal Law No. produced? 9,784/1999, which regulates Federal administrative procedures, reaffirms this principle and establishes a general right to appeal Solid waste has different natures, origins and compositions. As from any administrative decision within 10 days. a result, there are specific laws and regulations providing for Deadline to appeal as well as other aspects of the administra- the applicable management, collection, treatment and disposal tive procedure are regulated by specific agencies, both at Federal depending on the waste being disposed of. Waste producers may and State level. As an example, State of Minas Gerais Decree be allowed to temporarily store waste on their sites, depending on No. 47,383/2018 establishes that an administrative appeal may the waste, and as long as applicable safety standards are met and be filed within 30 days to challenge decisions that deny an envi- the respective permits are obtained. Alternatives for final adequate ronmental licence or request to change a condition contained in environmental destination include recycling, composting, gener- an environmental permit. ating energy from waste, and final disposal to landfills, provided that operating standards are met to avoid damage or risks to public 2.3 Is it necessary to conduct environmental audits health and safety, and to minimise adverse environmental impacts. or environmental impact assessments for particularly polluting industries or other installations/projects? 3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it An environmental impact assessment is required for activities to another person for disposal/treatment off-site (e.g. deemed as significantly pollutant, as provided for in article 225, if the transferee/ultimate disposer goes bankrupt/ §1, IV, of the Federal Constitution. disappears)? Article 2 of the CONAMA Resolution No. 1/1986, contains a list of activities deemed as significantly pollutant for the purposes Federal Law No. 12,305/2010 and Federal Decree No. 7,404/2010 of presentation of an Environmental Impact Assessment (EIA) provide for the Brazilian National Policy on Solid Waste. in the course of the respective licensing procedure, which According to this regulation, commercial and industrial gener- includes roads, railways, ports, airports, gas and oil pipelines, ators of solid waste are responsible for arranging the proper transmission lines over 230kV, hydropower plants over 10MW, storage, transportation and final disposal of the waste generated and landfills. by their activities, and may be held liable (in the administrative, Other laws may contain specific requirements related to EIA/ criminal and civil spheres) in case of inadequate management of RIMA and other environmental studies. As an example, Minas such waste by third parties. In accordance with article 14, §1 of Gerais State Law No. 23291/2019 foresees specific licensing Federal Law No. 6,938/1981, contamination of soil or water on rules and standards to ensure stability of dams, including urban or rural property imposes on the polluter the obligation to specific criteria for obtaining the respective Environmental remediate all damages directly or indirectly caused to the envi- Impact Report. ronment and third parties by its activities, or to pay an indemnification in the event reparation is not possible. 2.4 What enforcement powers do environmental regulators have in connection with the violation of 3.4 To what extent do waste producers have permits? obligations regarding the take-back and recovery of their waste? Pursuant to Federal Decree No. 6,514/2008, environmental regulators, upon violation of permits and provided that the required Federal Law No. 12,305/2010 provides for “take-back” obli- administrative proceedings are followed, may suspend or cancel gations, which impose that all involved in the products’ life the respective licence, as well as apply any of the sanctions provided cycle (manufacturers, importers, distributors, sellers, etc.) share for in this decree, which includes embargo, interdiction, suspen- responsibility for the management of the solid waste, through the sion of activity, and fines from BRL 500 to BRL 10 million. return of the products and packs after their use by consumers. These obligations are applicable for specific types of waste, such 32 Waste as pesticides, batteries, tires, lubricant oils, fluorescent lamps, and electronic products. The law defined three different legal instruments that can be used to implement “take-back” systems: 3.1 How is waste defined and do certain categories of direct regulation from the government; sectoral agreements; waste involve additional duties or controls? or terms of commitment. “Sectoral agreements” are acts of a contractual nature, signed between the Government and manu- Federal Law No. 12,305/2010, which provides for the National facturers, importers, distributors or traders, aiming at the imple- Solid Waste Policy, defines waste as any material, substance, or mentation of shared responsibility for the life cycle of products. object resulting from human activity that, after all treatment According to article 18 of Decree No. 7,404/2010, the reverse and recovery efforts, can only be submitted to final disposal. logistics implementation procedure through a sectoral agreement Classification of waste is defined by technical rules as well as may be initiated by the Government or by the manufacturers, specific regulation. It includes the process and activity from importers, distributors or traders of the products and packaging. which it originated, its components and characteristics, as well

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the assets also assumes the environmental liabilities related to 42 Liabilities the former. Warnings, fines and requirements imposed by the environment control agency, as well as any public civil actions 4.1 What types of liabilities can arise where there is a filed by the Public Prosecutor’s Office seeking prevention and breach of environmental laws and/or permits, and what remediation of damages caused to the environment or third defences are typically available? parties, as a rule, will be assumed by the legal entity acquiring the assets or that assumes the company’s operations. All the Non-compliance with environmental rules may subject the environmental debts, as a rule, would be transferred. In prin- violator to three different levels of environmental liability, ciple, criminal liability is not transferred with the acquisition. which run independently and concomitantly: (a) administra- However, if the irregular practice continues, the individuals tive liability, arising out of the breach of an environmental involved may be subject to the penalties set forth in Federal Law protection rule, which consists of the imposition of warnings, No. 9,605/1998. fines and interdiction, as well as other administrative penal- An asset purchase, on the other hand, could prevent the buyer, ties provided for in applicable law, by oversight and monitoring on a certain level and depending on peculiarities of the specific bodies; (b) criminal liability, which consists of the imposition case, from assuming administrative and criminal liability for the of sanctions that include loss of liberty and restriction of rights; acts imputed to the seller, especially if the seller remains as an and (c) civil liability, which consists of an obligation to repair or operational company or with an active tax number. In addition, remedy damages to the environment, or to compensate, in the an asset purchase does not automatically insert the purchaser event that such reparation or remediation is not possible. into the Defendants’ level of lawsuits in due course. And, as a When applicable, an absence of link of causation is a defence rule, the buyer does not assume all the environmental liability of available to all three levels of liability. Other specific defences are the seller’s legal entity, but only of the asset itself. applicable to each one of the liabilities, as, for example, absence of fault in the case of administrative/criminal liability, or proce- 4.5 To what extent may lenders be liable for dural aspects of administrative infractions, amongst others. environmental wrongdoing and/or remediation costs?

4.2 Can an operator be liable for environmental Brazil holds sparse environmental provisions, and court prec- damage notwithstanding that the polluting activity is edents enlarge the concept of the indirect polluter, thereby operated within permit limits? allowing the concept that financial institutions could be liable for financed projects (article 3 and 14 Federal Law No. Despite being duly licensed, a company and/or an individual 6,938/1981). In this case, under certain circumstances, finan- may be held responsible to recover areas or indemnify damages cial institutions could theoretically be held responsible for civil caused to the environment or to third parties. This is because of liability and would specially compensate or repair any environ- the strict liability principle set forth in article 14 of the Brazilian mental damage in connection with the project financed. Environmental Policy, which establishes liability without fault, Brazil Central Bank Resolution No. 4,327/2014 establishes i.e. the mere evidence of causal relation between the damage guidelines for Social and Environmental Responsibility Policy and the action or inaction of the polluter is enough to hold a (PRSA) to be implemented by financial institutions and other company and/or an individual liable, therefore, as this principle institutions alike. The Resolution provides that financial insti- is not based on the proving aspect of the fault, it is about factors tutions must: (i) implement actions under the PRSA; (ii) monitor of negligence or misconduct of intent. compliance with the actions established in the PRSA; (iii) evaluate the effectiveness of the implemented actions; (iv) verify 4.3 Can directors and officers of corporations attract the adequacy of the social and environmental risk management personal liabilities for environmental wrongdoing, and established in the PRSA; and (v) identify any deficiencies in the to what extent may they get insurance or rely on other implementation of such actions. indemnity protection in respect of such liabilities? 52 Contaminated Land Criminal liability allocation can reach partners, directors, officers, managers, technical advisors (whether employees or non-employees), if there is proof of active contribution to the damage or 5.1 What is the approach to liability for contamination (including historic contamination) of soil or nothing done to avoid it, even though they could or should have groundwater? done so. The manager of a company can neither be considered criminally liable due to their position held in the company nor for criminal actions performed by employees or by other managers, Liability for any soil and/or groundwater contamination may reach which they were not aware of and could not have avoided. As for both the owner and/or possessor of the respective site, regard- civil environmental liability, a different regime applies due to its less of fault, as well as the agent that effectively caused it. In the strict nature. Still, proof of causation between the damage and the civil sphere, liability leads to the obligation to indemnify or repair act or omission of the polluter is required. Pursuant to article 14 of damages caused to the environment and third parties affected by the National Environmental Policy, environmental civil liability is the contamination, whereas, in the administrative sphere, liability strict, which means that it does not require evidence of wrongdoing. leads to the obligation to undertake environmental remediation. Criminal liability is also applicable to the agent that caused contamination, but is subject to demonstration of fault. 4.4 What are the different implications from an Several States have enacted regulation over contaminated environmental liability perspective of a share sale on the sites. As an example, Section 13 of the State of São Paulo Law one hand and an asset purchase on the other? No. 13,577/2009 expressly establishes the following entities as jointly liable for preventing, identifying and remediating a When a company is sold (share sale), the legal entity acquiring contaminated site: (i) the causing agent of contamination and

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its successors; (ii) the owner of the site; (iii) the tenant; (iv) the entities like autarchies, public foundations and enterprises are enti- effective possessor; and (v) whoever benefits directly or indi- tled (have stand) to file public civil actions seeking to redress moral rectly from the contamination. and material damages to: the environment; consumers; historical, artistic and touristic assets; and public and social heritage, as well as any other collective, diffuse or homogeneous individual rights. 5.2 How is liability allocated where more than one person is responsible for the contamination? 62 Powers of Regulators For contaminated sites with more than one causing agent, agencies can seek the remediation from any and/or all of the respon- 6.1 What powers do environmental regulators have to sible persons (joint and several liability). In cases where more require production of documents, take samples, conduct than one person or company is involved with the remediation, a site inspections, interview employees, etc.? common criteria to allocate liability is the amount and characteristics of the substances disposed of on the site by each one of the Environmental regulators hold police power so that, when causing agents, as article 944 of the Civil Code limits liability to inspecting a facility to verify compliance with environmental regu- the extent of the damage caused. Nonetheless, the possibility of lation, they may take samples, interview employees, and collect GPS liability allocation does not prevent agencies from seeking reme- data, amongst other things. Measures undertaken during inspec- diation from only one causing agent. In this case, the person tion must be described in a report to be included in the respec- responding to the contamination can file a judicial procedure tive administrative proceeding and, if applicable, attached to the against one, some or all responsible people, who are jointly respective administrative infraction notice. Article 77 of Federal and severally liable for the contamination. Superior Court of Decree No. 6,514/2008 considers that hindering or impeding Justice’s Guiding Precedent No. 623 establishes that environ- environmental regulators from carrying out inspection activities mental obligations are propter rem, which therefore charges them is an administrative infraction, subject to fines up to BRL 100,000. to the current or previous owner, at the choice of the creditor. 72 Reporting / Disclosure Obligations 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 7.1 If pollution is found on a site, or discovered to be a third party challenge the agreement? migrating off-site, must it be disclosed to an environmental regulator or potentially affected third parties? In case an agreement is executed for implementation of an environmental remediation programme, the respective regulator can There is no Federal law imposing the obligation to communi- only require additional works in case of further disclosure of envi- cate soil contamination. However, spontaneous communica- ronmental damages and/or contaminations that were unknown tion is encouraged in order to: (i) promote remediation in its or occurred after the agreement was signed. Furthermore, an early stages; (ii) prevent the environmental bodies from consid- agreement executed with environmental agencies is not binding to ering silence as an aggravating factor, which leads to an increase third parties, which can challenge it in court, as long as the agree- in penalties; and (iii) mitigate criminal liability. There are States ment does not comply with applicable legislation, for example. that issued laws foreseeing communication as an obligation, for instance, São Paulo State Law No. 13,577/2008, article 15.

5.4 Does a person have a private right of action to seek contribution from a previous owner or occupier of 7.2 When and under what circumstances does a person contaminated land when that owner caused, in whole or have an affirmative obligation to investigate land for in part, contamination; and to what extent is it possible contamination? for a polluter to transfer the risk of contaminated land liability to a purchaser? An affirmative obligation to investigate land arises: i. periodically, through monitoring, for companies that A person has a private right of action to seek contribution from develop activities which may lead to soil or water contami- the previous owner or occupier to the extent that this party nation (article 14 of CONAMA Resolution No. 420/2009); caused the contamination. Furthermore, parties to an agree- ii. if the environmental body requires it; ment may establish how the costs associated with remediating iii. if the property is included in a contaminated area under an environmental site will be allocated. However, this contrac- investigation in São Paulo State (State Law No. 13,577/2009); tual provision does not prevent environmental agencies, prosecu- iv. yearly, by companies with high polluting potential, through tors and third parties from seeking remediation and undertaking environmental due diligence in Rio de Janeiro State (State clean-up costs from any of the potentially liable persons, regard- Law No. 1898/1991); less of the ordering and of the cost allocation established in the v. if there are potentially polluting activities when requesting contract. In that case, one would be entitled to redress damages the environmental licence in Rio de Janeiro State against the other party in accordance with contractual provision. (CONEMA Resolution No. 44/2012); and vi. in other situations provided for in State and local regulation. 5.5 Does the government have authority to obtain from a polluter, monetary damages for aesthetic harms to 7.3 To what extent is it necessary to disclose public assets, e.g. rivers? environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover The Public Prosecutor’s Office, the Public Attorney’s Office, transactions? Non-Governmental Organizations, federative entities (including the respective governmental agencies and secretariats) and public Only if the purchase agreement certifies that all the

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environmental liabilities have been disclosed, otherwise it is up not hold jurisdiction over pollution caused by a foreign affil- to the buyer to conduct a due diligence, a site assessment and iate abroad. even an environmental audit. 8.4 Are there any laws to protect “whistle-blowers” who 82 General report environmental violations/matters?

8.1 Is it possible to use an environmental indemnity There are no specific laws to protect “whistle-blowers” who to limit exposure for actual or potential environment- report environmental violations. However, there are general related liabilities, and does making a payment to another programmes to protect victims and witnesses who are collab- person under an indemnity in respect of a matter (e.g. orating in police investigations or criminal processes called in remediation) discharge the indemnifier’s potential both Federal and State levels. liability for that matter?

8.5 Are group or “class” actions available for pursuing Parties to an agreement can use environmental indemnity to environmental claims, and are penal or exemplary limit exposure for actual or potential environment-related liabil- damages available? ities; however, this would not be enforceable before the authorities. This means that environmental liability allocation clauses may only govern the relation between the contracting parties. Brazilian law provides for three types of collective lawsuits Public authorities and third parties are not limited by this legal that can address environmental claims: (i) Civil Public Actions, transaction. which can be filed by the Public Prosecutor’s Office, the Public Attorney’s Office, Non-Governmental Organizations, federative entities (including the respective governmental agencies 8.2 Is it possible to shelter environmental liabilities off and secretariats) and public entities like autarchies, public foun- balance sheet, and can a company be dissolved in order dations and enterprises; (ii) Citizens’ lawsuits, which are specific to escape environmental liabilities? suits to be filed by a person or a group of people to request cancellation of administrative acts deemed to have a negative Pursuant to Deliberation 594/2009, issued by the Securities impact on public assets and goods, public morality, environ- and Exchange Commission of Brazil, probable losses must be ment, as well as cultural and historical heritage; and (iii) ordinary disclosed on the balance sheets of openly traded companies. lawsuits filed by civil associations, including claims for indemni- Dissolution of a company to escape environmental liabilities fication for a certain group of people (i.e. fishermen that might can be deemed as fraud and lead to piercing of the corporate have lost their source of income) or claims arising from environ- veil. The very basic requisites for the court to disregard the mental impacts. Individuals have no standing to request envi- legal entity of a company and, therefore, consider its managers ronmental remediation as part of a collective lawsuit. Brazilian and shareholders personally liable for the company’s debts are: Law does not provide for punitive damages. (i) that the company does not have sufficient assets to meet its obligations; and (ii) that the situation results from fraud or abuse 8.6 Do individuals or public interest groups benefit in the use of the company by its shareholders or managers to from any exemption from liability to pay costs when hinder the company’s debts execution. pursuing environmental litigation?

8.3 Can a person who holds shares in a company According to Federal Law No. 7,347/1985, plaintiffs of public be held liable for breaches of environmental law and/ civil actions are exempt from the burden of defeat and respec- or pollution caused by the company, and can a parent tive suit fees, except in the case of demonstrated bad faith. company be sued in its national court for pollution caused by a foreign subsidiary/affiliate? Furthermore, the Brazilian Civil Procedure Code, established by Federal Law No. 13,105/2015, provides for legal aid and exemption of suit fees, in the case of insufficient funds and resources In theory, shareholders can be held liable for environmental to pay procedural costs and court fees, among others. damages in case of a demonstrated link of causation between the damage and their act or omission. Courts differ on how to interpret and apply the link of causation for the purposes of civil 92 Emissions Trading and Climate Change liability. Some precedents state that “merely secondary participation, as mentioned in the complaint, cannot be deemed a chain 9.1 What emissions trading schemes are in operation of causation”. Others apply a broader definition. The Superior in your jurisdiction and how is the emissions trading Court of Justice Herman Benjamin has defined polluters as market developing there? those “who do, those who do not act when they should, those who do not care, those who are silent when they should report, There are no governmental emissions trading schemes currently those who finance the ones who act, and those who benefit operational in Brazil. However, the Federal Government when others do it”. Shareholders may also be held liable in the is currently working on the implementation of the National civil sphere with application of article 4 of Law No. 9,605/98, Biofuels Policy, also known as RenovaBio, established by Federal which provides that “the corporate veil may be pierced when- Law No. 13,576/2017. RenovaBio’s purpose is promoting the ever the legal identity is an obstacle to the redress of damage expansion of biofuels on the energy matrix and the reduction of caused to environmental quality”. greenhouse gases emissions. It operates by setting annual decar- According to Federal Decree No. 4,657/1942, Brazilian bonisation goals for the fuel sector, in order to encourage an courts hold jurisdiction over lawsuits related to: (i) defendants increase in the production and participation of biofuels on the who reside in Brazil; (ii) obligations to be performed in Brazil; energy matrix of the country. Resolution CNPE No. 15/2019 or (iii) real properties located in the country. Therefore, it would sets national goals of emissions reductions for the energy matrix

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for the 2019–2029 period, which will be unfolded into compul- use, which poses a conflict between Federal Law No. 9,055/1995 sory individual goals to the fuel distributors, according to their (allows) versus Labor International Organization Convention participation in the fossil fuel market (ANP Resolution No. (OIT) No. 162 (forbids); b) States and Municipalities jurisdic- 791/2019). To demonstrate compliance with mandatory indi- tions to rule on the use/ban of asbestos in full or in part; and c) vidual targets, distributors can purchase Decarbonisation compensation for diseases allegedly caused by the use of asbestos. Credits (CBIO), derived from the certification of the biofuels Several lawsuits have been brought by prosecutors, workers production process based on the respective efficiency levels associations and individual workers before Labour Courts, achieved in relation to their emissions. This scheme is not yet not only to question asbestos legality, but also occupational operational. conditions at work sites and to claim collective and/or individual damages from companies, amongst other claims. On 29 November 2017, based on a public civil action that challenged 9.2 Aside from the emissions trading schemes mentioned in question 9.1 above, is there any other the legality of the substance, the Supreme Court decided to fully requirement to monitor and report greenhouse gas ban chrysotile asbestos in Brazil. This decision became enforce- emissions? able only in February 2019. A motion for clarification to discuss the decision’s effects is still pending. Pursuant to CONAMA Resolution No. 382/2006, stationary sources of air pollution must implement equipment to control 10.2 What are the duties of owners/occupiers of atmospheric emissions to monitor compliance with limits set premises in relation to asbestos on-site? forth in specific regulation applicable to each type of activity. States can also enforce specific emission standards and mecha- Working conditions in premises with asbestos must follow specific nisms to control atmospheric emissions from stationary sources, health, safety and environmental protection rules, established by as is the case of the State of São Paulo, which provides for the Regulatory Norm No. 15, Appendix 12 of Decree 3,214/78. creation of Plans for Atmospheric Emissions Control and Plans for Reducing Atmospheric Emissions from Stationary Sources 112 Environmental Insurance Liabilities depending on the regional air quality. The State of Paraná Environmental Secretariat issued Resolution No. 16, which creates a Self-Monitoring Program of Air Emissions and estab- 11.1 What types of environmental insurance are lishes standards for atmospheric emissions. available in the market, and how big a role does environmental risks insurance play in your jurisdiction?

9.3 What is the overall policy approach to climate Insurance covers environmental damages caused by sudden change regulation in your jurisdiction? accidents rather than continuing, long-lasting damages, such as those caused by contaminations. And although the Climate Change National Policy was established by Federal Environmental National Policy establishes environmental Law No. 12,187/2009 and regulated by Federal Decree No. insurance as one of its policy tools, this is not yet mandatory. 9,578/2018. It establishes a national voluntary commitment to Federal Bill No. 10,494/2018, under discussion in the House of reduce greenhouse gas emissions between 36.1% to 38.9% until Representatives, proposes that the issuance of an environmental 2020, considering the Brazilian Inventory of Anthropogenic licence be conditioned to contracting of an environmental insur- Emissions and Removals of Greenhouse Gases, dated 2010. ance in the case of enterprises subject to Environmental Impact The policy provides for the establishment of five action plans Study and Environmental Impact Report. for climate change mitigation and adaptation: prevention and The State of São Paulo Law No. 13,577/2008 and Decree No. control of deforestation in the Amazon; prevention and control 59,263/2013 also consider the environmental insurance as one of fires and deforestation in the Brazilian savannah; energy of the tools for deployment of the system that protects the soil expansion; mitigation and adaptation to climate change for quality and the management of contaminated areas. However, consolidating a transition towards a low carbon agriculture; and this tool is not available on the market. to reduce carbon emissions from the steel industry. These plans should be reviewed by the government every two years, which has not yet been done. 11.2 What is the environmental insurance claims experience in your jurisdiction? Some State and local governments have also enacted their respective climate change policies, as is the case with the City of São Paulo, which is working on an agenda for mitiga- Our experience is mostly related to major environmental acci- tion and adaptation. On 29 November 2019, the State of São dents that occurred in recent years, in which civil and environ- Paulo Environmental Agency released a State Environmental mental aspects were discussed but where the insurance did not Agreement for reducing greenhouse gas emissions and supporting play a major role in covering the liabilities. sustainable actions. Fifty-five companies have adhered to the agreement. 122 Updates

102 Asbestos 12.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in 10.1 What is the experience of asbestos litigation in environment law in your jurisdiction. your jurisdiction? New environmental regulation in Brazil is enacted with recur- Discussions over asbestos use and its health effects on humans are ring frequency. During 2019, the Brazilian Supreme Court ongoing and highly controversial in Brazil. Questions commonly ruled on the constitutionality of main articles of Law No. posed to the Judiciary are: a) legality of chrysotile (white asbestos) 12,651/2012 (“New Forest Code”), which regulates the use of

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land and forestry protection. Measures involving the Rural In 2019, a relevant decision was granted by the Superior Environmental Registry, created by Law No. 12,651/2012, is Court of Justice, reckoning the subjective nature of the environ- under implementation at State and Federal levels. Such registry mental liability in the administrative sphere (EResp 1,318,051). provides an important tool for land use management, for it According to the decision, administrative penalties, such as fines, gathers georeferenced and ownership/possession information, can be imposed solely against the transgressor, provided that as well as compliance with regulation regarding Legal Reserve culpability elements can be asserted. It is also worth mentioning and Permanent Preservation Areas. that under analysis of Brazilian Congress is a bill to expedite envi- The mining sector has also been under increasing regulation ronmental licensing processes in Brazil of activities that can cause in relation to an environmental perspective. Ordinance No. 4 impacts to the environmental or use natural resources. was enacted in 2019 by the Brazilian Mining Agency, forbidding raising of dams through the upstream method and ordering the decommissioning or de-characterisation of such type of dams. In addition to that, Federal Decree No. 9,760/2019 created the Environmental Conciliation Center (NCA), which aims to facilitate agreements in administrative procedures related to environmental infractions.

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Antonio José L.C. Monteiro graduated in Law from the University of São Paulo, 1982, with a specialisation in Private Law. He was a visiting scholar at the Environmental Law Course taught by the University of Illinois, Urbana-Champaign, USA, in 1988. He has been a Partner of the environmental area of the PNA Office since 1992; a member of the Environment Committee of the Infrastructure, Logistics and Sustainable Development Commission of the Brazilian Bar Association, São Paulo Sectional; and a member of the Information Council on Biotechnology – CIB. He has been recommended as “leading lawyer” in the field of environmental law since 2010 by Chambers & Partners magazine and others. He has been working in the environmental area for more than 25 years, providing legal advice to Brazilian and foreign companies and financial institutions in the advisory and litigation areas. He has experience in environmental audits involving the acquisition, incorporation and spin-off of companies, and in negotiations with the Public Prosecutor Office, environmental agencies and companies.

Pinheiro Neto Advogados Tel: +55 11 3247 8551 Rua Hungria 1.100 Email: [email protected] São Paulo URL: www.pinheironeto.com.br Brazil

Mariana Gracioso Barbosa has comprehensive knowledge and experience in dealing with Environmental, Human Rights and Public Law. In recent years, she has been involved in high complexity litigation and governance matters involving multi-party and multi-jurisdiction social and environmental matters. She has also advised clients on several Environmental and Regulatory questions, including socioenvironmental compliance and liability in supply chain, use of water resources, land use, licensing and development of new technologies for urban mobility and logistics. Mariana has also taken part in initiatives to support diversity and gender equality. As an active member of corporate social responsibility and pro bono activities, Mariana has acted in projects to enhance climate adaptation and resilience efforts, as well as to advance universal sanitation.

Pinheiro Neto Advogados Tel: +55 11 3247 8417 Rua Hungria 1.100 Email: [email protected] São Paulo URL: www.pinheironeto.com.br Brazil

Pinheiro Neto Advogados is an independent, Brazilian, full-service firm on-the-job training, but also by means of the highly structured Pinheiro specialising in multi-disciplinary deals and in translating the Brazilian legal Neto Professional Development Program, the first of its kind in Brazil. environment for the benefit of local and foreign clients. www.pinheironeto.com.br Founded in 1942, and with clients in almost 60 countries, the firm has grown organically, and developed a distinctive, tight-knit culture, with a low associate-to-partner ratio. Its unique, democratic governance structure promotes transparency and consensus-building among the partners. With a focus on innovation, the firm has kept its competitive edge throughout the years and is widely hailed as an institution of the Brazilian legal market. In order to maintain its status as a valued strategic partner to its clients, the firm invests heavily in professional development, not only through strong

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Canada Canada

Jonathan W. Kahn

Blake, Cassels & Graydon LLP Anne-Catherine Boucher

12 Environmental Policy and its established which contain information on a variety of matters such as proposed regulations and approvals, permitted activi- Enforcement ties, environmental assessments in progress and enforcement actions. 1.1 What is the basis of environmental policy in your Any person may request information from public authori- jurisdiction and which agencies/bodies administer and ties through access to information legislation at the federal and enforce environmental law? provincial levels. However, there are exceptions built into the right of access in each statute, such as access to some confiden- Jurisdiction to legislate with respect to environmental matters in tial technical, commercial, or personal information. Canada is found at each of the federal, provincial and municipal Canada’s courts have determined that government actions or levels. The Constitution Act, 1867 allocates responsibility for different decisions that may affect Indigenous or Treaty rights, impose subject areas to the federal government or the provinces. However, upon the government a duty to consult and accommodate responsibility for environmental matters is not specifically assigned affected groups. In addition, most environmental legislation to either the federal government or the provinces and the courts imposes broad consultation obligations on project proponents. have determined that it is a shared, joint area of responsibility. The provinces have jurisdiction over property and civil rights 22 Environmental Permits and matters of a local or private nature and, therefore, much of the legislation governing environmental issues is enacted at the 2.1 When is an environmental permit required, and may provincial level. The federal government retains jurisdiction over environmental permits be transferred from one person to fisheries, navigation, oceans, nuclear energy, as well as matters another? (such as transportation of dangerous goods and interprovincial undertakings such as pipelines and railways) which cross provin- Environmental permits or approvals are generally required for cial or international boundaries. The federal government has also a broad range of activities such as any discharge of contami- legislated in the area of toxic substances. nants into air or water, water taking, waste management activ- Environmental requirements and regulations are often also ities, as well as some specific undertakings such as mines and found in municipal by-laws. energy facilities. Environment and Climate Change Canada and the various The ability to transfer a permit from one person to another provincial Ministries of the Environment are responsible for the will depend on the jurisdiction which issued the permit and the development of environmental policy and the enforcement of specific type of permit. Certain permits may be issued by simply environmental legislation and regulations. providing notice to the regulator while other cases require the prior consent of the regulator to transfer the permits. Certain 1.2 What approach do such agencies/bodies take to other permits are non-transferable. the enforcement of environmental law?

2.2 What rights are there to appeal against the Environmental regulators at the federal and provincial levels have decision of an environmental regulator not to grant an broad regulation-making and approval-granting powers. In cases environmental permit or in respect of the conditions of failure to comply with laws or approvals, or threats to the envi- contained in an environmental permit? ronment, the regulators have broad order-making powers. While administrative penalties are an option for regulators, breaches of Most environmental statutes provide a statutory right to appeal environmental laws tend to be addressed by way of prosecution a decision to a tribunal, board or court, or to a government and the imposition of fines or prison sentences upon conviction. minister or cabinet. Decisions on whether to grant an environmental permit, or challenges to permit conditions, may generally 1.3 To what extent are public authorities required to be appealed by the applicant and other persons affected by the provide environment-related information to interested decision, in certain cases subject to obtaining leave. persons (including members of the public)?

In certain Canadian jurisdictions, public registries have been

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2.3 Is it necessary to conduct environmental audits implement recovery and reclamation programmes for products or environmental impact assessments for particularly of the same type as those they distribute. It is generally possible polluting industries or other installations/projects? for distributors to meet their obligations by joining an association that implements recovery and reclamation programmes for The requirement to carry out regular environmental audits may the same products. The costs related to the recovery and recla- be imposed as a condition to an environmental permit for certain mation of a product must be internalised in the price asked for polluting industries. Environmental impact assessment review the product at the point of sale. processes are generally triggered at the federal and provincial Blue box stewardship regimes are also in place in a number levels for major installations/projects in order to obtain project of provinces, which require distributors of paper products, approval and often involve public hearings. containers and packaging to fund the cost of municipal curb- side recycling programmes.

2.4 What enforcement powers do environmental 42 Liabilities regulators have in connection with the violation of permits? 4.1 What types of liabilities can arise where there is a breach of environmental laws and/or permits, and what Environmental regulators are generally granted a range of defences are typically available? enforcement powers and discretion as to the type of enforcement powers that are most appropriate in a particular case. The violation of a permit may lead to a warning or directive Liability under environmental legislation can be regulatory to comply, administrative monetary penalties, prosecution, or a (quasi-criminal), administrative or civil. stop or control order. In most cases, a breach of environmental legislation constitutes a regulatory offence. Such offences are quasi-criminal in nature and do not require proof of intent to commit an offence (i.e. strict 32 Waste liability offences). Such a breach may lead to prosecution and to fines and imprisonment upon conviction. The fines can be quite 3.1 How is waste defined and do certain categories of significant and minimum fines apply to certain offences. waste involve additional duties or controls? Due diligence is the most common defence in the case of prosecution for an environmental offence. A defendant must Waste is defined through provincial legislation or regulations in establish that he or she took all reasonable steps to prevent the a variety of ways based on the type of waste being regulated, but commission of the offence. What constitutes reasonable steps the definitions tend to be quite broad and can include any object in a particular case will depend on the circumstances and will that is discarded or that the holder intends to discard, as well as be determined by the court on a case-by-case basis, but generally process by-products and residues. requires at a minimum that an effective environmental manage- Generally, waste regulation is divided between non-haz- ment system be in place to prevent environmental harm. ardous waste (municipal or domestic waste) and hazardous waste In addition, environmental regulators at the federal and (industrial, chemical, corrosive, toxic, pathological, radioactive provincial levels generally have a number of additional adminis- or PCB waste), which is more heavily regulated. trative enforcement powers to respond to breaches of environmental law or of a permit. A breach of environmental law or of a permit may, for instance, lead to a warning, a directive to 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? comply, stop or control orders, or civil penalties. Finally, where a breach of environmental law causes damage to property, there is significant potential for civil liability under Restrictions on the on-site storage of waste will depend on the common law, under the heads of action of private nuisance, the type of waste being stored and the jurisdiction. Storage or negligence, trespass and strict liability. Some provincial legisla- generation of waste above prescribed thresholds may require a tion also creates statutory causes of action for clean-up costs in permit or authorisation. Disposal of waste may only occur at the case of spills. approved waste disposal sites.

4.2 Can an operator be liable for environmental 3.3 Do producers of waste retain any residual liability damage notwithstanding that the polluting activity is in respect of the waste where they have transferred it to operated within permit limits? another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/disappears)? Environmental statutes prohibit the discharge of contaminants into the environment that causes or may cause an adverse effect. Provided that waste is managed, shipped and disposed of in A person may be prosecuted for causing environmental damage accordance with regulatory requirements, the generator typi- notwithstanding compliance with permit conditions. There can cally does not retain liability once title to the waste is transferred also be civil liability under tort law even where compliance with to a third party for off-site treatment or disposal in Canada. permit limits would not be a defence.

3.4 To what extent do waste producers have obligations 4.3 Can directors and officers of corporations attract regarding the take-back and recovery of their waste? personal liabilities for environmental wrongdoing, and to what extent may they get insurance or rely on other Most provinces have adopted extended producer responsi- indemnity protection in respect of such liabilities? bility regimes which require distributors of certain products (used oils, paint, tyres, electronic products, batteries, etc.) to Environmental statutes in Canada impose personal liability on

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directors and officers of corporations. For instance, under the may, in certain cases, be made against a person or company that Canadian Environmental Protection Act, 1999, when a corporation was not responsible for the original source of contamination or commits an offence under the Act, any officer, director or agent was not aware of the contamination at the time of the purchase of the corporation who directed, authorised, assented to, acqui- of the property. Directors and parent companies may also be esced or participated in the commission of the offence may face exposed to liability. liability. Liability for historic environmental damage can also be Directors and officers may also be held liable if they knew or imposed on a current or purchasing owner or operator at ought to have known that the corporation was in contravention common law in the case of a suit brought by another landowner of legislation even if they did not actively participate. In certain whose property has been contaminated by the migration of provinces, directors and officers have a positive duty to take all contamination. reasonable care to prevent the corporation from committing an offence. 5.2 How is liability allocated where more than one Directors and officers may also be personally subject to person is responsible for the contamination? clean-up or preventative orders. Such orders are a particular risk in the case of bankruptcy or insolvency. Directors and officers are generally able to obtain insurance, Most Canadian jurisdictions have adopted a joint and several though the policy must be carefully reviewed to ensure that approach to liability for remediation of contaminated land, environmental matters are covered. Certain statutes relating to where a party considered responsible under the legislation may business corporations prohibit the indemnification of directors be held responsible for 100% of the remediation costs, irrespec- and officers in the case of criminal or administrative actions tive of its role in causing the contamination. Such party must unless the individual had reasonable grounds to believe that his then turn to the civil courts to recover any amount exceeding or her conduct was lawful. its contribution to the contamination. A few jurisdictions have adopted statutory mechanisms for allocating liability among responsible persons. 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? 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 In the context of a share deal, liability for acts of the corpora- a third party challenge the agreement? tion, including prosecution for violations of environmental laws prior to the effective date of the transaction, carry forward and When remediation is required, land must be decontaminated remain with the corporation. Liability does not flow to the new below regulatory limit values for substances considered contam- operating entity in the case of an asset deal. The purchaser of inants, which vary based on the use of the land and surrounding real property, however, could be liable for historic contamina- environment receptors. Risk assessments are permitted in tion. In addition, the issue of permit transfer referred to above some circumstances. While there have been cases of remedia- tends to be more of an issue in asset deals. tion being “re-opened”, some provinces have built protections into the regulatory scheme to provide a measure of protection 4.5 To what extent may lenders be liable for against that risk. environmental wrongdoing and/or remediation costs?

5.4 Does a person have a private right of action to Lenders can be exposed to environment liability if they directed, seek contribution from a previous owner or occupier of acquiesced or participated in the commission of an offence. contaminated land when that owner caused, in whole or Lenders may also be exposed to environmental clean-up orders in part, contamination; and to what extent is it possible if they have de facto management and control of land. Certain for a polluter to transfer the risk of contaminated land statutory protections against regulatory orders are available for liability to a purchaser? lenders, receivers and trustees in bankruptcy. Clean-up costs incurred by a party under a regulatory scheme 52 Contaminated Land are generally without prejudice to recovery of the remediation costs incurred from contributing parties. The allocation of 5.1 What is the approach to liability for contamination liability between buyer and seller will generally be a matter of (including historic contamination) of soil or contract. However, that will not insulate the seller from civil or groundwater? regulatory liability though it could, depending on the contract, give rise to a right of indemnification. While there is some variation from province to province, potential liability for clean-up or remediation of historic contamina- 5.5 Does the government have authority to obtain from tion can generally attach to current or past owners, occupiers, a polluter, monetary damages for aesthetic harms to those that have had management or control over a contaminated public assets, e.g. rivers? property, or those who caused or contributed to a discharge or spill into the environment. Environmental regulators generally The Supreme Court of Canada has recognised in theory the have broad powers with respect to clean-up of contaminated right of the Crown to seek monetary damages for the loss of land and can issue orders to characterise potentially contami- public resources caused by an environmental offender, which nated land, carry out full remediation, and monitor or reimburse could include damages for aesthetic harms but the recovery of the regulator for costs to carry out remediation work. The order these types of damages has not yet been tested by the courts.

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8.3 Can a person who holds shares in a company 7.1 If pollution is found on a site, or discovered be held liable for breaches of environmental law and/ to be migrating off-site, must it be disclosed to an or pollution caused by the company, and can a parent environmental regulator or potentially affected third company be sued in its national court for pollution parties? caused by a foreign subsidiary/affiliate?

Environmental statutes generally require that the regulator Subject to circumstances permitting a lifting of the corporate immediately be notified in the case of a discharge of contami- veil, shareholders will generally only be held liable for breaches nants out of the normal course of events (i.e. a spill) that is likely of environmental law to the extent they acquiesced, directed, to cause an adverse environmental impact. influenced or participated in the commission of an offence or Requirements to report the discovery of historical contamination exercised control over the contaminated site or pollutant. and of risks of off-site migration vary from province to province. An appellate-level decision in Ontario held a principal of a corporation liable along with the corporation on a joint-and-sev- 7.2 When and under what circumstances does a person eral basis for damages payable pursuant to a statutory right of have an affirmative obligation to investigate land for compensation which could be brought against the “owner of a contamination? pollutant or person having control of the pollutant”. While the corporation was clearly the owner of the pollutant, the court Regulators are generally granted wide powers to order investi- determined that a corporate principal, director or officer could gations, preventive measures or remediation. In practice, these also be considered a “person having control of a pollutant” powers tend to be exercised when there exists a risk to human based on fact-specific assessment. Future claimants could rely health or safety or of off-site migration. on this decision to pierce the corporate veil, thereby increasing the spectre of individual liability. Subject to local laws, a foreign parent company may be sued 7.3 To what extent is it necessary to disclose in its national court for pollution caused by a Canadian affiliate. environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover transactions? 8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters? “Buyer beware” is the prevailing concept in the context of purchase deals absent specific representations and warranties There exists legislation in certain provinces and at the federal and, as such, environmental issues should be thoroughly dili- level protecting a person who provides information to the genced and assessed prior to the conclusion of a transaction. government about an environmental offence from employer That said, a seller must not make any misrepresentations or fail retribution. to disclose latent defects.

8.5 Are group or “class” actions available for pursuing 82 General environmental claims, and are penal or exemplary damages available? 8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment- Subject to obtaining certification, environmental class actions related liabilities, and does making a payment to another may be brought in Canada and have in the past been certified in person under an indemnity in respect of a matter (e.g. remediation) discharge the indemnifier’s potential several provinces. Past certification decisions appear to show liability for that matter? that the likelihood of obtaining certification is greater where plaintiffs’ claims are limited to property damage as the courts have found that health-based claims are less well-suited to class Contractual allocation of environmental liability is possible but actions. Punitive or exemplary damages are available but are will be constrained in so far as it applies only to the parties to the rare and generally limited in practice. contract and will not insulate a party from administrative, regulatory or criminal liability.

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8.6 Do individuals or public interest groups benefit emitted in 2019, with this tax increasing by C$10 per year to from any exemption from liability to pay costs when C$50 per tonne in 2022. Some provinces have challenged the pursuing environmental litigation? constitutional jurisdiction of the federal government to regulate GHG emissions, which as at the time of publication, are In Canada, the losing side is usually required to pay the winning awaiting adjudication by the Supreme Court of Canada. side’s costs, but costs remain at the discretion of the courts. There are no statutory exemptions from paying costs for public 102 Asbestos interest groups, but such groups have avoided paying costs by successfully arguing that a cost award against them would have 10.1 What is the experience of asbestos litigation in a negative impact on public interest involvement. your jurisdiction?

92 Emissions Trading and Climate Change Workers in Canada are generally required to have their claims settled on a “no-fault” basis by a workers’ compensation board. 9.1 What emissions trading schemes are in operation Damage awards issued by these boards are modest compared to in your jurisdiction and how is the emissions trading damages that might be awarded by a jury in the U.S. Plaintiffs market developing there? impacted by asbestos in the workplace, and have tended to pursue defendants who fall outside of the workers’ compen- Québec adopted a cap-and-trade system for greenhouse gas sation regime, primarily the manufacturers and producers of (“GHG”) emissions in 2013, which is fully harmonised with asbestos-containing products, to recover more fully for their the California regime. Industries whose annual greenhouse injuries; however, the damages awarded tend to be more limited gas emissions are 25,000 metric tonnes or more are required than in the U.S. to register for the system and cover their reported and verified emissions with emission allowances. Ontario previously partic- 10.2 What are the duties of owners/occupiers of ipated in this joint market but has since dropped out. Other premises in relation to asbestos on-site? provinces have implemented their own stand-alone cap-and- trade programmes. Exposure to asbestos on-site is regulated under federal and The federal output-based pricing system (see question 9.3 provincial occupational health and safety legislation. Employers below) contains a trading component to allow surplus credits or owners/occupiers generally have various obligations to allocated to facilities whose emissions fall below their annual limit the exposure of workers to asbestos fibres. Such meas- emissions limit to be traded exclusively within the federal ures include: the requirement for asbestos management plans; output-based pricing system. meeting air quality standards with respect to the concentration of air-borne breathable asbestos fibres; taking special precau- 9.2 Aside from the emissions trading schemes tionary measures prior to undertaking any work liable to emit mentioned in question 9.1 above, is there any other asbestos dust; and keeping a registry of inspections, the location requirement to monitor and report greenhouse gas of materials containing asbestos, and details relating to samples emissions? taken.

In most provinces and at the federal level, legislation provides 112 Environmental Insurance Liabilities monitoring and reporting obligations for certain industries or where GHG emissions reach a certain threshold. 11.1 What types of environmental insurance are available in the market, and how big a role does 9.3 What is the overall policy approach to climate environmental risks insurance play in your jurisdiction? change regulation in your jurisdiction? Several carriers in Canada offer environmental insurance Canada is a signatory to the Paris Agreement, negotiated at liability coverage. Insurance products may include insurance the United Nations Conference of the Parties (“COP 21”) in for legal liability for pollution (which would cover expenses December of 2015. As part of its commitment, Canada has a such as legal costs, certain clean-up costs, damages assessed in GHG emissions reduction target of 30% below 2005 levels by court and economic loss), environmental impairment liability 2030. Most Canadian provinces and the federal government for third-party claims due to off-site migration, and insurance adopted the Pan-Canadian Framework on Clean Growth and against future pollution events on a property or undiscovered Climate Change, Canada’s national climate change plan to fight contamination. GHG emissions, in December 2016. Insurance products are also available to address specific As part of the Pan-Canadian Framework, a number of prov- concerns, such as asbestos, storage tanks, transportation of inces have adopted a tax or levy on carbon as well as addi- hazardous waste and the liability of secured creditors. tional GHG reduction measures and others have adopted (as mentioned above), a cap-and-trade system. 11.2 What is the environmental insurance claims The federal government has recently enacted legislation estab- experience in your jurisdiction? lishing a federal GHG emissions pricing scheme, composed of a carbon tax on fossil fuels and of an output-based pricing A wide range of environmental insurance has been available in system for large industrial emitters. The federal regime applies Canada on a consistent basis for at least 20 years, particularly in the provinces and territories that do not have a carbon pricing after general commercial liability insurance products began to system that aligns with the federal benchmark as of 2019. The exclude coverage for environmental liability. federal carbon tax on fossil fuels is of C$20 per tonne of carbon

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122 Updates Courts have, in recent years, been taking somewhat incon- sistent approaches on civil claims for damages caused by contamination and, as such, there is some uncertainty associ- 12.1 Please provide, in no more than 300 words, a ated with liability associated with off-site migration. summary of any new cases, trends and developments in Both the federal government and several provinces have environment law in your jurisdiction. become much more aggressive in prosecuting environmental offences and the quantum of fines has increased rapidly in Following a review of key federal environmental assessment recent years. and regulatory processes, new federal legislation is now in force which enhances federal environmental protections and the scope of federal environmental assessment, clarifies the federal environmental assessment process for major projects, increase opportunities for public participation, and expands the role of Indigenous peoples in some of the processes.

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Jonathan Kahn, a partner in the Toronto office of Blake, Cassels & Graydon LLP, has for more than 30 years provided representation and advice on a broad spectrum of environmental and natural resources law issues. He represents clients on: major project development; the purchase, sale, and remediation of contaminated land; mining regulation and permitting; management of natural resources; transportation, handling and disposal of hazardous substances; environmental permitting; air, water and waste regulation; lender liability; and other environmental matters. Jonathan’s wide-ranging expertise also includes representing accused corporations in major environmental prosecutions and providing environmental law advice on significant transactions, across a broad range of industries. Jonathan was the first non-American to serve on the Executive Committee of the American Bar Association’s Section of Environment, Energy and Resources Law, having also served on its governing Council and chaired several committees. He is also a past chair of the National Environment, Energy and Resources Law Section of the Canadian Bar Association, and a former chair of the Environmental Law Section of the Ontario Bar Association.

Blake, Cassels & Graydon LLP Tel: +1 416 863 3868 199 Bay Street Email: [email protected] Suite 4000, Commerce Court West URL: www.blakes.com Toronto, ON, M5L 1A9 Canada

Anne-Catherine Boucher’s practice focuses on environmental, energy, aboriginal and mining law. She advises clients on their environmental obligations generally as well as on matters relating to various permitting requirements and environmental assessment processes, obligations with respect to greenhouse gas emissions and cap-and-trade systems, the rehabilitation of contaminated lands, mine closure and restoration, the protection of water and fisheries, the transportation, management and treatment of hazardous substances, and the protection of endangered species. She has also been involved in the contestation of environmental administrative monetary penalties and in environmental investigations and prosecutions.

Blake, Cassels & Graydon LLP Tel: +1 514 982 4133 1, Place Ville Marie Email: [email protected] Suite 3000 URL: www.blakes.com Montreal, QC, H3B 4N8 Canada

Blake, Cassels & Graydon LLP (Blakes) provides exceptional legal services diligence procedures, training and permit requirements for projects with to leading businesses in Canada and around the world. Serving a diverse potential environmental ramifications and provide representation when national and international client base, Blakes has an integrated network of disputes arise. nine offices worldwide providing clients with a full spectrum of capabilities www.blakes.com in virtually every area of business law. Our national environmental team has extensive knowledge of environmental legislation and contacts with regulatory authorities to provide timely, efficient and effective advice to assist clients in this complex field. We have been involved in the development of major projects in a variety of industries and develop sophisticated strategies to minimise our clients’ exposure to environmental liabilities. We focus on emerging opportunities and challenges for our clients created by clean technologies and climate change regulations. We also advise on management, compliance, due

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Julio Lavín Valdes

LAVÍN Abogados & Consultores Andres Del Favero Braun

12 Environmental Policy and its The agencies below administer and enforce environmental law: ■ The Ministry of the Environment collaborates with the Enforcement President of the Republic in the design and enforcement of environmental policies, plans and programmes. This 1.1 What is the basis of environmental policy in your Ministry handles the protection and conservation of biodi- jurisdiction and which agencies/bodies administer and versity and renewable natural and water resources in order enforce environmental law? to promote sustainable development, the integrity of environmental policy and environmental regulation. The Environmental Framework in Chile is contained in Law ■ The Environmental Assessment Service administers 19300 and Law 20417, which amended Law 19300 to create the the Environmental Impact Assessment System (“SEIA” Ministry of the Environment, the Environmental Assessment in Spanish) and coordinates the government agencies Service and the Environmental Superintendence. These last involved in project permitting and approvals. two agencies are autonomous, have their own legal capacity ■ The Environmental Superintendence oversees compli- and equity, and report to the President of the Republic through ance with: the environmental approvals of Environmental the Ministry of the Environment. Law 20600 completes the Studies and Statements; the measures and instruments environmental regulation, which created the Environmental contained in Prevention and Decontamination Plans; Courts that hear appeals against administrative decisions by the environmental quality and emission standards; and the Environmental Assessment Service and the Environmental management plans. Superintendence, as well as any other matter, such as environ- ■ Three Environmental Courts: There are three courts, each mental damage claims. comprised of three judges, two of whom must be attor- Environmental legislation is supplemented by several regu- neys and one a scientist. These courts decide any environ- lations, such as the Environmental Impact Assessment System mental disputes within their purview according to the law. that controls water pollution, hazardous waste handling, mining Other government agencies have permitting and enforce- safety and other related matters. ment faculties, such as: the Regional Offices of the Ministry There are also other special laws that regulate aspects of envi- of Health; the Agriculture and Livestock Service; the National ronmental protection, such as the Sanitary Code, the Penal Forest Association; the National Fishing Service; the National Code, the General Fishing and Aquaculture Law, the Navigation Geology and Mining Service; the General Water Bureau; the Law and the Native Forest Protection Law. General Administration of the Maritime Territory and Merchant Lastly, Chile has signed and enacted several international trea- Marine; and Municipalities. ties, such as: ■ the 1940 Convention on Nature Protection and Wildlife 1.2 What approach do such agencies/bodies take to Preservation in the Western Hemisphere; the enforcement of environmental law? ■ the 1971 Convention on Wetlands, or Ramsar; ■ the 1981 Convention for the Protection of the Marine Environment and Coastal Area of the South-East Pacific; Due to the amount of agencies within the environmental regula- ■ the 1981 Agreement on Regional Cooperation in Combating tion system, there are different approaches. The Environmental Pollution of the South-East Pacific by Hydrocarbons or other Assessment Service applies the principle of prevention in Harmful Substances; granting environmental permits – its task is to evaluate the ■ the 1989 Basel Convention on the Control of Transboundary potential environmental impacts that a project or activity may Movements of Hazardous Wastes; cause prior to project implementation by means of an environ- ■ the 1992 United Nations Framework Convention on Climate mental impact study or an environmental impact statement. Change; The Ministry of the Environment follows the same principle in ■ the 1997 Kyoto Protocol to the Convention on Climate its function of issuing environmental quality standards, preven- Change; and tion and management plans. ■ the 2001 Stockholm Convention on Persistent Organic A second approach, used by both the Ministry of the Environment Pollutants. and by different government services, as applicable, is based on the “command and control” principle, and it is enforced through emission standards and the grant of sectorial environmental permits and other permits and authorisations for projects.

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The third approach is corrective. The Ministry issues decon- 2.2 What rights are there to appeal against the tamination plans and the Environmental Superintendence exer- decision of an environmental regulator not to grant an cises its authority of oversight and penalisation of infringe- environmental permit or in respect of the conditions ments of environmental permits or prosecutes liability for contained in an environmental permit? environmental damage. Finally, the fourth approach consists of economic incentives, The denial of an environmental permit can be appealed before the such as the air emissions tax on the following contaminants: Executive Director of the Environmental Assessment Service, particulate matter; nitrogen oxide; sulphur dioxide; and carbon if the project was evaluated by means of an Environmental dioxide. A particulate matter emissions offset system has also Impact Statement, or before the Ministers’ Committee, if the been implemented in the Metropolitan Region. Assessment was made by means of an Environmental Impact Study. This Committee is comprised of the Ministers of: 1.3 To what extent are public authorities required to Environment; Health; Economy, Development and Tourism; provide environment-related information to interested Agriculture; Energy; and Mining. persons (including members of the public)? Permit applicants can also bring an appeal before the Environmental Court against a refusal by the Executive Director The law stipulates that everyone has a right to access environ- or Ministers’ Committee; and any Environmental Court deci- mental information in possession of the government in any sion can be appealed before the Supreme Court via a remedy of format. vacation of judgment based on procedure violation. The Ministry of the Environment administers an online, regionally decentralised, National Environmental Information 2.3 Is it necessary to conduct environmental audits System. This system contains, for example: the text of envi- or environmental impact assessments for particularly ronment-related treaties, conventions, international agreements, polluting industries or other installations/projects? laws, regulations and other administrative acts; reports on the condition of the environment; and administrative authorisations The law does not require environmental audits of highly polluting of activities that may have a material environmental impact. If industries. All projects or activities that may cause an environ- the information is not in this system, it will indicate which other mental impact must be submitted to the Environmental Impact government authority has it. Assessment System to obtain environmental permits. The information on environmental assessment processes and on existing environmental permits is updated on the Environmental Assessment Service’s website. It also contains 2.4 What enforcement powers do environmental regulators have in connection with the violation of permits? information on oversight actions, inquests and provisional measures for the protection of the environment and/or human health. The above access is consistent with Law 20285 on Access to The Environmental Superintendence has the power to oversee Public Information, which sets down the principle of govern- compliance with environmental regulations and to apply penal- ment transparency, the right to access to the information held by ties for any infringement of the law or of the requirements under government agencies, and the procedures to exercise and protect an environmental permit. that right. However, access can be denied to any information The penalties for violations of the law or permits range from that is considered to be confidential pursuant to the law. fines of US$900 to US$9 million per violation, including the temporary or final closing of the facility and revocation of the environmental permit. 22 Environmental Permits 32 Waste 2.1 When is an environmental permit required, and may environmental permits be transferred from one person to another? 3.1 How is waste defined and do certain categories of waste involve additional duties or controls? Article 10 of Law 19300 lists the projects or activities that must be submitted to the Environmental Impact Assessment System Waste is defined in the Hazardous Waste Management Regulations by means of an environmental impact statement or study as they as a “substance, element or object that the producer disposes of, may cause one or more of the following impacts: risk to the proposes to dispose of or is obligated to dispose of”. health of the population; material adverse impacts on renew- The former Regulations on the Minimum Municipal Sanitary able natural resources; resettlement of communities or an alter- Standards (1947) defined household waste, now known as solid ation to their way of life; any impact on populations, resources household waste, as waste produced by people living in inhabit- and protected areas; significant alteration of the landscape or its able places, such as waste from home life and cleaning products. touristic value; or any impact on monuments or sites forming Industrial waste, now known as solid industrial waste, is waste part of a region’s cultural heritage. from industrial or manufacturing processes, such as slag and ash The environmental assessment of these projects concludes from mining or organic waste, or such as the by-products from with the issuance of an environmental permit. slaughterhouses and sugar refineries. An environmental permit can be legally transferred provided The Hazardous Waste Management Regulations define hazardous the change in holder is reported to the Environmental Assessment waste as a “waste or mix of waste that is a hazard and presents a risk Service. to public health and/or may cause adverse impacts on the environment, either directly or from actual or planned handling”.

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The Emission Standard for the Regulation of Pollutants in and/or permits, such as obligations, standards and measures Liquid Waste Discharges into Ocean and Inland Bodies of Water under environmental permits, or for the execution of projects defines liquid waste, wastewater or effluents as water discharged or activities without holding the relevant environmental permit. from an emitting source into a body of water. These breaches can be penalised by sanctions that go from The Emission Standard for Regulation of Pollutants in written admonition, to fines of US$900 to US$9 million, and/or Discharges of Liquid Industrial Waste into Sewerage Systems temporary or final closing of facilities, and even the revocation of defines liquid industrial waste as waste discharged by an the environmental permit, for each breach, depending on whether industrial facility. the breach is qualified as ordinary, serious or very serious. The law distinguishes between the treatment of each type of The law also stipulates liability for environmental damage. waste and allocates a greater responsibility to the producers of Anyone can file an action seeking reparation for any environ- waste that cause a considerable environmental impact. By way mental damage. of example, the Extended Producer Responsibility Law holds An environmental claim must be filed before the producers or importers of lubricants, electrical and electronic Environmental Court in the location where the damage devices, batteries, packages, packing and tyres liable for the occurred and any judgment by that court can be brought before organisation and funding of the management of waste produced the Supreme Court seeking vacation of judgment. from these products. 4.2 Can an operator be liable for environmental 3.2 To what extent is a producer of waste allowed to store damage notwithstanding that the polluting activity is and/or dispose of it on the site where it was produced? operated within permit limits?

The Regulations on Basic Sanitary and Environmental An operator may be liable for environmental damage even Conditions in the Workplace and the Hazardous Waste though he is operating within permit limits or standards, since Management Regulations allow industrial and hazardous environmental damage is defined as any loss, decrease, detri- waste to be accumulated, treated and disposed of on an indus- ment or significant impairment to the environment or to one or trial property, in a workplace or building, provided the Health more of its components. Authority has issued a sanitary authorisation. Consequently, if the operator causes any of those material Approval of a Hazardous Management Plan is required to effects, he will be liable for the damage to the environment. store hazardous waste, and it can be kept for no more than six months on an industrial facility. 4.3 Can directors and officers of corporations attract personal liabilities for environmental wrongdoing, and 3.3 Do producers of waste retain any residual liability to what extent may they get insurance or rely on other in respect of the waste where they have transferred it to indemnity protection in respect of such liabilities? another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/disappears)? In 2019, Law 20393, which establishes criminal responsibility for corporations, was modified, introducing certain criminal Chilean law has no general rules on residual liability for waste offences contained in the General Fishing and Aquiculture that has been transferred for off-site disposal or treatment by Law. As from this date, corporations may be liable for the intro- third parties. duction or ordering the introduction of chemical, biological or The enactment of the Extended Producer Responsibility physical polluting agents which cause damage to the hydrobio- Law in 2016 made producers or importers of waste-producing logical resources without their due and prior treatment may be lubricants, electrical and electronic devices, batteries, packages, sanctioned with fines and if it is deemed to be done with wilful packaging, and tyres liable, from the moment waste is produced misconduct may carry prison sentences. During this year there until it is either recovered or disposed of. have been some cases of corporation officers prosecuted for the violation of the criminal code which sanctions individuals with prison sentences for wrongly propagating organisms, products, 3.4 To what extent do waste producers have obligations elements or chemical, viral, bacteriological, radioactive agents regarding the take-back and recovery of their waste? or any other, that by its nature may be susceptible to endangering animal or vegetal health or human drinking water. Chilean law has no general rules on residual liability for waste Furthermore, any company required to repair or indemnify that has been transferred for off-site disposal or treatment by environmental damage can seek redress from its directors and third parties. officers if it is proven they were responsible for the decision that The enactment of the Extended Producer Responsibility led to the environmental damage. Law in 2016 made producers or importers of waste-producing Companies can carry director and officer insurance to cover lubricants, electrical and electronic devices, batteries, packages, environmental liability. packaging, and tyres liable, from the moment waste is produced until it is either recovered or disposed of. 4.4 What are the different implications from an environmental liability perspective of a share sale on the 42 Liabilities one hand and an asset purchase on the other?

4.1 What types of liabilities can arise where there is a In a share sale, environmental liability follows the company, and breach of environmental laws and/or permits, and what defences are typically available? not the shareholders, as the company holds the environmental permit and also conducts the damaging activity.

The law lists several types of breaches on environmental laws

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Environmental liability in an asset purchase lies with the buyer Under the law, third parties can take action to object to the unless it can be proven that the breach or damage occurred prior to approval of an environmental remediation plan by means of an the purchase, in which case redress may be sought from the seller. appeal to the Environmental Court. The court’s decision can be brought before the Supreme Court for vacation of judgment. 4.5 To what extent may lenders be liable for environmental wrongdoing and/or remediation costs? 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 Lenders of companies conducting activities or implementing in part, contamination; and to what extent is it possible projects that may cause environmental damage are not liable for for a polluter to transfer the risk of contaminated land environmental wrongdoing or remediation costs. liability to a purchaser?

52 Contaminated Land The purchaser of property on which contamination is found can take action before the competent environmental court 5.1 What is the approach to liability for contamination against the previous owner and also seek an indemnity if the (including historic contamination) of soil or groundwater? court declares that contamination exists, unless there is a private agreement between the buyer and seller stipulating that the Assuming that the word “contamination” is used in comparative buyer released the seller from any environmental liability. law as the equivalent to “environmental damage”, Chilean law Under the environmental liability system, anyone who has has no special regulations to pursue liability for the contamina- caused damage to the environment by negligence or wilful tion of soil or underground water, so the general rules on envi- misconduct will be obligated to remediate it, so a contaminator ronmental damage must be followed. cannot transfer the risk of responsibility for the contaminated Unlike the international trend of enforcing the principle of objec- land to a buyer. tive liability for environmental damage, where whoever performs However, the parties can freely stipulate a release from envi- an activity must be held liable for its damage, in Chile the principle ronmental liability in their contract. of subjective tort liability is followed where the presuppositions are an event that causes damage attributable to a certain person and 5.5 Does the government have authority to obtain from that person has acted negligently or with wilful misconduct. a polluter, monetary damages for aesthetic harms to As for historic contamination, any action to claim environ- public assets, e.g. rivers? mental damage prescribes five years after the contamination has become apparent and not from when it was caused, so Chilean The government has the authority to file an environmental law offers greater protection in seeking remediation and indem- action and civil suit for any damage inside the nation. According nity for any damage. to this rule, the State has the authority to seek an indemnity for aesthetic damage to public property. 5.2 How is liability allocated where more than one person is responsible for the contamination? 62 Powers of Regulators

Environmental law does not envisage more than one person 6.1 What powers do environmental regulators have to being responsible for contamination. However, since Law 19300 require production of documents, take samples, conduct does make reference to general rules in civil law, the rules in the site inspections, interview employees, etc.? Civil Code would apply, which stipulate joint and several liability when more than one person is responsible for contamination, The Environmental Superintendence has the authority by law to without prejudice to the action available to the accused to take conduct inspections, take measurements and perform analyses redress against the other persons responsible for the contamina- as part of its oversight faculties of the requirements imposed by tion, according to general rules. environmental regulations and the environmental permits for projects. 5.3 If a programme of environmental remediation The Superintendence’s officers will also have the power to enter is “agreed” with an environmental regulator, can the properties where overseen activities are being conducted in order regulator come back and require additional works or can to take samples or make records of the site or assets inspected, or a third party challenge the agreement? to prepare status certificates, among other measures. The Superintendence has the power to require statements The law does not grant the Environmental Superintendence from the representatives, directors, managers, advisors and the authority to require additional work after an Environmental employees of the overseen entities and to testify about any Remediation Plan has been approved. Therefore, the person punishable deed. responsible for the remediation must complete each of the actions, measures and objectives included in the remediation 72 Reporting / Disclosure Obligations plan. If the culprit does not follow the remediation plan and the contamination is thus not remediated, the Superintendence will 7.1 If pollution is found on a site, or discovered put an end to the remediation plan and forward the case to the to be migrating off-site, must it be disclosed to an State Defence Council for the filing of an environmental reme- environmental regulator or potentially affected third diation action before the environmental courts. parties? If the culprit completes the remediation plan satisfactorily, all environmental remediation actions will be extinguished and the Environmental regulations do not stipulate an obliga- culprit will be released from any additional measures. tion to report contaminated land or off-site migration to

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the Environmental Superintendence or potentially affected 8.3 Can a person who holds shares in a company third parties, but anyone can report contamination to the be held liable for breaches of environmental law and/ Environmental Superintendence. or pollution caused by the company, and can a parent Although environmental regulations do not impose the obli- company be sued in its national court for pollution gation to inform the authority or third parties, environmental caused by a foreign subsidiary/affiliate? permits do impose a duty upon the permit holders to notify the environmental authority of any unforeseen impacts, including Under Chilean law, a person who owns shares in a company cannot contaminating events. be held liable for that company’s violation of environmental law or pollution, since the company, its officers and directors are the ones 7.2 When and under what circumstances does a person that will have standing to be sued in any court action. have an affirmative obligation to investigate land for A parent company is not liable for damage caused by a foreign contamination? subsidiary. The actual perpetrator of the damage is held liable.

The law does not contain any rules requiring individuals to 8.4 Are there any laws to protect “whistle-blowers” who investigate land for contamination. report environmental violations/matters?

7.3 To what extent is it necessary to disclose Regulations do not contain legal protection for whistle-blowers environmental problems, e.g. by a seller to a prospective reporting environmental violations. purchaser in the context of merger and/or takeover Internally, companies have set up protections for workers transactions? reporting wrongdoings, including environmental violations.

The regulations do not set the contractual duties of parties to 8.5 Are group or “class” actions available for pursuing disclose environmental issues in mergers and acquisitions. environmental claims, and are penal or exemplary Civil law on contracts applies in this regard, where good faith damages available? prevails when a contract stipulates that a seller must disclose any environmental issues. Environmental regulations do not envisage cases of class actions As a general rule, buyers will request from seller’s representa- for contamination and there are no penal or exemplary damages tions and warranties on pre-existing environmental issues. If available. those representations and warranties on environmental matters prove to be untrue, buyers will have the right to claim the payment of indemnities. 8.6 Do individuals or public interest groups benefit from any exemption from liability to pay costs when pursuing environmental litigation? 82 General The law offers to any person the possibility of requesting the 8.1 Is it possible to use an environmental indemnity municipality to file an action for reparation of environmental to limit exposure for actual or potential environment- related liabilities, and does making a payment to another damages; in this case the costs are handled by the municipality. person under an indemnity in respect of a matter (e.g. remediation) discharge the indemnifier’s potential 92 Emissions Trading and Climate Change liability for that matter? 9.1 What emissions trading schemes are in operation Under Chilean law, releases from liability do not limit present or in your jurisdiction and how is the emissions trading future environmental liability to the State or third parties. market developing there? Under the rules of private law, parties to a contract are free to stipulate this type of clause, but they will not be released from Law 19300 authorises the use of emissions trading schemes to any liability for contamination in respect of third parties. encourage meeting goals for emissions reduction under prevention and decontamination plans. However, the regulations on 8.2 Is it possible to shelter environmental liabilities off the emissions trading system have not yet been issued. balance sheet, and can a company be dissolved in order At a regulatory level, valid only in the Metropolitan Region, to escape environmental liabilities? a particulate matter emission offset system has been established allowing emissions trading between sources to meet the required No overvaluing of a company’s assets or undervaluing of liabil- emissions limits, under prior approval of the Health Authority. ities is permitted in mergers or acquisitions by the International Financial Reporting Standards (IFRS). 9.2 Aside from the emissions trading schemes mentioned Any audit revealing that an environmental liability was left in question 9.1 above, is there any other requirement to off the balance sheet will immediately trigger default clauses for monitor and report greenhouse gas emissions? failure to disclose the environmental liability and causing the buyer or absorbing company to assume a risk. The Tax Reform Law 20780 added a “green tax” on particu- Directors of a company will be held liable if that company is late matter (PM), nitrogen oxide (NOx), sulfur dioxide (SO2) dissolved to elude environmental liability. and carbon dioxide (CO2) air emissions by facilities with a rated capacity greater than or equal to 50 MWt. They have the obligation to monitor emissions and report their results to the Environmental Superintendence.

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9.3 What is the overall policy approach to climate cover the damages caused to third parties arising from change regulation in your jurisdiction? sudden and accidental contamination, it can include the expenses of removal and cleanup costs. This is a specific and limited coverage that will not cover: fines; gradual The Climate Change Division of the Ministry of the Environment pollution; and damages to the premises of the insured. proposes policies and designs plans, programmes and actions in ■ Environmental insurance: This is a tailor-made policy, connection with climate change. that can cover (depending on the coverages hired, and the As a result, Chile now has a 2017–2022 National Climate type of industry): sudden and gradual pollution conditions; Change Plan, which may be viewed at: http://portal.mma.gob.cl/ on-site and off-site clean-up costs for pre-existing and/or wp-content/uploads/2017/07/plan_nacional_climatico_2017_2. new conditions, third-party bodily injury and property pdf (Spanish version). damage; and legal costs for defence, investigation and/or Currently, the Environmental Ministry is working on a adjustment of covered compensatory claims, and fines. Climate Change bill of law to be discussed in congress which coverage is offered by almost all the local objective among others, is to achieve carbon emissions neutrality General Liability insurers in Chile (CHUBB, Chilena Consolidada (Zurich), by the year 2050, include climate change in the country’s poli- Southbridge, Sura, Liberty, HDI, Starr, etc.). cies, instruments, regulations and institutions, strengthen is offered locally only by CHUBB. climate change information systems and create awareness on Environmental insurance It is important to mention that this company can offer the insur- this matter, all in accordance with the 2016 Paris Agreement. ance for specific industries, excluding mining operations, and with specific coverages. 102 Asbestos The reinsurance market is the best option to seek a wide and complete tailor-made policy. 10.1 What is the experience of asbestos litigation in Locally, mostly all insureds have in force a General Liability your jurisdiction? policy, and they are starting to quote Environmental Insurance, especially after big disasters in the region (Brazil). Asbestos was prohibited by Decree 656/2000 of the Ministry of Health, which prohibits the use of asbestos in certain products 11.2 What is the environmental insurance claims and authorises its import and use under very strict conditions. experience in your jurisdiction? One of the most representative cases regarding the use of asbestos is the lawsuit filed by Raúl Olivares against Pizarreño for the negligent handling of asbestos particulates. No pallia- Considering the subjective civil tort system, the environmental tive measures were adopted despite knowing the mortal danger insurance industry has not developed in Chile, except for subjec- of asbestos. In 2014, the Second Labour Court of Santiago tive tort liability insurance, so there is no or very little experi- ordered the company to pay an indemnity of approximately ence in environmental insurance claims. US$82,000 to Mr. Olivares, who contracted a terminal cancer called pleural mesothelioma from inhaling asbestos while he 122 Updates worked for Pizarreño. 12.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in 10.2 What are the duties of owners/occupiers of environment law in your jurisdiction. premises in relation to asbestos on-site?

In May 2019, the Supreme Court reversed Valparaiso’s Court of Chilean law prohibits the production, import, distribution and Appeal’s ruling and upheld the application for protection filed sale of asbestos and any other material or product containing it, by local communities and diverse NGO’s against corporations unless it is authorised under strict conditions and supervision of operating in Quintero and Puchuncavi municipalities for the the Health Authority. Its storage must be done without liberating generation of gases and chemical agents which caused an envi- fibres of the material into the environment over the permitted ronmental emergency in the zone during the months of August amounts. In the case where a facility has asbestos in stock for and September of 2018, and against the Chilean Government the production or manufacturing of its products, it must inform and several of its agencies, for the breach of their prevention, the Health Authority every semester as to its stock movements information systematisation, oversight and control of environ- and recipients. Activities such as demolitions, dismantling or mental wrongdoing duties mandated by the Chilean legal system. modification of buildings, equipment, installations or machinery The novelty of this ruling is that due to the lack of informa- which contain asbestos fibres will require the Health Authority’s tion and monitoring, there was no way to determine the source approval and an asbestos management plan. of the gases and emissions that caused the emergency, so even though none of the corporations were penalised, the ruling indi- 112 Environmental Insurance Liabilities cated that the public agencies’ years of inactivity translated into disregard of the Quintero and Puchuncaví’s neighbours well- 11.1 What types of environmental insurance are being and physical and mental health. available in the market, and how big a role does The Court’s decision ordered the Government agencies to environmental risks insurance play in your jurisdiction? promptly conduct the necessary studies and analyses to establish with certainty the nature and characteristics of all the gases and Regarding pollution/environmental insurance, you can find in emissions produced in each and all of the sources in the zone the local market two kinds of policies: and a general diagnosis basis for all of the diseases detected in ■ General Liability Policy with the inclusion of “sudden the local population produced by the air, earth and water pollu- and accidental contamination” coverage. This policy will tion and its monitoring.

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During 2019, the Chilean Government and private sector On new developments, the Environmental Minister introduced power generators have reached a voluntary agreement and have into congress a new bill of law which sanctions environmental announced the closure of eight coal powered plants in a five- wrongdoing with criminal prosecution. This bill of law includes year period and have agreed on 2040 as their goal for elimi- imprisonment for individuals and serious penalties for corpora- nating coal-based power plants from Chile’s power grid. This tions liable for environmental damage. These offences will need represents 19% of coal powered plants installed capacity in the to be included in every corporation’s compliance of crime preven- country. The initiative’s objective is to fulfil Chile’s commit- tion programme and model. On the other hand, and as a pro-in- ments on greenhouse gases emissions reduction acquired before vestment measure, the President has introduced into congress the United Nations and to massify renewable energy to confront another bill of law which strengthens the environmental impact climate change. assessment system, increasing its technical approach to evalua- In December 2019, Chile will host the 25th session of the tions (reducing political interference) and speeding its procedures. Conference of the Parties (COP 25), with the objective of estab- It also seeks to reach sustainable development on the basis of lishing the criteria for the fulfilment of the Paris Agreement on citizen participation, decentralised decision making, faster permit greenhouse gases emissions reduction and on improving the processing and equal access to environmental justice. reduction goals agreed by the signing parties. The meeting will focus on matters such as Antarctica and Acknowledgment oceans conservation, electromobility and renewable energies, circular economy, the protection of ecosystems, forests and The authors would like to thank Arturo Lavín for his assistance biodiversity. in preparing this chapter. Arturo is a lawyer at LAVÍN Abogados & Consultores specialising in energy and environmental law. Tel: +562 3245 2700 / Email: [email protected]

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Julio Lavín Valdes, a Chambers & Partners Senior Statesman for the years 2016, 2017, 2018, 2019 and 2020 in the Environmental law section, is also focused on public and administrative law, and on maritime and aquaculture concessions. He is involved in the mining, energy, utilities and industrial sectors (such as wine exporters and forestry & paper). He is also a government advisor and writer for the bill of law on Coastal Zoning and Maritime Concessions. Mr. Lavín is the Founding Partner and leader of the Natural Resources Department in the firm. Education: Master of Political Science, University of Chile (1989); Law Degree, Pontificia Universidad Católica de Valparaíso, Chile, Attorney at Law (1976). Experience: Jara Del Favero Abogados, Grasty Quintana Majlis y Cía.; Bertelsen-Oelkers-Genskowsky-Lavin Abogados & Consultores; and the Chilean Navy.

LAVÍN Abogados & Consultores Tel: +562 3245 2700 Burgos 80, Second Floor Email: [email protected] Las Condes, Santiago URL: www.lavinabogados.com Chile

Andrés Del Favero Braun is a partner focused on environment, maritime and aquaculture concessions, mining, and infrastructure law. He works hand-in-hand with Julio Lavín Valdés in the environmental and maritime concessions areas, and is involved in the mining, energy, utilities and industrial sectors (such as wine exporters and forestry & paper). Education: Master of Laws (LL.M.), University of Pennsylvania (2014); Wharton Business and Law Certificate, Wharton Business School, University of Pennsylvania (2014); and Law Degree from Pontificia Universidad Católica de Chile. Attorney at Law (2007). Experience: Anglo-American in-house counsel, Barrick Gold Corporation; in-house counsel, Carey & Allende; in-house counsel for Jacobs Engineering Group (formerly Aker Solutions); and Jara Del Favero Abogados.

LAVÍN Abogados & Consultores Tel: +562 3245 2700 Burgos 80, Second Floor Email: [email protected] Las Condes, Santiago URL: www.lavinabogados.com Chile

LAVÍN Abogados & Consultores is a Santiago-based boutique firm led by its founding partner Julio Lavin, one of the most recognised environmental attorneys in Chile, and comprising a highly capable and experienced team specialised in providing legal services and technical consultancy on the environmental, renewable energy, electrical, mining, maritime concessions, natural resources, corporate, tax and accounting areas. The firm’s attorneys have extensive experience in the environmental sector, both within law firms and in multinational companies in the natural resources sector, providing legal services in the diverse areas required by the industry, and helping those companies achieve their projects’ timely completion while ensuring their operational continuity. www.lavinabogados.com

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Philippi Prietocarrizosa Ferrero DU &Uría Luis Fernando Macías Gómez

12 Environmental Policy and its regional level. Likewise, Law 99 of 1993 also attributes judicial functions to departmental, district and municipal authorities. Enforcement The set of rules from Law 99 of 1993 regarding the imposition of sanctions and penalties for the violation of any environmental 1.1 What is the basis of environmental policy in your law was later amended by means of Law 1333 of 2009, which jurisdiction and which agencies/bodies administer and established the environmental sanctions regime. Through enforce environmental law? this regime, environmental sanctions or preventive measures might be imposed by the competent environmental authorities According to Law 23 of 1973, the Colombian Government issued for activities alleged to be in violation of environmental legal Law-Decree 2811 of 1974 (the “Decree”), known as the Natural dispositions. These attributions are also granted to the National Renewable Resources and Protection of the Environment Code. Army, and the departmental, district and municipal authorities. This Decree sets forth the legal framework in Colombia for the In September 2011, Congress issued Law 3573 of 2011, the protection of the environment and its natural resources, imposing National Authority for Environmental Licences (“ANLA” for a series of obligations to both the State and the Colombian popu- its acronym in Spanish) which was created as an administra- lation. Later, the issuance of Law 9 of 1979 provided a series tive and financially-autonomous entity in charge of evaluating, of rules aimed at the protection of the environment in order to approving and issuing environmental licences, permits and improve sanitary conditions and human wellbeing. other environmental procedures, as well as enforcing environ- In 1991, the Colombian National Constitution adopted a variety mental law within such procedures. of principles that were to be further regulated. This Political Charter has been catalogued as the “Ecological Constitution”, 1.2 What approach do such agencies/bodies take to given that it contains 34 articles from different perspectives the enforcement of environmental law? 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 deter- The enforcement of Colombian environmental law follows the mined as a main factor for development, which is limited to rules of administrative procedural law. The agencies in charge economic rights. Additionally, the Constitution sets forth the of enforcing these dispositions are the ANLA, the Autonomous obligation of the National Congress to create and regulate what in Regional Authorities, the Sustainable Development Authorities Colombia is known as Autonomous Regional Authorities. and the Large Urban Districts. Inspired by the international principles and directives Additionally, Law 1333 of 2009 establishes the environmental included in the Rio Declaration of 1992, the Colombian National sanctions regime by which the environmental authorities may Congress issued Law 99 of 1993, which creates the institu- impose preventive measures and/or sanctions to the activi- tional framework for the protection of the environment and the ties alleged to be in violation of the Colombian environmental management of natural resources. The National Environmental regime. The investigations to impose sanctions may be initiated System, created therein, is a hierarchical structure of the agencies as a result of the management and control functions of environ- in charge of the enforcement of environmental legal dispositions mental authorities or due to complaints from the community. and the management of natural resources within the Colombian The legal system also provides through judicial mechanisms, territory. The Ministry of Environment and Sustainable such as enforcement actions, class actions, actions for the protec- Development is the agency at the apex of the hierarchy, and it is tion of fundamental rights, criminal actions and civil actions. in charge of creating environmental policies at a national level. There are other environmental authorities, such as the Regional 1.3 To what extent are public authorities required to Authorities, the Sustainable Development Authorities, the Large provide environment-related information to interested Urban Districts and the Special Caribbean Districts, formally persons (including members of the public)? created by this law to manage the protection of the environment and enforce environmental law within the regions of their The National Constitution not only grants the right to a healthy competent jurisdictions. These Regional Authorities also eval- environment, but it establishes mechanisms to guarantee that its uate, approve, control and issue environmental licences, permits citizens are able to materialise this right. Bearing this in mind, and other environmental management and control instruments the legislator is imposed with the duty to guarantee that citizens within their jurisdictions. Among their functions, the Regional have participation mechanisms that enable them to participate in Authorities may also establish environmental policies at the any decision-making process that may affect their right to enjoy

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a healthy environment. The following are some of the environ- administrative procedures, environmental permits and licences mental participation mechanisms: public hearings; intervening are granted by the environmental authorities through decisions third parties; and prior consultation to ethnic communities. that are called administrative acts or “resolutions”. Therefore, Colombian citizens hold the right to access environmental the rights to appeal, or to use any of the other legally established information. Furthermore, Law 99 of 1993 establishes that any resources, are the same as those applying to the administrative person, without the need to manifest any interest whatsoever, can procedure. Hence, any person has the right to appeal before the intervene in the administrative actions initiated to issue, modify same authority that issued the resolution, i.e. the Autonomous or cancel environmental permits or licences for activities that Environmental Authorities, or before a superior agency when may affect the environment, as well as in the procedures towards applicable. An appeal can be initiated when the conditions of the imposing sanctions for the violation of environmental law. licence or permit are different from what the petitioner asks for or they appear to be restrictive of environmental rights. Therefore, 22 Environmental Permits the appeal can be proposed by the petitioner of the licence or permit, or by anyone involved in the project, which could be any 2.1 When is an environmental permit required, and may person who would like to participate in the licence or permit environmental permits be transferred from one person to process. another? 2.3 Is it necessary to conduct environmental audits The need to obtain an environmental permit is determined by or environmental impact assessments for particularly the activities due to be carried out, and by the possible impact polluting industries or other installations/projects? on a specific renewable resource. The National Code of Natural Renewable Resources, or Law-Decree 2811 of 1974 provides In Colombia, environmental audits are not mandatory but many that anyone willing to use natural resources must obtain an companies do it voluntarily. environmental permit, according to the resource to be used. On the other hand, the environmental regulations require As a general rule, the assignment of environmental permits analysis and characterisation of certain polluting activities, such requires previous authorisation from the competent authority. as stationary and mobile sources of air pollutants, whether they Various environmental permits are enlisted as follows: require a permit or not, in order to establish if they are accom- plishing the air-quality standards. For water-related activities, Environmental Permit Resource characterisations are also required in order to determine if there Water Concession Permit Water is an environmental infringement. Flow Occupation Permit Water Furthermore, there are specific activities, projects and instal- Water Discharge Permit Water lations implied in Law 99 of 1993, and regulated by Chapter 3 of the Decree 1076 of 2015, which require an Environmental Emissions Permit Air Impact Study (EIA, in Spanish). This study is defined as a tech- Forestry Permit Forest nical document containing information on the project location, Ban Lifting over Protected Species Biodiversity the biotic and abiotic elements, and the impact assessment. The Research Permit Biodiversity Environmental Impact Study is the basis for the environmental licence, which turns out to be a mandatory requirement in order On the other hand, are regulated in environmental licences to put into operation the activities listed in articles 2.2.2.3.2.2 article 2.2.2.3.1.1 and subsequent of Decree 1076 of 2015, which and 2.2.2.3.2.3 of Decree 1076 of 2015. is defined as the authorisation granted by the State to develop an On the other hand, as we have already said, the environmental activity that, according to the regulation, might cause the dete- audits are not mandatory, but a company that seeks the issue of rioration of natural renewable resources and the environment. an environmental licence must support filing it with an environ- Although it is called an environmental licence, it must cover mental impact assessment. 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 2.4 What enforcement powers do environmental natural resources through the development of the activity. It regulators have in connection with the violation of also includes the obligations with regards to the prevention, permits? mitigation and compensation of the effects that the activity may involve. According to the current regulation, an environmental The enforcement of the conditions of environmental permits licence is only required to develop the activities listed in articles and licences is held under Law 1333 of 2009, which establishes 2.2.2.3.2.2 and 2.2.2.3.2.3 of Decree 1076 of 2015. the environmental sanction regime through which the environ- The total or partial transference of an environmental licence mental authorities may impose injunctions (called “preventive is possible under Decree 1076 of 2015 but only when a prior measures”) and/or sanctions to the companies that violate envi- authorisation has been granted by the environmental authority. ronmental law. The sanctions may be imposed according to the In this event, the licensee must request the transference in seriousness of the infraction, and may contemplate the possi- writing, and the environmental authority should make a state- bility of temporary or definite suspension of the activities. ment within the subsequent 30 days. 32 Waste 2.2 What rights are there to appeal against the decision of an environmental regulator not to grant an 3.1 How is waste defined and do certain categories of environmental permit or in respect of the conditions waste involve additional duties or controls? contained in an environmental permit? Title 2 of Decree 1077 of 2015 sets forth the general regime Considering that environmental law follows the rules of for the complete management of solid waste. This regulation

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equates waste and residue, and defines it as any object, material, 42 Liabilities 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 trans- 4.1 What types of liabilities can arise where there is a formed into a new asset, or to be finally disposed. breach of environmental laws and/or permits, and what defences are typically available? 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 Several types of liabilities may arise from a breach of environ- related to waste management. mental laws or permits. On the other hand, article 2.2.6.1.1.3 of Decree 1076 of Administrative liability may arise as a result of the failure 2015 defines hazardous waste as that with corrosive, reactive, to comply with environmental regulation, as provided in Law explosive, flammable, infectious and radioactive characteris- 1333 of 2009. This regulation states that any violation of a law tics, which may involve risk or damage to human health and regarding the protection of the environment empowers the envi- the environment. Furthermore, this regulation establishes that ronmental authorities to impose sanctions. These sanctions may any conventional waste in contact with hazardous waste must be vary from economic penalties to the suspension of the licence treated as hazardous. or definite suspension of activities. It also enables the environ- Hazardous waste handling involves additional duties or mental authorities to impose preventive measures in order to controls. These obligations are set forth in Decree 1076 of avoid probable environmental damage occurring. 2015 and are to be attributed jointly and severally to generators, Please note that the defence mechanisms correspond to the recon- producers and importers, who must assure the adequate disposal sideration petitions set forth by Colombian administrative law. or treatment of the waste. The Decree also sets forth the rules for On the other hand, civil liability may arise as the result of the handling, labelling and packaging of hazardous substances. proving the occurrence of damage to the environment, in which Generators of hazardous waste must maintain updates on the case the person held liable could argue for negligence, force characterisation of hazardous waste and prepare a Complete majeure or acts of third parties. Hazardous Waste Management Plan, as well as register before A set of punishable conducts regarding the environment is the environmental authorities as a generator of this type of waste. provided in the Criminal Code; hence criminal liability may take place in the event where criminal conduct is proven.

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? 4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is operated within permit limits? 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 Civil liability can arise in the event of environmental damage, and transferring it to waste disposal venues. despite operating within permit or licence limits. An operator can In terms of hazardous waste disposal and storage, Title 6 also be found criminally liable if the actions that led to the damage Section 3 of Decree 1076 of 2015 establishes the obligation for are included in the Criminal Code. A common way to hold an the generator to store the waste for a maximum of 12 months. operator liable for environmental damage is through the filing Nonetheless, the generator may request to extend this term of class actions or actions for the protection of collective rights. before the environmental authorities. Please note that, depending on the type of hazardous waste, 4.3 Can directors and officers of corporations attract the timeframe for the storage of the waste may vary. For personal liabilities for environmental wrongdoing, and example, used oils may only be stored for up to three months. to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities?

3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it When directors and officers undertake activities that lead to to another person for disposal/treatment off-site (e.g. environmental damage, they may be subject to personal liability if the transferee/ultimate disposer goes bankrupt/ if negligence or wilful misconduct is proven. The personal disappears)? liabilities in this case can only be imposed regarding criminal law, not in civil or administrative law, where the corporation Although non-hazardous waste retains no residual liability for is the one that will be held liable for the environmental wrong its producers, hazardous waste rules impose joint and several with its capital. In any case, if the environmental wrong was liabilities to those involved in the management chain of this caused directly from the directors’ and officers’ wrongdoing, the type of waste; even if it involves outsourcing for its transporta- company could sue them to recover the damages. tion and disposition. 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 author- 3.4 To what extent do waste producers have obligations ised by the statutes. They will also compensate the company for regarding the take-back and recovery of their waste? the damages caused. Although Colombian law contemplates the possibility of direc- Post-consumption and return plans are mandatory for the producer tors and officers obtaining policies to insure against personal and distributor of specific types of hazardous wastes. The Ministry liability from environmental wrongdoings, this possibility has not of Environment has issued in the last few years regulations to been completely developed yet. adequately collect and manage several types of waste, such as pesticides, acid lead batteries, medicines, batteries, tires and pneu- matics, light bulbs and electrical and electronic waste.

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4.4 What are the different implications from an 5.4 Does a person have a private right of action to environmental liability perspective of a share sale on the seek contribution from a previous owner or occupier of one hand and an asset purchase on the other? 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 An environmental liability is transferred to the shareholder or liability to a purchaser? 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 The purchaser can pursue civil actions to seek contribution from to the asset itself, the purchaser may claim for non-disclosed the previous owner of contaminated land when it is proven that the liabilities. 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 4.5 To what extent may lenders be liable for with the purchaser, but not towards third parties. environmental wrongdoing and/or remediation costs?

5.5 Does the government have authority to obtain from The lender, when becoming the owner, inherits environmental a polluter, monetary damages for aesthetic harms to liabilities. Nonetheless, if the lender is held liable and forced to public assets, e.g. rivers? assume remediation costs, an action to seek contribution may be invoked under a civil law perspective. The Government is not only entitled to obtain monetary From an administrative perspective, and regarding environ- damages from whoever is proven to have caused pollution, but mental wrongdoing, the current operator of the activity, regard- also to protect the environment. less of ownership, holds the liability. The authorities can also impose sanctions and fines within the sanctionatory regime from Law 1333 of 2009, which can be 52 Contaminated Land applicable to damages for aesthetic harms. Other mechanisms to obtain monetary damages from the polluter are class actions 5.1 What is the approach to liability for contamination or any other judicial actions that seek the repair of the damage (including historic contamination) of soil or groundwater? or the fulfilment of a specific environmental rule.

The approach to liability for contamination of soil and ground- 62 Powers of Regulators water is conducted under the perspective of administrative, civil and criminal liabilities. 6.1 What powers do environmental regulators have to In 2014, the Ministry of Environment and Sustainable require production of documents, take samples, conduct Development issued the Technical Guide for Soil Sampling, in which site inspections, interview employees, etc.? it established the minimum standards that Companies must follow with regards to discharges of fossil fuel to the soil. Environmental authorities are empowered to conduct site Particularly, the country has not yet developed regulations for inspections when evaluating whether a licence or permit is historic contamination liabilities; therefore, it is treated under granted. Technical experts from the authorities, who may take the liability regime that is applicable. samples, interview employees and collect the necessary information in order to study the feasibility of the project, must conduct 5.2 How is liability allocated where more than one these inspections. person is responsible for the contamination? After a visit, the experts must present a technical concept, which may be further adopted in the administrative act approving In this case, joint and several liabilities may be allocated under or denying the permit or licence. civil law. Thus, the involved parties may pursue an action to Environmental regulators are also able to require any docu- seek contribution to distribute the costs that must be paid. ments, or the duty to obtain samples or conduct site inspections, Under a criminal law perspective, if more than one person at any time, especially when the authority deems it necessary to commits a crime, then both individuals are held liable. fulfil an investigation or to rule out a violation of environmental law. In administrative acts, authorities can ask any person to file the documents, or to take the samples needed. 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 72 Reporting / Disclosure Obligations a third party challenge the agreement? 7.1 If pollution is found on a site, or discovered A programme of environmental remediation has to be proposed to be migrating off-site, must it be disclosed to an environmental regulator or potentially affected third by the company and approved by the environmental authority, parties? 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 Colombian legislation establishes the obligation to report pollu- perform follow-up and control visits, if it is considered necessary. tion found on a site, or migrating off-site, to the competent If a third party considers that the programme is not complete or authorities. In such case, the competent authorities are the envi- sufficient to remedy the damage, this person may ask the environ- ronmental authorities. This information is regularly received mental authority to require the company to adjust the programme. from community complaints.

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Every citizen has the obligation to disclose this type of infor- There are some cases in which the company disappears and mation. The omission to do so may result in liability for failure its shareholders and administrative staff cannot be found to to report such a situation. be brought to justice. In this case, the Colombian State should In the case of environmental licences and permits, the proce- remediate the environmental damages, and this is known as dures include a clause that contains this specific obligation. “orphan liabilities”. In other cases, when this happens and there is someone that bought the land where the pollution or damage was found, the 7.2 When and under what circumstances does a person have an affirmative obligation to investigate land for environmental authorities can force the new owner (company or contamination? person) to pay for the environmental liabilities.

When there is circumstantial evidence of contamination, any 8.3 Can a person who holds shares in a company person, owner or occupier of a land has the obligation to act be held liable for breaches of environmental law and/ diligently and to investigate the land to determine if it is contam- or pollution caused by the company, and can a parent company be sued in its national court for pollution inated and, if so, the magnitude of the contamination. caused by a foreign subsidiary/affiliate? 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 It is possible that diligence and knowledge of a specific envi- the corresponding investigation in order to impose sanctions. ronmentally 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 7.3 To what extent is it necessary to disclose actions or did not show interest in taking effective actions to environmental problems, e.g. by a seller to a prospective seek and reach environmental remediation. purchaser in the context of merger and/or takeover transactions? With regards to parent companies, these may also be held liable for environmental wrongdoings. At any time prior to the execution of a sale and purchase agreement, it is necessary to disclose environmental situations to avoid imper- 8.4 Are there any laws to protect “whistle-blowers” who fections in the purchaser’s consent that could turn the contract report environmental violations/matters? null, and result in the reversing of the liability back to the seller. If the environmental situation is not disclosed, the purchaser In administrative and civil law, there is no specific regulation has the right to seek contribution from the seller through a intended to protect whistle-blowers, or people who inform the redhibition, according to civil law procedures. authorities of environmental violations. However, in criminal law, there are dispositions that prescribe that the witnesses 82 General should be protected, so it is only logical that the “whistle-blowers”, being some sort of witness, should be protected 8.1 Is it possible to use an environmental indemnity too. Nonetheless, it is necessary to specify that in Colombia the to limit exposure for actual or potential environment- reports or complaints cannot be made anonymously. related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. 8.5 Are group or “class” actions available for pursuing remediation) discharge the indemnifier’s potential environmental claims, and are penal or exemplary liability for that matter? damages available?

From a civil law point of view, the parties may agree upon Law 472 of 1998, which regulates actions for the protection of indemnity; however, this is limited to the parties, and adminis- collective rights, establishes that this type of legal action can be trative and criminal authorities will only bear in mind the liabil- filed to pursue environmental claims. ities related to the environment. In the same way, Law 472 of 1998 regulates group or “class In this sense, conducting a payment under a private agreement actions” that pursue economic restitution as well as the protec- will not discharge the parties from environment-related liabili- tion of environmental claims. ties, since this will only be enforceable within the agreement. Regarding the penal or exemplary damages, it is important to Under Colombian regulations, there is a legal duty for the take into account that the Colombian legislation does not allow seller to disclose to the purchaser or buyer the possibility of these kinds of damages. contamination before a purchase agreement is made.

8.6 Do individuals or public interest groups benefit 8.2 Is it possible to shelter environmental liabilities off from any exemption from liability to pay costs when balance sheet, and can a company be dissolved in order pursuing environmental litigation? to escape environmental liabilities?

Law 472 of 1998 regulates class actions and the protection of If a certain company has an obvious environmental liability, under collective rights by which any individual may file a claim to accounting rules, its balance sheet has to reflect this special matter. avoid contingent damages from collective rights, or a group may On the other hand, if a company is dissolved in order to seek the recognition of damages from any adverse effect to the avoid, or with the idea of avoiding, any kind of environmental environment which can be individualised. liability or other obligations regarding this matter, it is usual for Regarding criminal or exemplary damages please be aware its shareholders and administrative staff to still be found liable that there is no such provision under Colombian regulation. for any environmental obligations that the company or enterprise may have.

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92 Emissions Trading and Climate Change 102 Asbestos

9.1 What emissions trading schemes are in operation 10.1 What is the experience of asbestos litigation in in your jurisdiction and how is the emissions trading your jurisdiction? market developing there? In February 2015, a group of citizens filed a Constitutional Class Through Law 1931 of 2018, the Colombian Congress created Action against the Congress of the Republic and other private an Emission Trading Scheme (ETS) for the country. The law institutions that work with asbestos. Given that this is the first does not set a specific cap, but establishes that the Ministry of known case of asbestos litigation in our country, we are waiting Environment and Sustainable Development will regulate the to hear what the court’s decision will be in this case, in order to number of allowances that the regulated sector must get annually have the first precedent on this matter. to support their GreenHouse Gas (GHG) emissions. Banking is allowed but borrowing and linking were not expressly included. 10.2 What are the duties of owners/occupiers of The scope, sectors, point of regulation and entities covered by premises in relation to asbestos on-site? the ETS will also be regulated by the Ministry of Environment and Sustainable Development. Regarding the distribution of allowances, this will be done In Colombia, under Law 436 of 1998, different aspects were through auctions, both directly and through offsets for volun- defined regarding asbestos use. Article 17 establishes that quali- tary mitigation activities. The ETS will interact with other fied personnel enforcing qualified standards or practices should economic instruments and it will take into account what is paid only perform the demolition of structures and edification sites as carbon tax. containing asbestos materials, and any elimination of asbestos from buildings or constructions. On the other hand, until Law-Decree 2041 of 2014, companies 9.2 Aside from the emissions trading schemes mentioned that wanted to use asbestos in their projects had to request an in question 9.1 above, is there any other requirement to environmental licence from the competent authority. However, monitor and report greenhouse gas emissions? with this Decree, an environmental licence is only needed for the production of substances, materials or products subjected to By means of Resolution 1447 of 2018, the Ministry of Environ- control by an international treaty of an environmental nature. ment and Sustainable Development regulated the Monitoring, As such, this means there is no specific regulation of the need to Reporting and Verification System of mitigation actions at the have an environmental licence for the production or manipula- national level. Through this Resolution all the mitigations initi- tion of asbestos. atives title holders who intend to opt for payments for results, Regulations for transporting and manipulating hazardous similar compensations or demonstrate compliance with national substances are also applicable to asbestos handling. goals of climate change under the United Nations Framework Convention on Climate Change must carry out the monitoring, 112 Environmental Insurance Liabilities reporting and verification of their GHG mitigation actions. This, in accordance with the principles of the MRV System of mitigation actions at the national level and the accounting rules 11.1 What types of environmental insurance are available in the market, and how big a role does established in such regulation. environmental risks insurance play in your jurisdiction? Additionally, under Resolution 1962 of 2017, the Ministry of Environment and Sustainable Development set a maximum standard of the coefficient indicator on greenhouse gas emis- The term “ecological insurance” was created by means of Law sions for Denatured Fuel Anhydrous Ethanol. In order to fulfil 491 of 1999; however, the competent authorities have not yet this requirement, plants that produce Anhydrous Ethanol Fuel developed its implementation. Nonetheless, civil liability may to mix with gasoline must calculate and report their Inventory be covered by insurance policies. of Greenhouse Gases, based on the methodology defined in The cases in which ecological insurance may be taken are also ISO 14064-1: 2006. established in this regulation, which is mainly directed towards guaranteeing the compliance of environmental regulations.

9.3 What is the overall policy approach to climate change regulation in your jurisdiction? 11.2 What is the environmental insurance claims experience in your jurisdiction? Law 1931 of 2018 sets forth the guidelines for the management of climate change in Colombia and applies both for public and There has been very little experience regarding insurance claims private entities, and regulates the confluence of different public related to environmental risks in the country, since ecological actors to deal with the adaptation to climate change and the miti- insurance has not yet been implemented. gation of greenhouse gases. Likewise, this Law seeks to reduce vulnerability to the effects of climate change and promote 122 Updates the transition towards a competitive, sustainable low carbon economy. Additionally, it raised the National System of Climate 12.1 Please provide, in no more than 300 words, a Change to a legal level, established key instruments to manage summary of any new cases, trends and developments in climate change, created the Information Systems on Climate Environment Law in your jurisdiction. Change and regulates economic and financial instruments. In addition to the ratification of the Paris Agreement, Throughout 2019 the Colombian Government issued regula- Colombia has a National Policy on Climate Change and a public tions in order to further develop the management of natural policy on Green Growth.

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resources in Colombia as well as improve the environmental On the other hand, the Government issued the Decree compensation actions. Some of the regulatory changes to high- 2106 of 2019, which regulates different procedures before light are the following: different authorities. Regarding the environmental authori- First, we must highlight article 321 of Law 1955 of 2019, ties, the Decree established that the communications between which established that pending compensations of no less than the authorities and users should be digital. Finally, the Decree 1% of the project value should be updated by any environ- determined that the lifting of the woodcutting ban is no longer mental licence-holder with that obligation. As well as article going to be any more than an authorisation given by the Ministry 13, by which the Government determined that the wastewater of Environment and Sustainable Development, but the compe- discharge permit must be obtained only when the final disposal tent environmental authority must establish the compensation is directed to the sea, the ground or any other body of water. actions for the project.

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Luis Fernando Macías Gómez is the Environmental Law Partner of Philippi Prietocarrizosa Ferrero DU & Uría. 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 opinion 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 at 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.

Philippi Prietocarrizosa Ferrero DU &Uría Tel: +57 1 326 8600 Carrera 9 # 74-08 Oficina 105 Email: [email protected] Bogotá URL: www.ppulegal.com Colombia

Philippi Prietocarrizosa Ferrero DU &Uría (“PPU”) is the first major Ibero- The experience acquired by the founding firms, the technical and profes- American law firm. The firm was born from a merger between the Chilean sional quality of their lawyers and the geographical reach through our Philippi, Yrarrázaval, Pulido & Brunner, Colombian Prietocarrizosa, and the network of offices, have turned PPU into the reference firm with the largest two Peruvian firms Ferrero Abogados and Delmar Ugarte. The prestigious direct presence in Latin America. Spanish and Portuguese firm Uría Menéndez has participated in the new We are strongly committed to internal/external regulatory compliance and firm since its inception in 2015. to the ethical standards that govern the ethics of the profession. PPU has With offices in Santiago (Chile), Bogotá and Barranquilla (Colombia), and a Division of Ethics and Conflicts of Interest. Lima (Peru) is a full-service firm. Additionally, Uría Menéndez brings its www.ppulegal.com network of offices in Spain, Portugal, New York, Beijing, London, and Brussels to the partnership. The firm provides an efficient response to the new demands for professional services arising from the growing economic interdependence between the Pacific Alliance countries (Chile, Colombia, Mexico and Peru), coupled with the increasing interest of European, Asian and North American companies in the Latin American region.

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Eleni Neoptolemou

Harris Kyriakides LLC Christina Christodoulou

12 Environmental Policy and its The Environment Service comprises five departments that enjoy respective competences in the fields of Waste Management, Enforcement Climate Action and Energy, Water Pollution Control, Permits and Inspections, Protection and Management of Nature and 1.1 What is the basis of environmental policy in your Biodiversity, as well as Environment Impact Assessment (EIA). jurisdiction and which agencies/bodies administer and The Department of Waste Management deals with waste enforce environmental law? management permits, solid waste, batteries, used oils, electronic and electrical waste, hazardous waste, waste shipments, pack- Following the accession of Cyprus to the European Union in aging waste, climate change, emissions trading and relevant 2004, the environmental policy has been subjected to a funda- EIAs. The Department of Climate Action and Energy deals mental review, in order to be brought into line with over 300 legis- with greenhouse gas emissions reductions, the Greenhouse Gas lative instruments (Regulations and Directives) and other action Emissions Trading Scheme, Aviation and Emissions Trading programmes which form part of the manifold, a complicated Scheme, maritime transport, general transports, collection and detailed environmental chapter of the acquis communautaire. and geological storage of carbon, monitoring and reporting Although the new legislative framework is systematically on greenhouse gas emissions and other climate change infor- comprehensive and clear in interpretation without leaving room mation, Sector “LULUCF” (Land use, land use change and for relaxations or illegalities, its implementation has seen steady forestry), fluorinated greenhouse gases, hydrocarbons and progress, indicated by the growing number of inspections and funding. The Department of Water Pollution Control, Permits fines imposed, as well as the Courts’ approach towards environ- and Inspections deals with the protection, control and preven- mental matters, as evidenced by the increasing number of cases tion of soil and water pollution from the operation of industrial, where the Environment Service’s Opinion of the Committee’s farming and human activities, extractive waste permits, indus- for Assessment of Environmental Impact report has been given trial emission permits, regular and on-the-spot environmental notable consideration when deciding the ruling of a matter. inspections. The Department of Protection and Management of The Ministry of Agriculture, Natural Resources and Nature and Biodiversity deals with the “Natura 2000” European Environment is the competent authority for the endorsement Ecological Network, flora, fauna and the habitat types, invasive and implementation of the governmental policy on environ- alien species, the movement of species and genetic resources and mental issues. Its tasks include the processing and execution of the GMOs. The Department Environment Impact Assessment individual plans and programmes aiming to develop the envi- deals with the assessment of the impacts on the environment ronmental sector and deal with particular problems identified from plans and programmes, the assessment of the impacts in relation to the environment. The Environment Service of the on the environment from projects, the environmental noise Ministry, a personnel team of the Ministry Directorate, is the and the integrated coastal zone management. In addition to key unit to which the environmental sector has been assigned. the Environment Service, various other Ministerial depart- The main competences of the Environment Service include the ments enjoy competences that involve satellite environmental provision of advice on issues of environmental policy, co-ordi- issues. Such examples are the Department of Town Planning nation of environmental action plans and supervision on the and Housing of the Ministry of the Interior, the Department performance and implementation of environmental policy and of Labour Inspection of the Ministry of Labour and Social legislation. It also performs impact assessments from contem- Security, the Public Health Service and the State General plated actions on the environment, advice on harmonisation of Laboratory of the Ministry of Health. Lastly, other semi-gov- Cyprus Law with the European policy, as well as legislation on the ernmental authorities and local authorities are entrusted with a environment, acting as the national authority for a wide range of variety of competences that are environmentally related, such international agreements, conventions and intergovernmental as water supply, sewerage and wastewater treatment, street organisations such as the Central Securities Depository (CSD), cleaning, waste collection and disposal, etc. the Mediterranean Commission on Sustainable Development (MCSD), Short and Medium Priority Environmental Action Programme (SMAP), Mediterranean Action Plan (MAP), United Nations Environment Programme (UNEP) and the promotion of environmental conscience and awareness.

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1.2 What approach do such agencies/bodies take to be published no more than 30 days after the issuing of the the enforcement of environmental law? Environment Service’s decision.

Following the integration of Cyprus as a full Member State of 22 Environmental Permits the European Union, there has been an enhancement in regulation, awareness and enforcement of environmental Law on the 2.1 When is an environmental permit required, and may island. The Environment Service has taken a strict and pro-ac- environmental permits be transferred from one person to tive approach, utilising both protective and preventative meas- another? ures that are apt for the enforcement of the regulatory framework. The 2018 Annual Report of the Environment Service Various legislative instruments provide for activities, projects, busi- shows that, with regard to pollution control, constant inspec- nesses, plants and installations which are subject to environmental tions were conducted on waste management sites. In cases permits, prior to their commencement and while their operation is where the inspections revealed infringements, proper measures pending. For the purposes of acquiring an environmental permit, were enforced, such as warning letters requesting immediate a study and other relevant information must be submitted by the compliance, out-of-court settlement procedures and drafting of developer of the project to the Environment Service, according reports for the Attorney General for the imposition of crim- to the provisions of the Environmental Impact Assessment of inal penalties. Specifically, 98 out-of-court settlements were Certain Works Law 127(I)/2018, detailing the characteristics of served in 2018, amounting to €93,300. The amount of money the project and its potential impact on the environment, etc. ultimately won from these out-of-court settlements amounts to The Environment Service is responsible for granting permits €72,700. Furthermore, the amount of €16,230 was also recov- for waste management according to the Waste Law 185(I)/2011, ered in arrears of out-of-court settlements from previous years. as amended, permits for waste disposal according to the Water Pollution Control Law 106(I)/2002, as amended, and permits 1.3 To what extent are public authorities required to for industrial emissions according to the Industrial Emissions provide environment-related information to interested (Integrated Pollution Prevention and Control) Law 184(I)/2013. persons (including members of the public)? The issuing of Air Emissions Permits for industrial plants also fall within the competence of the Ministry of Labour, specifically the Cyprus law has incorporated the Convention on Access to Department of Labour Inspection, according to the Air Pollution Information, Public Participation in Decision-Making and Control Law 187(I)/2002. Licensing may be subject to conditions Access to Justice in Environmental Matters (“the Aarhus that the competent authority deems fit for the protection of other Convention”) by passing Law 33(III)/2003. Further, the Law public interests, such as public health. Environmental permits on Public Access to Information Related to the Environment issued in the name of a corporate entity are not affected by any of 2004 – 119(I)/2004 was enacted for the purposes of harmo- change of share ownership of the corporate entity. nising Cyprus legislation with Directive 2003/4/EC on public Reversely, in the case of a sale of an asset which enjoys an access to environmental information. The above provisions environmental permit, this permit is not directly transferable or require public authorities to make available any environmental assignable. After being notified of any intention to transfer such information held by such authorities to any natural or legal asset which has been subject to a licence, the relevant authority person requesting such environmental information. The person ordinarily grants a new licence to the new owner, provided that requesting this information has no duty to state or prove any no changes or amendments have been effected. If the new owner legitimate interest. If the addressed public authority knows that effects amendments to the plans or operation of the project, instal- another public authority holds the requested information, it lation or plant, a new approval process is normally commenced. must send the application to the latter authority and inform the applicant accordingly. Public authorities may refuse a request 2.2 What rights are there to appeal against the for the disclosure of environmental information in restricted decision of an environmental regulator not to grant an circumstances defined by the Law, such as general or manifestly environmental permit or in respect of the conditions unreasonable requests, incomplete material or internal commu- contained in an environmental permit? nications, or in case the disclosure of this information would adversely affect confidentiality protected by Law, international Article 146 of the Cyprus Constitution secures the right of any relations, public security, national defence, the administration person affected by any decision of an administrative body to of justice, the conduct of an enquiry of a criminal or discipli- file an administrative recourse to the Administrative Court nary nature and the right of any person to receive a fair trial, of Cyprus. This right may be exercised within 75 days from tax secrecy, intellectual property rights, personal data of natural the date the decision is noticed to the interested person. Some persons not consenting to the disclosure of the information to Laws provide for the right to a hierarchical review of a decision, the public, the protection of the environment to which such which may be taken as an intermediary step prior to the filing of information relates (e.g. location of a rare species), etc. recourse to the Supreme Court. Any person who is not content with the response or lack of response to a request for disclosure of environmental information is entitled to apply for a hierarchical review and/or lodge an 2.3 Is it necessary to conduct environmental audits administrative recourse for the matter to be brought before the or environmental impact assessments for particularly Administrative Court of Cyprus. polluting industries or other installations/projects? Moreover, it is also established in Law 127(I)/2018 that the public must be kept informed of any decisions the Environmental Regulation of specially polluting industries and large-scale Service takes relating to submitted studies and the issuing of the installations is implemented through the Environmental Impact relevant permits to projects, programmes and plans, by having Assessment of Certain Works Act 2018 (Law 127(I)/2018), as access to such information on the Service’s website and through well as through the relevant Regulation R.A.A. 420/2008. The other forms of public announcements. This information should Law which was established gave competence to the Committee

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on the Assessment of Impact on the Environment, to assess 3.3 Do producers of waste retain any residual liability preliminary reports and formulate opinions as to whether a in respect of the waste where they have transferred it comprehensive report on EIA must be prepared on the basis of to another person for disposal/treatment off-site (e.g. specific criteria, such as the size of the project, proximity to other if the transferee/ultimate disposer goes bankrupt/ installations, use of natural resources and energy, waste produc- disappears)? tion, pollution and nuisance, and risk of accidents, particularly during the use of substances and technologies and the poten- Liability vests on the person who possesses waste. Producers tial dangers to human health. The Committee is also vested of waste may be liable for damage that occurs as a result of a with general advisory competences, both in regard to the conse- breach of their aforementioned duties, i.e. to take precau- quences that the execution or operation of a specific project may tionary measures that would ensure the elimination of risk or have on the environment, the assessment of EIA and whatever nuisance to public health or the environment, to deliver the other topic is requested. waste without delay to a licensed person or in the event of an unlawful or dangerous transfer of waste or irrational manage- 2.4 What enforcement powers do environmental ment or handling of used oils. regulators have in connection with the violation of permits? 3.4 To what extent do waste producers have obligations Criminal liability and sanctions are contemplated for any person regarding the take-back and recovery of their waste? operating any installation or performing activities contrary to a legislative requirement to obtain an environmental permit or The Packaging and Packaging Waste Law (No. 32(I)/2002, authorisation. Violations may take the form of failure to obtain as amended) defines the responsibilities of companies that a permit or breach of the conditions of an acquired permit. are considered to be responsible for their packaging and the Sanctions comprise fines up to €500,000 and imprisonment that ways and means for the recovery and recycling of their pack- does not exceed three years or both of these sanctions, according aging waste. According to the Order 747/2003, issued by the to the provisions of Law 185(I)/2011, Law 184(I)/2013 and Law Council of Ministers for the purpose of supplementing the Law 106(I)/2002. In addition, said Laws provide the power to the 32(I)/2002, waste producers may either organise and manage an competent authorities to vary the terms and conditions of any individual Collection and Recovery System or join a Collective permits or authorisations granted or to cancel them. System. Following the practice in other EU Member States, a large number of companies in Cyprus have created and joined 32 Waste collective organisations such as the Cyprus Waste Management Organization (KODA). Additional joined collective organisations have been established for the management of household 3.1 How is waste defined and do certain categories of dry cell batteries, as well as Electrical and Electronic Equipment. waste involve additional duties or controls?

Waste is defined as every substance or object which the possessor 42 Liabilities disposes of, intends to dispose of, or is obliged to dispose of. It includes residue of production or consumption that cannot be 4.1 What types of liabilities can arise where there is a processed further, products not in compliance with the original, breach of environmental laws and/or permits, and what expired products, contaminated or polluted material, non-us- defences are typically available? able elements of products, as well as any materials, substances or products. Certain categories of waste involve additional duties A breach of any environmental Law may result in criminal, or controls, as stipulated in detailed legislative instruments. A administrative or civil liability. Criminal liability is founded on major instance of such increased protection is hazardous waste, several offences which involve breaches of environmental legis- i.e. waste characterised by explosiveness, oxidisation, inflamma- lation, such as failure to obtain environmental permits, breach bility, combustiveness, harmfulness, toxicity, carcinogenicity and of conditions of permits, water pollution, soil pollution, waste other potentially dangerous attributes. In addition, supplementary disposal and other. Sentencing involves fines of up to €500,000 duties are provided for producers of electrical substances (in regard or imprisonment for not more than three years or both of these to establishment and maintenance of a collection/recycle system, sanctions, according to Law 185(I)/2011. Criminal liability may as well as prohibition of use of any equipment that contains lead be avoided in cases of force majeure, provided that the accused and other substances), as well as owners of aged motor vehicles. proves that due care and attention were demonstrated to prevent the committing of the offence and that all possible measures for 3.2 To what extent is a producer of waste allowed to store remediation were taken without undue delay. Civil liability may and/or dispose of it on the site where it was produced? arise under the Law of torts and, in particular, the well-known case Law developed in relation to the torts of nuisance. Any management of waste, including storing and disposal, can only be made by duly licensed persons. Persons who are not 4.2 Can an operator be liable for environmental respectively licensed have a legislative duty, for any amount damage notwithstanding that the polluting activity is of waste in their possession, to take provisional measures for operated within permit limits? the elimination of risks to the public health or environment or nuisance and, thereafter, a duty to deliver the waste without A polluting activity which is permissible under the terms and delay to a licensed person. This duty is codified in article 15(2), conditions of a valid licence, provided that this was obtained where it is stated that original waste producers must cooperate prior to the commission of the polluting activity, cannot provide with licensed establishments or persons, duly registered in the a legitimate ground for criminal liability. In that respect, legis- Waste Management Registry. lative provisions specifically state that the obtaining of a valid

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permit constitutes a defence to any criminal offence. However, mud or other semi-liquid or dry waste from any installation on or this does not automatically absolve any person from civil liability, in the soil or sub-soil; (e) disposal or depositing from any instal- provided that damage to a third party can be proved and the lation into any surface waters or coastal waters, of any liquid or polluting activity falls within the ambit of the Law of torts. dry waste, or any other liquid containing floating matter; and (f) disposal or depositing into the sea mud of any substance or matter that comes from the treatment of waste. The relevant offence 4.3 Can directors and officers of corporations attract personal liabilities for environmental wrongdoing, and provides for a maximum sentence of three years’ imprisonment, to what extent may they get insurance or rely on other a €500,000 fine or both. Valid defences include the acquisition indemnity protection in respect of such liabilities? of a permit prior to the commission of the offence and, under certain conditions, if the accused proves that the disposal, deposit or distribution was done in compliance with agricultural practice Under general criminal Law provisions dealing with offences or that the disposal, deposit or distribution was due to a cause out committed by corporate entities, as well as under specific provi- of his control and that due care and attention was demonstrated sions that can be found in environmental Law, criminal liability in preventing the committing of the offence and that all possible is imposed on directors and officers of corporate entities who measures for remediation were taken without undue delay. Civil commit a breach of said environmental Law. Liability depends liability may arise under the general Law of torts. on the premise that such persons have expressly or impliedly authorised the commission of this act. If several directors or officers are prosecuted for the same offence, a defence may be 5.2 How is liability allocated where more than one raised by some of them on the ground that the polluting activity person is responsible for the contamination? was effected under the orders of other directors or officers and that they had no personal knowledge of such action. Directors With regard to criminal liability, any person that has contrib- or officers may rely on indemnity provisions, provided that uted to contamination shall be liable for the relevant offence, these provisions form part of an agreement between themselves regardless of whether more persons may have equally contrib- and the corporate entity or if this indemnity is provided for in uted. With regard to civil liability, apportionment is a duty of the articles of association of the corporate entity. Insurance is the Court and the general principles are that: (a) allocation is also available, although not customarily utilised. effected on the basis of the magnitude of fault of each party involved; and (b) in cases where differentiation on this crite- 4.4 What are the different implications from an rion cannot be made, liability is split equally. In any event, the environmental liability perspective of a share sale on the liability of tortfeasors is joint and several, while tortfeasors may one hand and an asset purchase on the other? seek to transfer liability to other parties, usually through third- party proceedings. In the event of a merger or acquisition of capital in a company, environmental liability is not affected, in the sense that liability 5.3 If a programme of environmental remediation remains with the company. In the event of an asset sale, liability is “agreed” with an environmental regulator, can the remains with the seller, although it is customary to include regulator come back and require additional works or can indemnity clauses for the protection of the buyer, especially a third party challenge the agreement? where pollution or its extent may not be easily verifiable. If this arrangement falls within the ambit of private Law, general 4.5 To what extent may lenders be liable for principles of contract shall apply and such agreement may only environmental wrongdoing and/or remediation costs? be considered non-binding if it specifically states this to be the case or under other general principles of void contractual obligations, such as a mistake. On the other hand, if the arrange- There is no precedent under Cypriot Law for founding liability ment is ruled to fall within the ambit of public Law, any effort to on lenders for environmental wrongdoing and/or remediation demand additional works may be barred under the general prin- costs and the prospects for such a claim are relatively remote. ciple of estoppel or venire contra factum proprium, which are mirrored in general principles of Cypriot administrative Law and jurispru- 52 Contaminated Land dence. Generally, the environmental regulator is not willing to commit to any particular works and the remediation may only 5.1 What is the approach to liability for contamination be assessed after it has been implemented. Third parties may (including historic contamination) of soil or groundwater? not challenge agreements that fall within private Law. In the event that the agreement falls within public Law, they can challenge this agreement before the Cypriot Administrative Court Contamination of soil or underwater constitutes a criminal through an administrative recourse, provided that they allege offence under the Law of Control of Water Pollution (106/2002, and prove a legitimate interest in doing so. as amended). This offence embraces: (a) disposal, depositing or distribution into a stream, dry river bed of any stream, coastal waters, lake or dam, of any object, substance or matter that 5.4 Does a person have a private right of action to pollutes or tends to pollute their waters; (b) disposal, depositing seek contribution from a previous owner or occupier of or distribution on the soil or subsoil of any object, substance or contaminated land when that owner caused, in whole or in part, contamination; and to what extent is it possible matter, in such way that it pollutes or tends to pollute coastal for a polluter to transfer the risk of contaminated land waters, groundwater, stream water, or the water of a lake or dam; liability to a purchaser? (c) depositing of any object, substance or matter in a place from where it is likely to fall or be transferred into a stream, the dry river bed of a stream, a lake or a dam, in a way that would pollute The rights of subsequent land owners against previous owners who or tend to pollute their waters; (d) disposal of any liquid waste, may have caused land contamination shall be dealt with under the

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contract of sale of the land. In that respect, the relevant contractual obligation to disclose any environmental problem; however, provisions must provide for a base line contamination survey, an a reason to avoid contractually binding obligations may be allocation of risk and proper indemnity clauses. If this matter was founded on false disclosure or representation. not expressly agreed, the rights of the subsequent owner are rather limited to rescission and damages on grounds of a mistake or failure to disclose information. Transfer of risk of contaminated liability to 82 General a purchaser may also form part of a contractual agreement. 8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment- 5.5 Does the government have authority to obtain from related liabilities, and does making a payment to another a polluter, monetary damages for aesthetic harms to person under an indemnity in respect of a matter (e.g. public assets, e.g. rivers? remediation) discharge the indemnifier’s potential liability for that matter? Under general principles of tort, the government must prove the ownership of public assets, the breach of statutory duty by the Under the general principles of contract law, parties may formu- defendant and the damage occurred, which may either be quan- late the contact of their contractual arrangement in such a way tifiable (special damages) or non-quantifiable (general damages). so that it mirrors their intentions. Accordingly, a contract may provide for an environmental indemnity to limit exposure for any actual or potential environment-related liabilities. General 62 Powers of Regulators indemnity rules apply in such agreements.

6.1 What powers do environmental regulators have to require production of documents, take samples, conduct 8.2 Is it possible to shelter environmental liabilities off site inspections, interview employees, etc.? balance sheet, and can a company be dissolved in order to escape environmental liabilities?

Regulators enjoy wide powers under several provisions in environmental Law, including the power to enter premises without The correct practice for financial reporting is to note in the notice, carry out investigations, take measurement, sampling, balance sheet any environmental liability which has been crys- making inspections and checks on equipment and the structures, tallised (e.g. in the sense of a formal demand) and make provi- requiring production of documents or information, receive and sion for any potential liability which has not yet been crystal- transport any object or substance for the purpose of conducting lised, but it is reasonably suspected to arise in the future. When further investigation or submit it to the Court as evidence, request a company is dissolved, it escapes not only environmental, but that any machinery, equipment or structure remain intact for the also any other liability under the well-established principles of purposes of inspection, request from any person deemed relevant corporate autonomy and limited liability. It is important to note to the investigation to provide him with the necessary information. that according to the Companies Law, article 326, the Court has vested authority to issue an Order, to declare the dissolution of the company invalid and as such any proceedings could 72 Reporting / Disclosure Obligations continue as if the company had not been dissolved.

7.1 If pollution is found on a site, or discovered to be 8.3 Can a person who holds shares in a company migrating off-site, must it be disclosed to an environmental be held liable for breaches of environmental law and/ regulator or potentially affected third parties? or pollution caused by the company, and can a parent company be sued in its national court for pollution Cyprus environmental Laws 184(I)/2013 and 106(I)/2002 caused by a foreign subsidiary/affiliate? provide for obligations of immediate disclosure to the Minister of Agriculture, Natural Resources and the Environment and The well-established principles of autonomy and limited liability Law 187(I)/2002 provides obligations of immediate disclosure do not permit the transfer of liability from a corporate entity to the Minister of Labour, Welfare and Social Security in the to its shareholders or any other company, regardless of whether event of an incident or accident to which the permit relates and this is a subsidiary or a mother company. The general excep- which affects or is likely to affect the environment or any person tion of “lifting the veil” applies in regard to sham companies; in the area of installation or disposal or project. however, as an exception it is treated with strictness.

7.2 When and under what circumstances does a person 8.4 Are there any laws to protect “whistle-blowers” who have an affirmative obligation to investigate land for report environmental violations/matters? contamination? Cypriot environmental Law does not provide for such protection. Cypriot environmental Law does not provide for affirmative obligations of investigations for land contamination. 8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary 7.3 To what extent is it necessary to disclose damages available? environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover transactions? Cypriot Law only accommodates representative actions and not class actions; the difference being that each claimant can only be bound from a judicial proceeding if he is separately added as a Under the general principles of contract law, there is no claimant or if he expressly authorises his representation.

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8.6 Do individuals or public interest groups benefit Climate Change (UNFCCC), which Cyprus signed in 1997, and it from any exemption from liability to pay costs when was ratified by the Cypriot Parliament under the ratification Law pursuing environmental litigation? 12(III)/2003. In addition, Cyprus signed the Kyoto Protocol in 1990, which it subsequently ratified and incorporated to national law Cyprus, as a Member State of the United Nations Commission through Law 29(III)/2003. Cyprus is not included in Annex B of for Europe (UNECE) ratified in 19 September 2001 the the Kyoto Protocol. As far as the Kyoto Convention is concerned, Convention on Access to Information, Public Participation Cyprus has also ratified it, but without having the status of an Annex in Decision and Access to Justice in Environmental Matters I party to the convention. Since Cyprus’ accession to the EU, there (Aarhus Convention) and started implementing it by passing Law has been an obligation to reduce greenhouse gas (GHG). 33(III)/2003. According to article 9 of the Aarhus Convention, Hence, as a Member State, Cyprus has to limit GHG emis- every contracting party to the Convention should ensure that sions under the Effort Sharing Decision, which is the Decision any person who considers that his/her request for information No. 443/2009/EC of the European Parliament and of the has been ignored, wrongfully refused, inadequately answered or Council and it was entered into force on 25 June 2009. In an otherwise not dealt with, has access to an expeditious review effort to reduce these emissions, Cyprus has already taken procedure established by law which is free of charge or inex- measures in various levels, including legal, administrative and pensive for reconsideration by a public authority or review by an political action. For Cyprus, this corresponds to a reduction independent and impartial body other than a court of law. in GHG emissions by 42% for electricity generation and the Apart from the Aarhus Convention, Cyprus has implemented production of cement and ceramics, and 22% in other sectors, the requirements of the relevant European Directive (2003/4/EC) including agriculture, transport, waste, etc., by 2030, compared on Public Access to Environmental Information by passing a new to the 2005 levels. Cyprus faces the challenge of developing Law (No. 119 (1)/2004), which includes provisions on access to its economy to try and minimise the emissions of greenhouse justice, but it does not deal with the matter of costs in case of envi- gases, and at the same time adopt and implement those measures ronmental litigation. and actions appropriate to enable adaptation to climate change.

92 Emissions Trading and Climate Change 102 Asbestos

9.1 What emissions trading schemes are in operation 10.1 What is the experience of asbestos litigation in in your jurisdiction and how is the emissions trading your jurisdiction? market developing there? The only reported case for asbestos litigation in Cyprus today The licensing of industrial plants and the granting of the relevant is Attorney General of the Republic v. Pogiatzis (No. 4264/2013). Air Emission Permits are materialised through the provisions of This particular case involved the examination of the claim the Air Pollution Control Law 187(I)/2002 and the Industrial regarding asbestos fibres possibly contained within construc- Emissions (Integrated Pollution Prevention and Control) Law tion material, making them dangerous and unfit. 184(I)/2013. The Permits granted include operating conditions such as the obligation to install air pollution abatement tech- 10.2 What are the duties of owners/occupiers of niques and not to exceed the set air emission standards. premises in relation to asbestos on-site?

9.2 Aside from the emissions trading schemes mentioned According to the Security and Health Protection in Employment in question 9.1 above, is there any other requirement to (Protection from Asbestos) Regulations of 2006, any employer monitor and report greenhouse gas emissions? who intends to expose his employees to asbestos must apply and obtain a relevant licence from the Chief Inspector of the According to the aforementioned Laws (Law 187(I)/2002 and Department of Labour. In addition, every employer has an over- Law 184(I)/2013), before the grant of an Air Emission Permit or arching duty to ensure, to the extent that is reasonably possible, the an Industrial Emissions Permit, there are technical requirements safety and health of all his employees during exposure to asbestos. to be satisfied for any machine or equipment used by the industrial plants. Furthermore, any material (including fuels) used 112 Environmental Insurance Liabilities by such machines or equipment should meet standard requirements of quality. The owner of the industrial plant is obliged to install measurement instruments or other kinds of equipment 11.1 What types of environmental insurance are available in the market, and how big a role does at his own expense and in places approved by the Minister of environmental risks insurance play in your jurisdiction? Labour and Social Insurance in order to measure the quality of atmosphere air, as well as the total amount of any substance that is emitted in the atmosphere within a particular period of time. Insurance companies in Cyprus may provide insurance cover After this, the measurements and any other data regarding the for environmental risks up to a certain amount. This insurance greenhouse gas emissions must be documented in a report and cover has a particular character and cannot be expected to be be sent to the Ministry of Labour and Social Insurance. provided under standard insurance policies.

9.3 What is the overall policy approach to climate 11.2 What is the environmental insurance claims change regulation in your jurisdiction? experience in your jurisdiction?

The cornerstone of international law regarding the combating of There is no extensive environmental insurance claims experi- climate change is the United Nations Framework Convention on ence in Cyprus.

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122 Updates and thorough in its examinations of the Environment Service’s opinions or the EIAs issued by the Committee for the Assessment of Environmental Impact, and has showed great consideration 12.1 Please provide, in no more than 300 words, a towards the latters’ findings. summary of any new cases, trends and developments in Specifically, in the case of A.P. Energ y LTD v. The Council Of environment law in your jurisdiction. Minsters (No. 6107/13), regarding the construction of a wind farm, the Court indicated that the overwhelming amount of With regard to the legislation, Cyprus has ratified the Kiev Protocol material contained in the administrative files and the thorough- after having signed it on 21 May 2003. This ratification resulted in the ness of the investigation conducted by the CAEI, in their efforts issuance of the new Law about the Aarhus Convention on Access to to comply with the EU’s requirements for environmental issues Information, Public Participation in Decision and Access to Justice and avoiding serious consequences, proves that due inquiry was in Environmental Matters and Relevant Protocols (Ratifying) made. Other cases where the EIA was conducive to the Court (Amending) Law of 2012 (Law 21(III)/2012). Additionally, Cyprus Opinion was Maroula Pantela and others v. The Republic (No. 231/15), has ratified the 2015 Paris Agreement and accordingly has imple- where again the Court was sure to point out the CAEI detailed mented the Paris Agreement on Climate Change (Ratification) approach in their report, and in Harris Antoniadis and others v. Law of 2016 (Law 30(III)/2016), involving the effective tackling of The Republic and the Municipality of Limassol (No. 1366/2010). In climate change by actively limiting, through a series of efforts, the these more current cases, it is apparent that the Courts of Cyprus amount of emissions produced by each State. are displaying clear willingness in adopting the CAEI’s or the As far as the jurisprudence is concerned, it is worth mentioning Environment Service’s Opinions and Reports and has become that in recent years, in a series of cases, the Supreme Court and after more likely to attach greater importance on the environmental 2015, the Administrative Court has been exceptionally receptive issues presented by the Service and the CAEI.

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Eleni Neoptolemou is an Associate in the Department of Competition, Public Procurement and Regulatory and the Department of Data Protection and Cyber Law at Harris Kyriakides LLC. Eleni specialises in the areas of oil and gas, administrative law, tender processes, and data protection. She regularly appears before the Administrative Court of Cyprus and other authorities, such as the Tenders Review Authority and Consumer Protection Service, and assists in cases challenging decisions of public authorities on behalf of private clients. She also provides opinions regarding oil and gas matters regarding legal and contractual matters.

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Environment & Climate Change Law 2020 © Published and reproduced with kind permission by Global Legal Group Ltd, London 66 Chapter 10 Egypt Egypt

Esraa Yulia V. Hesham Akinfieva

Amina Zaynab Youssry Saleh & Partners El Baz Ismail

12 Environmental Policy and its According to Article 5 of the Egyptian Environmental Protection Law No. 4 of the year 1994, the EEAA shall Enforcement formulate the general policy and prepare the necessary plans for the preservation and development of the environment and 1.1 What is the basis of environmental policy in your follow up its implementation in coordination with the compe- jurisdiction and which agencies/bodies administer and tent administrative bodies. It may undertake the implementa- enforce environmental law? tion of some experimental projects. The Agency shall be the national authority responsible for The environmental policy of the Government of Egypt seeks to supporting the environmental relations between the Arab Republic achieve environmental protection through the establishment of of Egypt and the international and regional organisations. proper institutional, economic, legislative and technical frame- The NTRA recommends that legal action be taken to accede to works at the local, regional, national and international levels. international and regional agreements related to the environment This is expressed through the seven directives of the policy and prepares the draft laws and decisions necessary for the imple- statement of the ministry: mentation of these agreements in order to achieve its objectives: ■ Strengthening partnerships at the national level. ■ Prepare draft laws and decisions related to achieving the ■ Supporting bilateral and international partnerships in the objectives of the Authority and express opinion on the environmental fields. proposed legislation related to the preservation of the ■ Enforcing Law 4 of 1994 for the protection of the envi- environment. ronment, and Law 102 of 1983 for Natural Protectorates ■ Preparing studies on the environmental situation, formu- and all other environmental legislation. lating the national plan for the protection of the environ- ■ Supporting institutional strengthening and capacity ment and the projects it includes, preparing the estimated building for the Egyptian Environmental Affairs Agency budget for each of them, as well as the environmental and Environmental Management Units (EMUs) of the maps of the urban areas and areas planned for develop- governorates. ment, and setting the criteria to be adhered to in the plan- ■ Supporting Integrated Environmental Management ning and development of new areas as well as the criteria Systems. for the targeted areas. ■ Integrate the use of market-based instruments in the field ■ Setting the standards and requirements that the owners of environmental protection. of projects and establishments must adhere to, before ■ Transfer and adaptation of environmentally friendly construction and during operation. technologies. The Ministry of Environment – the Egyptian Environmental 22 Environmental Permits Affairs Agency (EEAA) – EMUs of the governorates. 2.1 When is an environmental permit required, and may 1.2 What approach do such agencies/bodies take to environmental permits be transferred from one person to the enforcement of environmental law? another?

The implementation of the environmental policies of the According to Article 10 of the Executive Regulation of the Government of Egypt is carried out with four main principles Environmental Protection Law No. 338 of the year 1995: underlying environmental management and protection initiatives: “Each public or private natural or legal person is obliged to ■ Strengthening the Integrative Capacity of Central and submit a study to assess the environmental impact of the facility Local Government. or project to the competent administrative authority or the ■ Strengthening of Public-Private Partnerships. licensing authority before starting the implementation of the ■ Partnerships with Environmental Non-Governmental project. The competent administrative authority or the licensing Organizations. authority shall verify all required data before sending it to the EEAA for feedback. The competent administrative authorities in charge of the industrial zones are obliged to submit a study 1.3 To what extent are public authorities required to of the environmental pollution loads and the distribution plan provide environment-related information to interested of the activities in the area to ensure the homogeneity of activ- persons (including members of the public)? ities and the absence of negative impacts in case of exceeding

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incompatible activities. This study should be submitted to on the proposal of the Minister of Environment, and after the the EEAA for review, environmental feedback, and envi- approval of the concerned authorities – its sources shall be ronmental load lists. Attached to this study is the Integrated suspended immediately, by all means and procedures, by an admin- Environmental Management Plan for the Industrial Zone, istrative decision issued by the Executive Chairman of the EEAA. including the Solid Waste and Hazardous Waste Management In all cases, the EEAA is obliged to notify the Council of Plan, Industrial Wastewater Treatment and Final Disposal, and Ministers of its actions to stop the sources of such danger. the Self-Monitoring Plan for Air Quality, Noise and Wastewater Such establishments shall be obliged to keep the environ- in the Area.” mental register in accordance with the form stipulated in Article The Environmental permits cannot be transferred from one 17 of these Regulations permanently. When renewing their person to another. data, the establishment shall keep it for a period of ten years calculated from the date of signing the inspection by the representative of the EEAA.” 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 2.4 What enforcement powers do environmental contained in an environmental permit? regulators have in connection with the violation of permits? According to Article 21 of the Environmental Protection Law No. 4 of the year 1994: “The competent administra- Article 5 of the Egyptian Environmental Law No. 4 of the tive authority shall notify the owner of the result of the eval- year 1994 stipulates that the Environmental Affairs Authority uation with a registered letter of arrival, and he may object in shall perform field follow-up to the implementation of the writing to this result, within 30 days from the date of its notifi- standards and requirements that the bodies and establishments cation, before a committee formed by a decision of the minister are obliged to implement and take the procedures stipulated by concerned with the environment affairs. The committee shall law against those who violate these standards and conditions. be represented in this committee and the owner of the establishment, the competent authority, or the licensing authority. The 32 Waste Executive Regulations shall specify the terms of reference of this Committee and the procedures of its objection.” 3.1 How is waste defined and do certain categories of waste involve additional duties or controls? 2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly Article 1 of the General Provisions of the Egyptian polluting industries or other installations/projects? Environmental Protection Law No. 4 of the year 1994 provided and defined different kinds of waste as follows: As per Article 18 of the Executive Regulation of the ■ Contaminants of the aquatic environment: Environmental Protection Law No. 338 of the year 1995: Harmful and hazardous wastes provided for in international “The EEAA is responsible for following up the data of the envi- agreements to which the Arab Republic of Egypt is bound. ronmental register, to ensure its conformity with reality and the ■ Hazardous waste: adherence of the establishment to the self-monitoring plan, the The residue of various activities and processes or their validity of its equipment and the efficiency of the monitoring ashes retaining the properties of hazardous substances personnel. The EEAA shall take the necessary samples and that do not have subsequent original or alternative uses conduct the appropriate tests to determine the impact of the such as clinical wastes from therapeutic activities and activity of the establishment on the environment, determine its wastes resulting from the manufacture of any pharmaceu- compliance with the criteria and requirements set for the protec- ticals, organic solvents, inks, or dyes. tion of the environment, and the specific loads of pollutants. ■ Some categories of wastes involve additional measures as If it is found that: the establishment does not keep the envi- per Article 29 of the above-mentioned Environmental ronmental record; its data is not regularly recorded; it does not Law which states: “Handling of hazardous materials and conform to reality; the establishment does not comply with the wastes without a license from the competent administrative mentioned standards or loads; or there is any other violation of authority is prohibited. The Executive Regulation of this Article 22 of the Environment Law, the EEAA shall promptly Law shall specify the procedures and conditions for granting notify the competent administrative authority to instruct the the license and the competent authority to issue it. owner of the establishment to correct the violation as required In coordination with the Minister of Health and EEAA, by the technical assets, and send a copy of such notification to the Ministers within its jurisdictions shall issue a table of the owner of the establishment, if it does not do so within sixty hazardous substances and wastes referred to in the first para- days from the date of its assignment. graph of this Article.” The EEAA, by a decision of the Chief Executive Officer, ■ Article 31 of the Egyptian Environmental Law states: shall, after notifying the competent administrative authority, “It is prohibited to establish any facilities for the treat- take any of the following actions: ment of hazardous wastes unless authorized by the compe- ■ Granting a specific additional period for the establishment tent authority after taking the opinion of the EEAA. The to rectify the violations according to the environmental disposal of hazardous wastes shall be in accordance with sanitation plan submitted by the facility, otherwise the the conditions and criteria specified in the executive regu- authority may do so at the expense of the establishment. lation of this law. ■ Stop the infringing activity, by administrative means, until The Minister of Housing, after taking the opinion of the effects of the violation are eliminated without preju- the Ministries of Health and Industry and EEAA, shall dice to the wages of its employees. determine the places and conditions of the license for the In the case of serious environmental danger – which the disposal of hazardous waste.” Council of Ministers approves the criteria to determine, based

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Article 32 of the Egyptian Environmental Law stip- them to the designated disposal places specified by the local ulates: “Hazardous waste is prohibited to be imported, authorities and the competent administrative and environ- allowed to enter or pass through the territory of the Arab mental authorities. These wastes shall be subject to the circula- Republic of Egypt. tion of these wastes as stipulated in this regulation.” It is prohibited without permission from the competent administrative authority to allow the passage of ships 42 Liabilities carrying hazardous wastes into the territorial sea or the exclusive economic zone of the Arab Republic of Egypt.” 4.1 What types of liabilities can arise where there is a Article 25 of the Executive Regulation of the breach of environmental laws and/or permits, and what Environmental Protection Law No. 338 of the year defences are typically available? 1995 stipulates: “Without prejudice to the text of Article 32 of the Environment Law, it is prohibited to deal with hazardous substances and wastes without a license issued Article 84 of the above-mentioned Environmental Law stip- by the competent authority indicated for each type of such ulates: “Whoever violates the provisions of Article 28 of this materials and wastes, as follows: Law shall be fined a sum of not less than two hundred Egyptian 1. Agricultural Hazardous Substances and Wastes pounds and not more than five thousand Egyptian pounds. In (Pesticides and Fertilizers) – Ministry of Agriculture. addition, birds and animals seized as well as the machines and 2. Industrial Hazardous Materials and Wastes – Ministry equipment used in the violation shall be confiscated.” of Industry.” Article 84BIS of the above-mentioned Environmental Law stipulates: “Penalties for violating provisions of Articles 22 and 37 (item a) and 69 of this Act shall be punished by imprisonment for 3.2 To what extent is a producer of waste allowed to store a period not exceeding one year and a fine not less than five thou- and/or dispose of it on the site where it was produced? sand pounds and not more than one hundred thousand pounds. Violators are punishable by a fine of not less than fifty thou- The following Articles of Law clarifies the ways of disposal of sand pounds and not more than a million pounds for every all kinds of wastes: contravention of the provisions of Articles (23.19) of the Act. ■ Article 33 of the Egyptian Environmental Law stipu- In case of repetition, redouble the minimum and maximum lates: “Those responsible for the production or handling limits of the fine and a maximum penalty of imprisonment. of hazardous materials, whether in their gaseous, liquid In addition to the original previous sanctions, violators may or solid state, shall take all precautions to ensure that no be sentenced to close the premises and cancel the license issued damage to the environment occurs. to it or stop the violating activity.” The owner of the establishment whose activity produces Article 54 of the Egyptian Environmental Law stipulates hazardous wastes in accordance with the provisions of that: “The penalties prescribed in this Law shall not apply to this law shall keep the register of such wastes and how to cases of pollution resulting from: dispose them as well as the contracting parties to receive a) Securing the safety of a ship or the lives of those on board. such wastes.” b) Discharge resulting from damage to a ship or its equipment, ■ Article 60 of the Egyptian Environmental Law provided such damage was not caused by the master or the states: “Ships carrying harmful substances transported in person in charge to disable or destroy the ship or as a result of containers, shipping containers, pallets, road tankers or negligence. In all cases, the master of the ship or the person iron tankers shall not be disposed of by throwing them in charge thereof must have taken before and after the occur- in the territorial sea or the exclusive economic zone of the rence of damage all necessary precautions to prevent or Arab Republic of Egypt.” reduce the effects of pollution and must have immediately ■ Article 28 of the above-mentioned Executive notified the competent administrative authority. Regulation of the Environmental Law stipulates: This shall be without prejudice to the right of the competent “Where hazardous wastes cannot be treated or disposed authority to recover the costs of removing the effects of pollu- of at the source of their generation, the entity that gener- tion from the party responsible therefor and to claim damages for ates these wastes shall collect and transport them to the losses incurred and injuries sustained by reason of such pollution.” designated disposal sites specified by the local authorities, the competent administrative authorities and the 4.2 Can an operator be liable for environmental Environmental Affairs Agency regulations.” damage notwithstanding that the polluting activity is operated within permit limits? 3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it to An operator may be held liable if he did not adhere to the another person for disposal/treatment off-site (e.g. if the measures stated in the Egyptian Environmental Law and its transferee/ultimate disposer goes bankrupt/disappears)? Executive Regulation with regards to all the activities that may affect the Environment. This is not applicable. 4.3 Can directors and officers of corporations attract 3.4 To what extent do waste producers have obligations personal liabilities for environmental wrongdoing, and regarding the take-back and recovery of their waste? to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities? Article 28 of the Executive Regulation of the Egyptian Environmental Law states: “Where hazardous wastes cannot The liability falls under the owner of the entity and whoever is be treated or disposed of at the source of their generation, the delegated by the owner even if it was the Manager. entity that generates these wastes shall collect and transport No insurance or indemnity protection is valid.

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4.4 What are the different implications from an 5.5 Does the government have authority to obtain from environmental liability perspective of a share sale on the a polluter, monetary damages for aesthetic harms to one hand and an asset purchase on the other? public assets, e.g. rivers?

The same provisions of the Environmental Law and its Yes, it does. Executive Regulation will be applied in case of share sale and asset purchase. 62 Powers of Regulators

4.5 To what extent may lenders be liable for 6.1 What powers do environmental regulators have to environmental wrongdoing and/or remediation costs? require production of documents, take samples, conduct site inspections, interview employees, etc.? This is not applicable. According to Article 5 of the Egyptian Environmental 52 Contaminated Land Protection Law No. 4 of the year 1994: the EEAA shall formulate the general policy and prepare the necessary plans for the preservation and development of the environment and 5.1 What is the approach to liability for contamination follow up its implementation in coordination with the compe- (including historic contamination) of soil or groundwater? tent administrative bodies. It may undertake the implementation of some experimental projects. The Agency shall be the national authority responsible Article 33 of the Egyptian Environmental Law stipulates: for supporting the environmental relations between the “Those responsible for the production or handling of hazardous Arab Republic of Egypt and the international and regional materials, whether in their gaseous, liquid or solid state, shall take organisations. all precautions to ensure that no damage to the environment occurs. The NTRA recommends that legal action be taken to accede The owner of the establishment whose activity produces to international and regional agreements related to the environ- hazardous wastes in accordance with the provisions of this law ment and prepares the draft laws and decisions necessary for shall keep the register of such wastes and how to dispose them as the implementation of these agreements. In order to achieve its well as the contracting parties to receive such wastes.” objectives, the Agency may: Article 85 of the Environmental Law stipulates: “Whoever ■ Prepare draft laws and decisions related to achieving the violates the provisions of Articles 30-31-33 shall be punished by objectives of the Authority and express opinion on the imprisonment for a period not less than one year and a fine of proposed legislation related to the preservation of the not less than ten thousand pounds and not more than twenty environment. thousand pounds.” ■ Prepare studies on the environmental situation, formu- lating the national plan for the protection of the environ- 5.2 How is liability allocated where more than one ment and the projects it includes, preparing the estimated person is responsible for the contamination? budget for each of them, as well as the environmental maps of the urban areas and areas planned for develop- This is not applicable. ment, and setting the criteria to be adhered to in the planning and development of new areas as well as the criteria for the targeted areas. 5.3 If a programme of environmental remediation ■ Set the standards and requirements that the owners is “agreed” with an environmental regulator, can the of projects and establishments must adhere to, before regulator come back and require additional works or can construction and during operation. a third party challenge the agreement? ■ Take inventory of national institutions as well as competencies that contribute to the preparation and implementa- Yes, the Regulator can come back and require additional works by tion of environmental conservation programmes and use Adjustment conditions through the Environmental Consultant, them in the preparation and implementation of projects where the Consultant agrees with the Environmental Authority and studies that prepare them. to make amendments and adjustment conditions. Third parties are not allowed to challenge the Agreement. 72 Reporting / Disclosure Obligations

5.4 Does a person have a private right of action to 7.1 If pollution is found on a site, or discovered seek contribution from a previous owner or occupier of to be migrating off-site, must it be disclosed to an contaminated land when that owner caused, in whole or environmental regulator or potentially affected third in part, contamination; and to what extent is it possible parties? for a polluter to transfer the risk of contaminated land liability to a purchaser? Article 55 of the Egyptian Environmental Law states: “The owner of the ship, the captain or any person responsible for it, The Land Owner is responsible for cleaning the land. and those responsible for oil transportation within ports, the The contamination and all waste on the Land is transferred regional sea or the exclusive economic zone of the Arab Republic directly to the purchaser of the land or the new owner unless of Egypt, as well as the companies involved in the extraction of the land owner and the purchaser agree that the land owner will oil, shall promptly inform the competent administrative author- be responsible for sanitising the land before the transfer of the ities of every incident of oil leakage as soon as it occurs with property. the ship. The statement of the circumstances of the accident

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should include the type of leaked material, the measures taken Violators are punishable by a fine of not less than fifty thou- to stop or reduce the leak, and other data provided for in the sand pounds and not more than a million pounds for every Convention and the Law. contravention of the provisions of Articles (23.19) of the Act. In all cases, the competent administrative authorities shall In case of repetition, redouble the minimum and maximum inform the EEAA of all information about the incident referred limits of the fine and a maximum penalty of imprisonment. to immediately.” In addition to the original previous sanctions, violators may be sentenced to close the premises and cancel the license issued to it or stop the violating activity.” 7.2 When and under what circumstances does a person have an affirmative obligation to investigate land for contamination? 8.2 Is it possible to shelter environmental liabilities off balance sheet, and can a company be dissolved in order Article 19 of the Egyptian Environmental Law states: “Each to escape environmental liabilities? public or private natural or legal person is obliged to submit a study to assess the environmental impact of the establishment No, it is not possible to shelter environmental liabilities off or project to the competent administrative authority or the balance sheet. licensing authority before starting the implementation of the project. The competent administrative authorities are obliged 8.3 Can a person who holds shares in a company to submit maps of industrial zones showing the types of indus- be held liable for breaches of environmental law and/ tries allowed by environmental loads.” or pollution caused by the company, and can a parent company be sued in its national court for pollution caused by a foreign subsidiary/affiliate? 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 The liability falls under the owner of the entity and whoever is transactions? delegated by the owner, even if it was the Manager. It is also possible to sue the Parent Company in its national Article 22 of the Environmental Law stipulates: “According to Court. the provisions of this law, the person responsible for managing the establishment shall keep a record of the statement of the 8.4 Are there any laws to protect “whistle-blowers” who activity impact of the establishment on the environment (envi- report environmental violations/matters? ronmental register). The Executive Regulation shall set a model for this register No, there are no laws that protect “whistle-blowers”. and the timetable for its retention by the establishments and the data in which it is recorded.” 8.5 Are group or “class” actions available for pursuing 82 General environmental claims, and are penal or exemplary damages available?

8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment- Yes, group actions are possible for pursuing Environmental Claims. related liabilities, and does making a payment to another The Egyptian Environmental Law Section No. 4 deter- person under an indemnity in respect of a matter (e.g. mined all the penalties for Environmental violations. remediation) discharge the indemnifier’s potential liability for that matter? 8.6 Do individuals or public interest groups benefit from any exemption from liability to pay costs when It is not possible to use an environmental indemnity to limit the pursuing environmental litigation? exposure for actual or potential environment related liabilities, where Article 19 of the Egyptian Environmental Law states No, neither individuals nor public interest groups can benefit that: “Each natural or legal person or public or private person from any exemption from liability in Egypt. shall submit a study to assess the environmental impact of the facility or project to the competent administrative authority or the licensing authority before starting the implementation of the 92 Emissions Trading and Climate Change project. The study shall be conducted according to the elements, designs, specifications, foundations and specific loads issued 9.1 What emissions trading schemes are in operation by EEAA in coordination with the administrative authorities. in your jurisdiction and how is the emissions trading The competent administrative authorities are obliged to provide market developing there? maps of industrial zones showing the types of industries allowed according to environmental loads.” In accordance with Decisions 1/CP.19 and 1/CP.20 “The UN As previously stated, the penalty of violating such act is stated Decisions”, the Arab Republic of Egypt submits its report on in Article 84 of the Egyptian Environmental Law that stip- the Intended Nationally Determined Contributions (INDCs) ulates: “Penalties for violating provisions of Articles 22 and 37 towards achieving the objectives of the United Nations (item a) and 69 of this Act shall be punished by imprisonment for Framework Convention on Climate Change (UNFCCC). The a period not exceeding one year and a fine not less than five thou- report provides information which enhances clarity, transpar- sand pounds and not more than one hundred thousand pounds. ency, and understanding of Egypt’s INDC.

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Egypt is a part of the Kyoto Protocols to the UN framework 102 Asbestos convention on Climate Change (UNFCCC) Clean Development Mechanism (CDM) that allows carbon savings from clean energy projects in developing states to be sold to buyers in rich 10.1 What is the experience of asbestos litigation in nations seeking to meet mandatory emissions targets. your jurisdiction?

The manufacture and import of Asbestos is prohibited by virtue 9.2 Aside from the emissions trading schemes mentioned of the Minister of Commerce and Industry Decree No. 336 of in question 9.1 above, is there any other requirement to monitor and report greenhouse gas emissions? 2004 concerning the Prohibition of Import and Manufacture of Asbestos. INDC Definition: Measures determined and intended to be applied by the country to face climate change in terms of adapta- 10.2 What are the duties of owners/occupiers of tion (to climate change impacts) and mitigation (reducing green- premises in relation to asbestos on-site? house gas emissions). The INDC Report includes the following elements: This is not applicable. 1. National circumstances that address general economic conditions, including economic and population growth 112 Environmental Insurance Liabilities rates, major sustainable development goals, and political circumstances. 11.1 What types of environmental insurance are 2. National efforts implemented to combat climate change available in the market, and how big a role does in Egypt, in terms of treating impacts in different sectors environmental risks insurance play in your jurisdiction? (agriculture, water resources, coastal zones, etc.) or efforts made to reduce GHGs emissions in different sectors There is no environmental insurance in Egypt. (energy, transportation, industry, etc.).

11.2 What is the environmental insurance claims 9.3 What is the overall policy approach to climate experience in your jurisdiction? change regulation in your jurisdiction?

There is no environmental insurance in Egypt. The National Council for Climate Change established under Prime Ministerial Decree No. 1912 of 2015 is the national authority concerned with climate change. The Council has all 122 Updates the necessary powers to perform its work, and works to achieve the following objectives: 12.1 Please provide, in no more than 300 words, a 1. Formulate the general policies of the State with regard summary of any new cases, trends and developments in to dealing with climate change, and work to develop and environment law in your jurisdiction. update sectorial strategies and plans for climate change, in the light of international conventions and national inter- No environmental cases are available to public domain and ests, and work to formulate and update a comprehensive there are no new developments or updates in the Environmental national strategy for climate change. Law in 2019. 2. Linking national climate change policies, strategies and plans to the sustainable development strategy. 3. Follow-up the negotiations of the Framework Convention on Climate Change and the protocols or conventions emanating therefrom and related to national communications.

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Esraa Hesham is an Attorney-at-Law in the corporate team at Youssry Saleh and Partners Law Firm. Ms. Esraa Hesham has significant experience in the corporate field, including providing legal opinions, analysing legal documents, legal research, incorporation of companies, reviewing and drafting contracts – including those for distribution, franchise, employment, secondment, partnership, commercial cooperation agreements, Memoranda of Understanding and e-services, among others – as well as drafting required POAs along with preparing documents for company meetings such as EGMs, OGMs, BODs and AGMs, and also works on public-private partnership projects. Moreover, Ms. Hesham has drafted many legal articles in order to follow up with the amendments and changes in laws and regulations in the Arab Republic of Egypt.

Youssry Saleh Law Firm Tel: +202 2262 2002 24, St. Al Tayaran, 7th Floor Email: [email protected] Nasr City, Cairo URL: www.youssrysaleh.com Egypt

Yulia V. Akinfieva, M.B.A., LL.M. is a partner and Management Consultant. Mrs. Yulia Akinfieva advises national and international clients including but not limited to investors, financial services firms, trade and industrial companies and institutions in connection with contract and commercial law, transactions and regulatory matters, compliance and governance, as well as counsels on internal investigations and in merger and acquisition transactions, joint ventures, and takeovers. She also assisted clients in raising capital, structuring and executing corporate transactions, implementing compliance programmes as well as corporate re-structuring. Furthermore, as a seasoned management consultant, she has extensive experience in telecoms, real estate, aviation and manufacturing, as well as the energy sector.

Youssry Saleh Law Firm Tel: +202 2262 2002 24, St. Al Tayaran, 7th Floor Email: [email protected] Nasr City, Cairo URL: www.youssrysaleh.com Egypt

Ms. Amina El Baz is an attorney-at-law at Youssry Saleh & Partners, who has experience in Labour Law, Commercial Law, Companies Law, Egyptian Civil Aviation Law, etc. Her core responsibilities lie in conducting legal research, providing legal opinions related to several fields including oil & gas and PPP projects, etc. She also has experience in analysing cases, reviewing and drafting contracts including employment contracts, lease contracts, share transfer agreements, distribution agreements, aircraft charter contracts, and secondment agreements. In addition, she drafts required POAs, prepares documents for company meetings, and prepares and provides all the required information regarding incorporation of companies.

Youssry Saleh Law Firm Tel: +202 2262 2002 24, St. Al Tayaran, 7th Floor Email: [email protected] Nasr City, Cairo URL: www.youssrysaleh.com Egypt

Ms. Zaynab Ismail is an attorney-at-law at Youssry Saleh & Partners Law Firm as a part of the corporate team. Ms. Ismail’s core responsibilities lies in drafting and reviewing contracts and agreements such as: Distribution, Franchise, Employment, Secondment, Partnership, E-services, Master-reseller, Commercial Cooperation, Memorandum of Understanding, and others as well as conducting legal researches in a wide range of areas of practice in Egypt and the MENA region as well. Moreover, she legally analyses different laws, regulations and International conventions concerning Egypt and the MENA region. She assists in and drafts expert witness reports and witness statements. Ms. Ismail has assisted the world’s leading international companies on corporate matters such as incorporation of local entities, corporate advice (including corporate restructuring and corporate reporting requirements).

Youssry Saleh Law Firm Tel: +202 2262 2002 24, St. Al Tayaran, 7th Floor Email: [email protected] Nasr City, Cairo URL: www.youssrysaleh.com Egypt

Youssry Saleh Law Firm, established in 1985, is a full-service law firm in Egypt, which has gained a strong reputation for supporting businesses in a wide range of industries as well as helping individual clients. Youssry Saleh Law Firm in Egypt is experienced in drafting and negotiating oil and gas deals and rendition of prior and post legal consultation on disputes arising in relation thereto, whether in respect of execution or accommodation of the changes in governmental laws, rules and regulations concerning the industry itself or industries related thereto. www.youssrysaleh.com

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European Union European Union

Jan Bouckaert

Guan Schaiko

Stibbe Cedric Degreef

12 Environmental Policy and its in environmental decision-making and liability for environmental damage. Whereas EU Regulations apply in the national Enforcement legal orders of the Member States without the need for transposition, Directives aim at approximation through transposition 1.1 What is the basis of environmental policy in your (into national law) and implementation, of which the Member jurisdiction and which agencies/bodies administer and States enjoy a certain discretion. Examples of the former include enforce environmental law? the Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals (“REACH”); examples of the latter The EU is competent to act in all fields of environmental are the Waste Framework Directive, the Air Quality Framework policy, including air and water pollution, waste management and Directive and the Industrials Emissions Directive. climate change. EU environment policy is based on the prin- Besides these instruments, the case law of the Court of Justice ciple of subsidiarity and Articles 11 and 191–193 of the Treaty of the European Union (“CJEU”) is an important source of EU on the Functioning of the European Union (“TFEU”). Article environmental law, too. 3(3) of the Treaty on the European Union (“TEU”) lists “sustain- The main driver behind the EU policy on the environ- able development […] based on […] inter alia a high level of protection ment is the European Commission (“Commission”). The and improvement of the quality of the environment” among the EU’s Commission proposes environment policies, formally adopted objectives. According to Article 191 (1) of the TFEU, the EU by the European Council and the European Parliament, and shall contribute to: (a) preserving, protecting and improving safeguards its implementation on the basis of multiannual the quality of the environment; (b) protecting human health; Environment Action Programmes. As the “Guardian of the (c) prudent and rational utilisation of natural resources; and Treaties”, the Commission is empowered under Article 17 of the (d) promoting measures at an international level to deal with TEU to ensure the correct application of the EU instruments regional or worldwide environmental problems, in particular, in the field of environmental law. The Directorate-General for combatting climate change. EU environmental policy shall be Environment is the Commission department responsible for EU based on the precautionary principle, the polluter pays principle, policy on the environment; climate change is the responsibility and on the principle that preventive action should be taken and of the Directorate-General for Climate Action. The current EU that environmental damage should, as a priority, be rectified at environment and climate change policy objectives are set out source. in the Seventh Environmental Action Programme “Living well, Over the last 40 years, the body of law that makes up the within the limits of our planet”, which has guided EU environ- European environmental acquis has steadily expanded although ment policy until 2020. The objectives are: to protect, conserve in more recent years it has been reaching maturity. Nevertheless, and enhance the European Union’s (“EU”) natural capital; this body of law is continually under assessment with significant turn the EU into a resource-efficient, green and competitive developments having taken place in the chemicals sector, but low-carbon economy; and safeguard the EU’s citizens from also in the waste, air and water sectors. environment-related pressures and risks to health and well- The vast majority of EU environment legislation is in the form being. On 4 October 2019, the Council of the European Union of Directives. In addition, the EU legislature is empowered to called upon the European Commission to present an ambitious adopt Regulations and Decisions to implement the aforemen- Eight Environment Action Programme “Turning the Trends tioned principles. Currently, over 200 legal acts exist in the field Together” by early 2020 for the 2021–2030 period, comple- of EU environmental law and climate change, covering areas menting the newly announced European Green Deal with the such as air quality, waste management, water protection, nature aim of tackling climate and environmental-related challenges. protection, industrial pollution control, chemicals management, Other specialised agencies and bodies play an important role noise and greenhouse gas emissions. Other instruments deal in the enforcement of environmental law too. Important exam- with crosscutting issues such as environmental impact assess- ples are the European Chemical Agency (“ECHA”) in the field ments, access to environmental information, public participation of chemicals and the European Food Safety Authority (“EFSA”)

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which monitors food safety issues. The European Environment The case law of the CJEU on the admissibility of actions Agency (“EEA”) assists the Commission with providing infor- lodged by third parties (other than Member States and the mation on the environment, which includes the 2020 State of Commission) remains restrictive, though. the Environment Report. 22 Environmental Permits 1.2 What approach do such agencies/bodies take to the enforcement of environmental law? 2.1 When is an environmental permit required, and may environmental permits be transferred from one person to another? The enforcement of EU environmental law is primarily the responsibility of the national authorities. Therefore, the focus of the Commission is on facilitating compliance and enforce- EU law does not provide for general rules on when an envi- ment on the national level through guidelines, better knowledge ronmental permit is required. This is a matter of national law. and responsiveness. Key in that regard is the 2008 Commission Specific EU environmental regulations nonetheless contain Communication on implementing European Community permit obligations. The Industrial Emissions Directive, for Environmental Law that sets out the Commission’s enforce- example, requires some large-scale industrial installations to ment strategy to tackle breaches of EU Environmental Law. obtain an operating permit granted by the national authori- In addition, Directive 2008/99/EC defines a number of ties. Other pieces of EU legislation, although not entailing serious offences that harm the environment and requires EU any explicit permit requirements, impose some form of devel- countries to introduce effective and proportionate penalties opment consent for some activities with adverse effects on the constituting a deterrent for such offences, if they are committed environment. Under Article 6 (3) of the Habitats Directive, for intentionally or with at least serious negligence. These offences example, the competent national authorities shall agree to a plan include: discharging, emitting or otherwise releasing dangerous or project only after having ascertained that it will not adversely materials into air, soil or water; collecting, transporting, recov- affect the integrity of a protected site. ering or disposing of hazardous waste; shipping noticeable quantities of waste; operating an industrial plant that conducts 2.2 What rights are there to appeal against the dangerous activities or stores dangerous substances (e.g. facto- decision of an environmental regulator not to grant an ries producing paints or chemicals); manufacturing, treating, environmental permit or in respect of the conditions storing, using, transporting, importing, exporting, or disposing contained in an environmental permit? of nuclear material and hazardous radioactive materials; killing, possessing or trafficking noticeable amounts of protected EU law does not regulate the rights of applicants with an envi- animal and plant species; and damaging protected habitats and ronmental permit. This remains a matter of domestic law of the producing, trading in or using substances that deplete the ozone Member States. However, domestic procedural rules shall not layer (e.g. chemicals in fire extinguishers or cleaning solvents). deprive EU law of its effects. Specific EU instruments in the field of environmental law, such as REACH, require an effective enforcement mechanism, which include criminal sanctions too. 2.3 Is it necessary to conduct environmental audits If a Member State fails to fulfil its obligations under EU or environmental impact assessments for particularly polluting industries or other installations/projects? environmental law, the Commission may bring infringement proceedings against that Member State before the CJEU on the basis of Article 258 TFEU. The Commission shall deliver EU law provides for a mandatory environmental assessment of a reasoned opinion the matter first, after giving the Member certain plans and programmes (“SEA Directive”) and projects State concerned the opportunity to submit its observations. If (“EIA Directive”). The aim of these instruments is to ensure the Member State concerned does not comply with the opinion that environmental considerations are integrated into the prepa- within the period laid down by the Commission, the latter may ration and authorisation of plans, programmes and projects. bring the matter before the CJEU. There are numerous exam- Environmental assessments apply to airports, nuclear installa- ples of Member States brought before the CJEU in accordance tions, railways, roads, waste disposal installations, waste water with Article 258 TFEU. treatment plants, etc. Some EU instruments in the field of environmental law, such as the Industrial Emissions Directive, require some form of 1.3 To what extent are public authorities required to mandatory environmental reporting. provide environment-related information to interested persons (including members of the public)? 2.4 What enforcement powers do environmental Regulation 1367/2006 requires the EU’s institutions and various regulators have in connection with the violation of permits? bodies to implement the obligations contained in the Aarhus Convention, i.e. to guarantee public access to information, participation in decision-making and access to justice on envi- EU law does not regulate the enforcement powers of national ronmental issues. The CJEU considers access to environmental environmental regulators in connection with the violation of information to be an integral part of the exercise by EU citizens permits. This remains a matter of domestic law of the Member of their democratic rights. In principle, no interest is required to States. obtain environmental information. Under the principle of sincere cooperation laid down in Article In addition to the foregoing, the European Environment 4 (3) TEU, however, Member States are required to nullify the Agency provides the public with objective, reliable and compa- unlawful consequences of an infringement of EU (environ- rable information on the state of the environment. mental) law. The competent (environmental) authorities are

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therefore under an obligation to take all measures necessary, 3.4 To what extent do waste producers have within the sphere of their competence, to remedy the failure obligations regarding the take-back and recovery of their to comply with obligations under EU environmental law, for waste? example, by revoking or suspending permits. Therefore, if the violation of a permit involves a violation of EU (environmental) The Waste Framework Directive provides for a system of law, the national (environmental) authorities will need to take extended producer responsibility, to strengthen the re-use, appropriate action in order to put an end to that infringement. prevention, recycling and other recovery of waste. Under EU law, extended producer responsibility is mandatory within the 32 Waste context of: the WEEE Directive; Batteries Directive; and the End-of-Life Vehicles Directive. The applicable legal frame- 3.1 How is waste defined and do certain categories of work puts the responsibility for the financing of collection, recy- waste involve additional duties or controls? cling and responsible end-of-life disposal of WEEE, batteries, accumulators and vehicles on the producers. The Packaging The Waste Framework Directive is the main instrument in the Directive requires Member States to take necessary measures to field of waste management in the EU and establishes a waste ensure that systems are set up for the collection and recycling of hierarchy: prevention; re-use; recycling; and recovery for other packaging waste. purposes such as energy and disposal. Waste is defined in the Waste Framework Directive as “any 42 Liabilities substance, object that the holder discards, intends to discard, or is required to discard”. It does not cover certain types of waste such as radioac- 4.1 What types of liabilities can arise where there is a tive elements, decommissioned explosives, faecal matter, waste breach of environmental laws and/or permits, and what waters and animal carcasses. defences are typically available? The Waste Framework Directive is based on the “polluter pays principle”, whereby the original waste producer must pay At an EU level, the Environmental Liability Directive lays down for the costs of waste management. It introduces the concept liability rules in the aftermath of a breach of environmental of “extended producer responsibility” on certain categories of law and/or permits. The cornerstone of this directive is the waste (infra question 3.4), which may include an onus on manu- “polluter-pays principle”, meaning that an entity causing envi- facturers to accept and dispose of products returned after use. It ronmental damage is liable for it and must take the necessary furthermore incorporates certain provisions on hazardous waste preventive or remedial action and bear all the related costs. The (e.g., cannot be mixed or diluted), waste oils and equally includes directive defines environmental damage as “damage that signifi- re-use and recycling targets for, inter alia, paper, metal, plastic cantly affects the environmental (ecological, chemical or quantitative) status and glass. of water resources, damage to land creating a significant risk to human In addition to this framework directive, there exist several health and damage to protected species and natural habitats that adversely legislations on specific categories, such as: the WEEE Directive affects conservation”. This definition includes, among others, the (electrical and electronic equipment); the Batteries Directive; discharge of pollutants into the air, inland surface water and the End-of-Life Vehicles Directive; and the Packaging Waste groundwater. Directive. The Environmental Liability Directive provides for both fault-based liability, as well as strict liability. According to this 3.2 To what extent is a producer of waste allowed so-called faultless liability system, operators of certain listed to store and/or dispose of it on the site where it was dangerous activities – such as energy industries, production and produced? processing of metals, mineral industries, chemical industries and waste management – are liable if a causal link is established In principle, any original waste producer or other holder must between that activity and the environmental damage, even if the carry out the treatment of waste himself or have the treatment operator did not commit any wrongful behaviour. Liability in handled by a dealer, establishment or undertaking which carries the context of environmental damage to protected species and out permitted waste treatment operations, or arrange for it to natural habitats (or its imminent threat) caused by other activi- be disposed of by a private or public waste collector. Member ties than those listed in the directive, occurs only if the entity is States may decide that the responsibility for arranging waste at fault or negligent. management is to be borne partly or wholly by the producer of Defences for breaches of environmental law under the the product from which the waste came and that distributors of Environmental Lability Directive include, among others, envi- such product may share this responsibility. In practice, most ronmental damage (or an imminent threat of such damage) Member States opted for a collective waste management system, caused by: (i) an act of armed conflict, hostilities, civil war or based on a shared responsibility of the waste producers. insurrection; or (ii) a natural phenomenon of exceptional, inev- itable and irresistible character. Compliance with an environmental permit may equally be invoked under the Environmental 3.3 Do producers of waste retain any residual liability Liability Directive, provided that certain conditions are met in respect of the waste where they have transferred it (infra question 4.2). to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/ disappears)? 4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is operated within permit limits? Under the Waste Frame Directive, as a general rule, the transfer of waste does not discharge the original producer or holder of the waste from its responsibility for carrying out a complete Under the Environmental Liability Directive, Member States recovery or disposal operation. can allow the operator not to bear the cost of remedial action

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taken pursuant to the directive where he demonstrates that: for example, Member States must ensure that the permit for (i) he was not at fault or negligent; and (ii) the environmental certain listed activities includes at least the appropriate require- damage was caused by an emission or event expressly authorised ments ensuring protection of the soil and groundwater and peri- by, and fully in accordance with the conditions of, an authori- odic monitoring of soil and groundwater in relation to relevant sation conferred by or given under applicable national laws and hazardous substances likely to be found on site. regulations which implement those legislative measures adopted Groundwater is dealt with under the Water Framework by the Union specified in Annex III of the directive, such as Directive and the Groundwater Directive with the aim of waste management operations. achieving good quantitative and chemical status of groundwater. The Member States are the addressees of those obligations and must, inter alia, take appropriate measures to achieve 4.3 Can directors and officers of corporations attract personal liabilities for environmental wrongdoing, and the water quality standard and avoid a deterioration of the water to what extent may they get insurance or rely on other quality. indemnity protection in respect of such liabilities? As to liability for the contamination of soil and groundwater, the aforementioned framework laid down in the Environmental Liability Directive applies. Under the Environmental Liability Directive, “operator” is defined as “any legal, private or public person who operates or controls the occupational activity or, where this is provided for in national legislation, 5.2 How is liability allocated where more than one to whom decisive economic power over the technical functioning of such an person is responsible for the contamination? activity has been delegated […]”. Hence, if directors and officers of corporations operate or The allocation of liability in case of multiple-party causa- control the occupational activity, they might qualify as “oper- tion falls, in principle, beyond the scope of European Law. ators”, and incur liability under the Environmental Liability The Environmental Liability Directive, e.g., provides that the Directive. Directive is without prejudice to any provisions of national Liability for environmental damage can be covered by insur- regulation concerning cost allocation in cases of multiple-party ance (infra section 11). causation.

4.4 What are the different implications from an 5.3 If a programme of environmental remediation environmental liability perspective of a share sale on the is “agreed” with an environmental regulator, can the one hand and an asset purchase on the other? regulator come back and require additional works or can a third party challenge the agreement? EU law does not address the different implications from an environmental liability perspective of a share sale vs. an asset EU environmental law does not address the question of envi- purchase. This remains a matter of domestic (corporate) law of ronmental remediation agreements. This remains a matter of the Member States. national law. Under the Environmental Liability Directive, Often, however, the seller remains liable for all matters however, the competent authority under domestic law may at concerning the business that occurred prior to the purchase any time require supplementary information or require the oper- under an asset deal, whereas in case of a share deal, the buyer ator to take the necessary remedial measures, or give instruc- acquires or takes over all liabilities (no assets but shares are tions to the operator as to the necessary remedial measures. acquired). In practice, division or allocation of (environmental) liabilities, including soil contamination, will be settled among 5.4 Does a person have a private right of action to the parties and set out in the purchase agreement by way of stip- seek contribution from a previous owner or occupier of ulating it in specific guarantees, representation and warranties, contaminated land when that owner caused, in whole or often based on the findings from a due diligence investigation. in part, contamination; and to what extent is it possible for a polluter to transfer the risk of contaminated land liability to a purchaser? 4.5 To what extent may lenders be liable for environmental wrongdoing and/or remediation costs? Under the Environmental Liability Directive, an operator is Since lenders do not operate or control the occupational activity, not required to bear the cost of preventive or remedial actions they will not be liable for environmental wrongdoing under the when he can prove that the environmental damage or imminent Environmental Liability Directive. threat thereof was caused by a third party. Member States must provide for the possibility in such cases to enable the operators 52 Contaminated Land to recover the costs incurred. The question of transfer of liability must be assessed under domestic law of the Member States. 5.1 What is the approach to liability for contamination (including historic contamination) of soil or groundwater? 5.5 Does the government have authority to obtain from a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers? EU environmental law does not provide for a comprehensive legal framework on soil contamination yet. Regulations in other fields such as agriculture, water, waste, chemicals, and There is no specific basis for authorities to obtain monetary prevention of industrial pollution nonetheless contribute to the damages from a polluter for aesthetic harm to public assets, such protection of soil. Under the Industrial Emissions Directive, as rivers, under EU law.

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62 Powers of Regulators 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 6.1 What powers do environmental regulators have to transactions? require production of documents, take samples, conduct site inspections, interview employees, etc.? The disclosure of environmental problems, e.g. in the context of a merger and/or takeover transactions, is not subject to any As discussed in section 1, the focus of EU environmental law specific EU legislation. There exist, however, general trans- is on facilitating and promoting compliance of Member States parency requirements for listed companies under Directive with the applicable environmental legislations. Although the 2004/109/EC. The information to be published is of a predomi- European Commission plays an important role in this regard, nantly financial nature, such as, e.g., yearly and half-yearly finan- the national environmental regulators are the predominant cial reports, major changes in the holding of voting rights and actors for enforcing compliance with EU environmental law. ad hoc inside information that could affect the price of securities. Recommendation 2001/331/EC nevertheless sets, in The latter might in theory include information related to envi- a non-prescriptive way, minimum criteria for organising, ronmental problems. In practice, especially in the context of performing, following-up and publishing the results of envi- sizable mergers and/or takeover transactions, the process of ronmental inspections in all Member States with the aim of exchanging (environmental) information is organised through improving compliance and ensuring that EU environment a due diligence investigation process. legislation is applied and implemented more consistently. The Recommendation has strongly influenced the legal framework on environmental inspections in numerous EU acts in the field 82 General of environmental law, such as the WEEE Directive. 8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment- 72 Reporting / Disclosure Obligations related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. 7.1 If pollution is found on a site, or discovered remediation) discharge the indemnifier’s potential to be migrating off-site, must it be disclosed to an liability for that matter? environmental regulator or potentially affected third parties? EU law does not prevent such indemnities to be binding among parties to the agreement. However, this does not prevent third EU environmental law does not address the question of parties from relying on the provisions of the Environmental disclosing pollution to an environmental regulator or potentially Liability Directive to hold an operator liable for environmental affected third parties. This remains a matter of national law. damage suffered.

7.2 When and under what circumstances does a person 8.2 Is it possible to shelter environmental liabilities off have an affirmative obligation to investigate land for balance sheet, and can a company be dissolved in order contamination? to escape environmental liabilities?

EU environmental law does not provide for a comprehen- Under the International Financial Reporting Standards sive legal framework on soil contamination yet. The question (“IFRS”), approved by and applied within the EU, it is gener- remains a matter of national law. ally not possible to shelter environmental liabilities off balance Under the Industrial Emissions Directive, however, where sheet. IAS 37 provides that companies should recognise a certain listed activities, such as energy industries and the produc- provision in their balance sheets when: (i) an entity has a present tion and processing of metals, involve the use, production or obligation (legal or constructive) as a result of a past event; (ii) release of relevant hazardous substances and having regard to it is probable that an outflow of resources will be required to the possibility of soil and groundwater contamination at the site settle the obligation; and (iii) a reliable estimate can be made of of the installation, the operator shall prepare and submit to the the amount of the obligation. When an environmental liability competent authority a baseline report before starting the oper- arises which meets all aforementioned conditions, an example of ation of an installation or before a permit for an installation is which are clean-up costs for unlawful environmental damage, updated for the first time. Upon a definitive cessation of the the company is therefore obliged to recognise a corresponding activities, the operator shall assess the state of soil and ground- provision. water contamination by relevant hazardous substances used, EU law does not address whether a company can be dissolved produced or released by the installation. Where the installation in order to escape environmental liabilities. This question there- has caused significant pollution of soil or groundwater by rele- fore remains a matter of domestic law. vant hazardous substances compared to the state established in the baseline report, the operator shall take the necessary measures to address that pollution so as to return the site to that 8.3 Can a person who holds shares in a company be held liable for breaches of environmental law and/ state. In addition, where the contamination of soil and ground- or pollution caused by the company, and can a parent water at the site poses a significant risk to human health or the company be sued in its national court for pollution environment as a result of the permitted activities carried out by caused by a foreign subsidiary/affiliate? the operator, the operator shall take the necessary actions aimed at the removal, control, containment or reduction of relevant EU environmental law does not address the question of share- hazardous substances, so that the site, taking into account its holder and parent company liability for breaches of environ- current or approved future use, ceases to pose such a risk. mental law in general. This remains a matter of national law.

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Under the Environmental Liability Directive, however, the 92 Emissions Trading and Climate Change shareholder and parent company can be held liable for environmental damage if they operate or control the occupational activity, where this is provided for in national legislation. 9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading market developing there? 8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters? The EU has created the EU emissions trading system (“EU ETS”) with a view of reducing greenhouse gas emissions cost-ef- Directive (EU) 2019/1937 of 23 October 2019 on the protection fectively. The EU ETS is a “cap and trade” system applicable of persons who report breaches of EU law lays down common to emitters of greenhouse gases from energy-intensive indus- minimum standards for the protection of persons reporting, tries and the energy generation sector, as well as to the avia- inter alia, breaches of EU law on protection of the environment. tion sector. “Information on breaches” is defined as “information, including Since 2013 (phase 3 of EU ETS), the allocation of allowances reasonable suspicions, about actual or potential breaches, which occurred has been made on the basis of centrally approved allocation or are very likely to occur in the organisation in which the reporting person plans rather than by Member States alone. The default method works or has worked or in another organisation with which the reporting for allocating allowances is now via auctions. Despite the person is or was in contact through his or her work, and about attempts to auctioning of allowances being the intended method, the manu- conceal such breaches”. facturing industry continues to receive a share of allowances for free on the basis of GHG emission performance benchmarks. 8.5 Are group or “class” actions available for pursuing Sectors facing carbon leakage risks receive a higher share of environmental claims, and are penal or exemplary the allowances for free. Currently, these free allowances are damages available? based on a preliminary calculation of the number of free allowances that should be allocated to each plant, i.e. the National The possibility of filing a “class” action claim with the CJEU Implementation Measures (“NIMs”). under EU law is limited due to the restrictive locus standi criteria The legislative framework of the EU ETS for its next trading laid down in Article 263 (4) of the TFEU and the case law of period (phase 4 2021–2030) was revised in early 2018 to enable it the CJEU. In 1963, the CJEU ruled in the Plaumann & Co v to achieve the EU’s 2030 emission reduction targets in line with Commission case that “persons other than those to whom a decision is the 2030 climate and energy policy framework and as part of addressed may only claim to be individually concerned if that decision affects the EU’s contribution to the 2015 Paris Agreement. To increase them by reason of certain attributes which are peculiar to them or by reason the pace of emission cuts, the overall number of emission allow- of circumstances in which they are differentiated from all other persons and ances will decline at an annual rate of 2.2% from 2021 onwards, by virtue of these factors distinguishes them individually just as in the case compared to 1.74% currently. of the person addressed”. Recently, the EU General Court applied the Plaumann-doctrine to climate litigation: “it is true that every 9.2 Aside from the emissions trading schemes individual is likely to be affected one way or another by climate change, mentioned in question 9.1 above, is there any other that issue being recognised by the European Union and the Member States requirement to monitor and report greenhouse gas who have, as a result, committed to reducing emissions. However, the fact emissions? that the effects of climate change may be different for one person than they are for another does not mean that, for that reason, there exists standing to No, there are no other requirements. bring an action against a measure of general application.” The case is now pending before the CJEU. There is, however, currently an 9.3 What is the overall policy approach to climate ongoing debate on whether the Plaumann-doctrine is compatible change regulation in your jurisdiction? with the right of access to justice for the public concerned under the Aarhus Convention. EU environmental law does not prevent punitive or exem- The EU has subscribed to the Paris Agreement objective to keep plary damages, though the application thereof remains rare. the global temperature increase to well below 2°C and pursue efforts to keep it to 1.5°C. In this regard, the 2030 climate and energy framework includes 8.6 Do individuals or public interest groups benefit EU-wide targets and policy objectives for the 2021–2030 period. from any exemption from liability to pay costs when The key targets for 2030 are: (i) at least 40% cuts in greenhouse gas pursuing environmental litigation? emissions (from 1990 levels); (ii) at least a 32% share for renewable energy; and (iii) at least 32.5% improvement in energy efficiency. There is no general rule exempting certain individuals or public To achieve these targets, the EU Member States are involved. interest groups from liability to pay costs when pursuing envi- Pursuant to Regulation 2018/1999/EU on the governance of the ronmental litigation before the European courts. As a general energy union and climate action, each EU Member State must rule of procedure of the CJEU, the unsuccessful party shall be draft an integrated National Energy and Climate Plan (“NECP”) ordered to pay the costs, if they have been applied for in the covering the five dimensions of the energy union: energy secu- successful party’s pleadings. Where each party succeeds on rity; internal energy market; energy efficiency; decarbonisation; some and fails on other heads, the parties shall bear their own and research, innovation and competitiveness. Each Member costs. However, if it appears justified in the circumstances of the State must also report on the progress that it makes in imple- case, the Court may order that one party, in addition to bearing menting its NECP, mostly on a biennial basis. The Commission its own costs, pay a proportion of the costs of the other party. will monitor EU progress (as a whole), notably as part of the annual state of the energy union report.

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In the longer term, the European Commission has presented 11.2 What is the environmental insurance claims a European Green Deal to achieve a climate-neutral European experience in your jurisdiction? economy by 2050. With the European Green Deal, the EU is to transform the EU into “a fair and prosperous society, with a modern, We are not aware of any case law of the CJEU in the field of resource-efficient and competitive economy where there are no net emissions environmental insurance. of greenhouse gases in 2050 and where economic growth is decoupled from resource use. It also aims to protect, conserve and enhance the EU’s natural capital, and protect the health and well-being of citizens from environ- 122 Updates ment-related risks and impacts”. (COM(2019) 640 final, p. 2.) 12.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in 102 Asbestos environment law in your jurisdiction.

10.1 What is the experience of asbestos litigation in your jurisdiction? Climate change is a top priority for the European Commission, as evidenced by the European Green Deal, announced by the Commission President Ursula von der Leyen. The European Directive 1999/77/EC banned the marketing and use of prod- Green Deal provides a roadmap with actions to boost the effi- ucts containing asbestos, while Directive 2009/148 aims at cient use of resources by moving to a clean, circular economy enhancing the protection of asbestos-exposed workers. and stop climate change, revert biodiversity loss and cut pollu- European case law regarding asbestos, and the ban thereof, tion. It outlines investments needed and financing tools avail- is limited but important, and mainly concerns the exposure of able, and explains how to ensure a just and inclusive transition. workers to this dangerous substance. The European Green Deal covers all sectors of the economy, notably transport, energy, agriculture, buildings, and indus- 10.2 What are the duties of owners/occupiers of tries such as steel, cement, ICT, textiles and chemicals. Under premises in relation to asbestos on-site? the Green Deal, the European Investment Bank is set to facilitate €1 trillion in funding over the next decade and set itself the The mere presence of asbestos is not illegal. Directive 2009/148/ target of doubling its climate target from 25% to 50% by 2025, EC nevertheless lays down exposure limits and specific require- thus becoming Europe’s climate bank. ments with regard to safe work practices, including, in respect National courts of Member States of the EU are more and of: demolition, repairing, maintenance and asbestos removal more receptive of claims against public authorities for alleged work; information, consultation and training of workers; and inaction in light of international and European climate and envi- health monitoring. ronmental obligations, as shown in the Urgenda judgment of the Dutch Supreme Court of 20 December 2019. There is currently a similar case pending before the CJEU (cf. supra question 8.5). 112 Environmental Insurance Liabilities The EU will continue to focus on reducing plastics. Action on plastics was identified as a priority in the Circular Economy 11.1 What types of environmental insurance are Action Plan. The EU Strategy for Plastics in the Circular available in the market, and how big a role does Economy aims at transforming the way plastic products are environmental risks insurance play in your jurisdiction? designed, used, produced and recycled in the EU. Numerous initiatives are underway, focusing on micro-plastics, packaging Environmental liability insurance is increasingly a means of and single-use plastics. We expect this to have a major impact covering liability for environmental damage and harm under on the European recycling industry in general and the plastics the Environmental Liability Directive. Insurance Europe, the sector in particular. European (re)insurance federation, to which the national insurance associations in 37 States (including all the Member States) are members, plays an important role in this regard.

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Jan Bouckaert is the head of Stibbe’s Environment and Planning practice group. His practice broadly revolves around areas of law regarding environmental protection, with a particular focus on European and international environmental law, Belgian environmental law, zoning and planning, nuclear law, and expropriation. Moreover, he handles cases concerning human rights (ECHR) and constitutional and administrative law. Jan represents clients from both public and private sectors and acts on their behalf in litigations and negotiations. He is also highly experienced in drafting laws and regulatory texts regarding his areas of expertise for Belgian public authorities.

Stibbe Tel: +32 2 533 52 22 Central Plaza – Loksumstraat 25 rue de Loxum Email: [email protected] Brussels, 1000 URL: www.stibbe.com Belgium

Guan Schaiko has considerable expertise in environmental law with a particular focus on EU regulations (waste, chemicals, and impact assessments), nuclear law, nature conservation, and expropriation law. He assists and advises public authorities, property developers, and private individuals on the regulatory aspects of project development, land use initiatives, and nature conservation. Guan also has a particular interest in national and international human rights protection. In addition, he represents clients in administrative law matters before the European Court of Justice, the Constitutional Court, and the Council of State.

Stibbe Tel: +32 2 533 57 23 Central Plaza – Loksumstraat 25 rue de Loxum Email: [email protected] Brussels, 1000 URL: www.stibbe.com Belgium

Cedric Degreef is well-versed in commercial contracts and regulatory advice. He has relevant expertise in renewable and conventional energy projects (including offshore installations and nuclear energy), oil and gas, hydrogen, mining, commodity trading and supply contracts, energy efficiency, grid infrastructure and operation, and the EU ETS. Cedric is also the author of several publications on energy and climate law, and he is often a guest speaker at seminars on these subject matters.

Stibbe Tel: +32 2 533 53 14 Central Plaza – Loksumstraat 25 rue de Loxum Email: [email protected] Brussels, 1000 URL: www.stibbe.com Belgium

Stibbe is a Benelux law firm with main offices in Amsterdam, Brussels and and public authorities. We realise that understanding their commercial Luxembourg, and branch offices in Dubai, London and New York. Stibbe objectives, their position in the market and their sector or industry allows offers full legal service, both advisory work and litigation, in all areas of law, us to render suitable and effective advice. such as administrative law, banking & finance, corporate / M&A, employ- www.stibbe.com ment & pensions, energy, EU, competition & regulated markets, insolvency & restructuring, intellectual property, litigation & arbitration, planning & environment, real estate & construction, tax, and TMT. Stibbe consists of more than 390 lawyers. Stibbe’s Brussels office comprises close to 150 lawyers, of whom 30 are partners. As a full-service firm, our lawyers work in multidisciplinary teams with the aim to deliver pragmatic advice. We build close business relationships with our clients that range from local and multinational corporations to state organisations

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Finland Finland

Casper Herler

Borenius Attorneys Ltd Henna Lusenius

12 Environmental Policy and its 1.3 To what extent are public authorities required to provide environment-related information to interested Enforcement persons (including members of the public)?

1.1 What is the basis of environmental policy in your In accordance with the Finnish Act on the Openness of jurisdiction and which agencies/bodies administer and enforce environmental law? Government Activities (621/1999), all official documents must be available to the public unless specifically otherwise provided by law. Finland does not have a federal structure, so environmental policy is regulated through state and municipal authorities. The 22 Environmental Permits state authorities have a regional representation. The Ministry of the Environment defines environmental policies and makes strategic plans at national level, sets administra- 2.1 When is an environmental permit required, and may tive controls as well as targets for environmental protection and environmental permits be transferred from one person to another? prepares environmental legislation. The Finnish Environment Institute (“SYKE”) produces and compiles environmental data, develops new ways to protect the environment and supervises An environmental permit is required for all activities listed in international waste transportation. Appendix 1 of the FEPA. Under certain preconditions, an envi- The AVI Agencies (the Regional State Administrative Agency) ronmental permit is also required for activities that may cause are the main environmental authorities responsible for environ- pollution of a water body or place an unreasonable burden on mental licensing. In certain smaller-scale activities specified in the surroundings as well as for conducting wastewater. All the the Finnish Environmental Protection Act (527/2014, “FEPA”), environmental effects of an activity are considered within the environmental and water permits are granted by municipal envi- same permit procedure, regardless of which element of environ- ronmental protection authorities. ment the effects occur (soil, water, air, etc.). The scope of activ- The ELY centres (the Centre for Economic Development, ities covered is broader than in the EU’s IPPC and IED direc- Transport and the Environment) are regionally responsible tives. In accordance with a recent amendment to the FEPA, for supervision of compliance with the environmental permits certain functions that previously required an environmental throughout the entire life cycle of operations. In addition, the permit have been transferred under the range of a lighter notifi- ELY centres ensure that public interest is taken into account in cation procedure as of 1 January 2019. The activities under the environmental and water issues. notification procedure are listed in Appendix 4 of the FEPA. In addition, municipalities promote and supervise environ- An environmental permit is granted for the operations in ques- mental protection locally. Chemical safety permits and mining tion and is not tied to a specific operator, but the supervisory permits are granted by the Finnish Safety and Chemicals Agency, authority must be informed of a change of operator. which also acts as the supervisory authority with respect to the compliance of operators with said permits. 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 1.2 What approach do such agencies/bodies take to contained in an environmental permit? the enforcement of environmental law?

The competent appeal body in environmental issues is the The enforcement of Finnish environmental law is strongly Administrative Court, and all parties to the permission proce- based on preliminary supervision, which in practice relies on dure may appeal the authority’s decisions. In addition, envi- a comprehensive environmental permitting system. Recently, ronmental NGOs have a right of appeal in most environmental however, the role of subsequent supervision has increased due decision-making processes. to a wide-ranging transition in environmental legislation to a There are generally no specific grounds for appeal, although lighter permitting process. the grounds for appeal are slightly more limited in zoning matters. As of January 2018, nearly all environmental issues require a leave of appeal from the Administrative Court to the Supreme Administrative Court.

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■ the substance or object fulfils all relevant product require- 2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly ments and requirements for the protection of the environ- polluting industries or other installations/projects? ment 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. The Environmental Impact Assessment (“EIA”) procedure must There is special regulation for handling (e.g., storage, pack- be applied to projects that may have a significant adverse impact aging, transport and recycling) of hazardous waste. 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 3.2 To what extent is a producer of waste allowed project types. In addition, a discretionary EIA may be organ- to store and/or dispose of it on the site where it was ised for other project types as well as smaller projects close to produced? the thresholds if the project, in terms of its quality and scope, would likely cause significant environmental impact comparable Under the Waste Act, the producer/holder of waste is respon- to the projects listed in the EIA Act. sible for organising waste management. This includes the obli- An EIA does not free the operator from its duty to apply for gation to see to the appropriate disposal of waste in landfills and an environmental permit. However, a permit cannot be granted waste processing facilities in accordance with the relevant legis- before the permit authority has obtained the assessment report lation. The storage and disposal of waste originating from oper- and the coordination authority (the ELY centre or, in projects ations subject to environmental permit is, however, regulated in related to nuclear power plants, the Ministry of Employment the permit conditions. and the Economy) has given its statement. Even when an EIA under the EIA Act does not apply, the environmental licensing 3.3 Do producers of waste retain any residual liability procedure under the FEPA and the zoning procedure under in respect of the waste where they have transferred it the Finnish Land Use and Building Act (132/1999, “LUBA”) to another person for disposal/treatment off-site (e.g. require a limited EIA. if the transferee/ultimate disposer goes bankrupt/ disappears)?

2.4 What enforcement powers do environmental regulators have in connection with the violation of permits? The waste producer/holder’s responsibility for organising waste management is terminated and transferred to a new holder when If the permit regulations or the environmental legislation are the waste is delivered to a lawful consignee. However, respon- violated, the supervisory authority (ELY centre) may use admin- sibility is not transferred to a mere carrier transporting waste istrative compulsion, which may take the form of a coercive on behalf of another party. Waste may only be delivered to a fine suspension of the activity or notice of enforced compli- party that: ance. In case there is a violation of the permit conditions, ■ has been registered as a professional waste transporter or despite a written caution by the supervisory authority, the permit dealer; or authority may revoke the permit, forcing the operator to close ■ has the right under an environmental permit to receive the down the activity. waste in question. In the event of soil or groundwater contamination, the supervisory authority may impose a remediation obligation on the 3.4 To what extent do waste producers have operator. The supervisory authority may also initiate a crim- obligations regarding the take-back and recovery of inal investigation where a corporate fine and confiscation of their waste? the proceeds of crime are possible. The threshold for doing so has become lower in recent years, hence companies and officers The producer’s liability applies for certain products specified in face a material risk for criminal investigation and prosecution in the Waste Act (e.g., certain vehicles, car tyres, electronic equip- cases of incompliance with permits and legislation. ment, batteries, packages, recycled paper). Hence, the producer of the product is responsible for organising waste management, 32 Waste regardless of who the waste holder is.

3.1 How is waste defined and do certain categories of 42 Liabilities waste involve additional duties or controls? 4.1 What types of liabilities can arise where there is a In accordance with the EU Waste Directive and the Finnish breach of environmental laws and/or permits, and what Waste Act (646/2011), waste is defined as any substance or defences are typically available? object, which the holder discards, intends to discard or is required to discard. According to the Waste Act, a substance or The breach of environmental laws or permits may lead to civil, object is not waste but a by-product, if it results from a produc- criminal or administrative sanctions. tion process whose primary aim is not the production of that In the event of soil or groundwater contamination, either substance or object, and: the party, which has originally caused the contamination or ■ further use of the substance or object is certain; the party currently in possession of the area (e.g., the current ■ the substance or object can be used directly as is, or owner or tenant) may be required to assess the need for remedi- without any further processing other than normal indus- ation and take the necessary actions required by the authorities. trial practice; There are not many defences available, but the extent of remedi- ■ the substance or object is produced as an integral part of a ation required for the contaminated site is dependent upon the production process; and purpose of use of the site.

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The supervisory authority for operations subject to an envi- companies. Potential liabilities for previous sites of operations ronmental permit may impose a remediation obligation on the will also follow the acquired company. operator and may also initiate a criminal investigation where a The acquisition of assets may imply a risk of secondary corporate fine and confiscation of the proceeds of crime are liability for soil or groundwater contamination, as the acquirer possible. may be considered liable as the holder of the contaminated prop- Environmental liability in relation to third parties cannot erty if the actual polluter cannot be found or has ceased to exist. be avoided by contractual agreement. However, as agreements Moreover, the acquirer may also face liability under the Act on regarding the division of environmental liability are binding Compensation for Environmental Damage (737/1994, ACED) between the parties, a party may raise a civil action against the if the acquirer knew or should have known about the pollution counterparty and claim that it should stand for the costs accrued or the risk of pollution at the time of the transfer. The acquirer to the party due to environmental liabilities. 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. 4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is operated within permit limits? 4.5 To what extent may lenders be liable for environmental wrongdoing and/or remediation costs? An operator may be liable for restoring contaminated soil and groundwater, paying compensation for environmental damage In certain justified situations specified in the ACED and the as well as for damage to protected species and natural habitats FEPA, liability may be extended to the shareholder of the oper- notwithstanding that the polluting activity has been operated ator of the polluting activity. This rule may also be applied to the within the permit limits. lender financing the operations but only in the rare event that the lender exercises factual control over the operator (e.g., ordinary 4.3 Can directors and officers of corporations attract covenants should not as such render the lender liable). personal liabilities for environmental wrongdoing, and to what extent may they get insurance or rely on other 52 Contaminated Land indemnity protection in respect of such liabilities? 5.1 What is the approach to liability for contamination There is no legislation or case law explicitly allocating liability (including historic contamination) of soil or under public law or regulations concerning environmental groundwater? damage to the directors of a company, unless their ownership in the company is significant enough for them to be regarded as In accordance with the FEPA, liability for remediation of the factual polluter or operator. In contrast, chapter 48 of the so-called new soil contamination (contamination that occurred Criminal Code (39/1889) allocates liability for environmental after 1 January 1994) lies primarily with the polluter, i.e. the offences to the person in whose sphere of responsibility the act party whose activities have caused the contamination. The of negligence belongs. The allocation rules do not exclude, e.g. polluter is required to restore the contaminated soil to a condi- external board members or officers of a parent company. The tion that will not cause harm or hazard to the environment or formal position of an officer in the corporation does not as such harm to health. The holder of the property where the contami- exclude liability, as the assessment is made on an overall basis nation has occurred may face secondary liability – however, only with due account to the factual participation and responsibility if the polluter cannot be found or cannot be made to fulfil its of the person in the unlawful activity. As the Criminal Code remediation responsibility – and: prohibits both intentional and negligent impairment of the envi- ■ the contamination has taken place with the consent of the ronment, breaches of environmental legislation may easily lead holder of the property; or to a criminal investigation. ■ the holder was or should have been aware of the contami- Criminal liability of directors and officers is best prevented by nation when the property was acquired. monitoring compliance and clearly allocating the environmental Finnish legislation does not, as a main rule, allow a retroac- responsibilities within the company as well as by providing the tive application of liability. However, case law developed on officers of a local subsidiary enough power to remain in factual the basis of the old Waste Management Act (673/1978) allows control of the subsidiary’s operation. Based on a ruling by the the establishment of liability for historic soil contamination that Supreme Court (KKO:2016:58) in 2016, directors of the board originates from activities between 1 April 1979 and 31 December can also be held liable if they have not supervised that substan- 1993 on the polluter or the holder (owner and/or tenant) of the tial environmental issues are sufficiently attended to. contaminated property. Although there are no specific rules on which party should be responsible for remediation, recent court 4.4 What are the different implications from an practice suggests that polluters would primarily be liable before environmental liability perspective of a share sale on the holders. However, if the soil polluting activities ceased prior to one hand and an asset purchase on the other? 1 April 1979, only the holder of the property can be held liable for remediation based on the Waste Management Act (Supreme The acquisition of company shares implies that the whole Administrative Court, KHO 2006:30). Other grounds for target company, its environmental liabilities included, is trans- liability may also evolve; in KHO 2013:187 the Supreme ferred to the acquiring company. Consequently, the acquiring Administrative Court considered a municipality liable for land- company may face liability for possible contamination of soil or fill which was closed in the 1950s based on waste management groundwater, or other environmental damage that the activity rules in the 1927 health protection legislation. In addition to may have caused in the past. As liabilities for soil and ground- soil contamination, the FEPA contains a groundwater pollu- water contamination may extend far back in time, the risks tion prohibition. Liability for groundwater contamination lies may be substantial, especially in acquisitions of old industrial with the polluter. A non-polluting holder of the contaminated

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groundwater area cannot be held liable for remediation. If the does not present an adequate report or otherwise neglects its groundwater has been contaminated through polluted soil, it is monitoring duties. The new FEPA introduces risk-based moni- possible to impose both soil and groundwater remediation liabil- toring; thus the intensity of authority monitoring is determined ities for the polluter (KHO 1996:A 29). Liability for ground- based on dependency on risk, size and track record. water contamination can be extended on the basis of the old Water Act (264/1961) to activities that have been operational as 72 Reporting / Disclosure Obligations of 1 April 1962. 7.1 If pollution is found on a site, or discovered 5.2 How is liability allocated where more than one to be migrating off-site, must it be disclosed to an person is responsible for the contamination? environmental regulator or potentially affected third parties? There are no clear rules for allocation of liability where more than one person is responsible for contamination. Yes, the relevant environmental acts contain such duties towards the authorities.

5.3 If a programme of environmental remediation is “agreed” with an environmental regulator, can the 7.2 When and under what circumstances does a person regulator come back and require additional works or can have an affirmative obligation to investigate land for a third party challenge the agreement? contamination?

This is possible if the circumstances around the original deci- The FEPA contains a list of so-called directive facilities in accord- sion have changed. ance 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 environ- 5.4 Does a person have a private right of action to mental permit application. When the company dissolves activ- seek contribution from a previous owner or occupier of contaminated land when that owner caused, in whole or ities, soil and groundwater conditions must be reinvestigated in part, contamination; and to what extent is it possible and compared to the results of the baseline study. In the case for a polluter to transfer the risk of contaminated land increased contamination of soil or groundwater is detected, or if liability to a purchaser? the baseline of the site is found harmful for health or environment, the operator is under obligation to remediate the site. The current owner may demand authorities to take action and In addition, if there are grounds to suspect that contami- order a liable party to assess and/or remediate a site. An inter nation of soil and/or groundwater has occurred, the operator partes agreement does not bind authorities or third-party claim- of the polluting activity or, under certain preconditions, the ants for the benefit of a polluter. holder of the area, is under obligation to establish the size of the An acquirer may be considered liable as the holder of the contaminated area and the need for remediation. contaminated property if the actual polluter cannot be found or has ceased to exist. Moreover, the acquirer may also face liability 7.3 To what extent is it necessary to disclose under the ACED if the acquirer knew or should have known about environmental problems, e.g. by a seller to a prospective the pollution or the risk of pollution at the time of the transfer. purchaser in the context of merger and/or takeover transactions?

5.5 Does the government have authority to obtain from a polluter, monetary damages for aesthetic harms to The FEPA contains a specific provision on the obligation to public assets, e.g. rivers? disclose environmental information in connection with transfer of land. The provision applies to asset sales, real estate sales and new lease contracts. 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 82 General environment. In addition, the Water Act (587/2011) regulates liability for damage caused by water resources management 8.1 Is it possible to use an environmental indemnity projects to, e.g., fish stocks or fishing. 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. 62 Powers of Regulators remediation) discharge the indemnifier’s potential liability for that matter? 6.1 What powers do environmental regulators have to require production of documents, take samples, conduct It is possible to agree on an environmental indemnity. However, site inspections, interview employees, etc.? such indemnity is only effective between the parties to the agreement and is therefore not binding upon the authorities. 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 8.2 Is it possible to shelter environmental liabilities off balance sheet, and can a company be dissolved in order inspections and tests, carry out measurements and take samples. to escape environmental liabilities? 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 No, Finnish legislation does not allow this.

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are not subject to emissions trading, the monitoring and reporting 8.3 Can a person who holds shares in a company be held liable for breaches of environmental law and/ of greenhouse gases is regulated in the environmental permit. or pollution caused by the company, and can a parent company be sued in its national court for pollution 9.3 What is the overall policy approach to climate caused by a foreign subsidiary/affiliate? change regulation in your jurisdiction?

The Finnish general corporate law does not contain any specific Finland’s national climate actions are largely based on the frame- rule regarding piercing the corporate veil. However, in certain work set by the UN Climate Change Convention, the Kyoto justified situations specified in the ACED and the FEPA, Protocol, the Paris Convention and the EU. liability may be extended to the parent company or shareholder The new government programme appointed in June 2019 sets of the operator of the polluting activity. Liability is not limited a goal for Finland to achieve carbon neutrality by the year 2035. to officers of the corporation. However, this rule only applies if In November 2019, the government initiated a reform of the the parent company or shareholder is deemed to exercise factual Finnish Climate Change Act by consulting with stakeholders. control over the operator. The reform will strengthen the Climate Change Act so that the carbon neutrality target could be achieved by the year 2035. 8.4 Are there any laws to protect “whistle-blowers” The current Finnish national strategy for adapting to climate who report environmental violations/matters? change outlines adaptation measures for 15 sectors up to the year 2050 and includes anticipatory measures as well as measures No, there are none. 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 8.5 Are group or “class” actions available for pursuing 2050 and serving as a strategy guide on the journey towards environmental claims, and are penal or exemplary achieving a carbon-neutral society. The measures to be taken in damages available? order to reduce greenhouse gas emissions by 80–95% are related to renewable energy, energy efficiency and clean-tech solutions. No, they are not. The parliament accepted the Government Report on Medium- term Climate Change Plan for 2030 in March 2018. The plan 8.6 Do individuals or public interest groups benefit outlines the necessary measures for reducing greenhouse gas from any exemption from liability to pay costs when emissions in sectors that are not subject to the EU ETS. The pursuing environmental litigation? goal is to reduce greenhouse gas emissions by 39% compared to the year 2005 by the year 2030. No, but the Finnish administrative process is low in costs for the parties, as damages are seldom imposed and high bills of costs 102 Asbestos are adjusted. However, parties to a civil process bear a much greater risk of costs (e.g., damages based on the ACED). 10.1 What is the experience of asbestos litigation in your jurisdiction? 92 Emissions Trading and Climate Change Asbestos litigation cases in Finland relate mostly to the neglect 9.1 What emissions trading schemes are in operation of asbestos safety regulations and compensation for occupa- in your jurisdiction and how is the emissions trading tional diseases caused by asbestos. market developing there? 10.2 What are the duties of owners/occupiers of As a member of the EU, Finland has implemented the EU premises in relation to asbestos on-site? Emissions Trading Directive through the national Emissions Trading Act (311/2011), meaning that most sectors of heavy The use of asbestos-containing materials was partly prohibited industry, and with certain restrictions in the aviation industry, in Finland in 1977 and totally prohibited in 1994. Asbestos is are subject to the European Union Emissions Trading Scheme currently not considered to constitute a health risk when found (EU ETS). About 600 facilities in Finland are currently subject in intact materials in normal use. Therefore, there is no explicit to the EU ETS. Finland has implemented the latest changes legal obligation to remove asbestos-containing material on site to the Emissions Trading Directive, e.g. application proce- unless it is found to be a health hazard (i.e., loose or friable). It dure for free emission allowances, obligation to deliver neces- is, however, obligatory to conduct asbestos testing for all build- sary information to the emissions trading authority and distribu- ings built before 1994 prior to any construction work. The tion of emission allowances, by an amendment to the Emissions handling of asbestos-containing materials (e.g., demolition Trading Act that entered into force in March 2019. work) is strictly regulated.

9.2 Aside from the emissions trading schemes 112 Environmental Insurance Liabilities mentioned in question 9.1 above, is there any other requirement to monitor and report greenhouse gas emissions? 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? The IED has been implemented in Finland in connection with the major amendment of FEPA in 2014, including the require- Under the Finnish Environmental Damage Insurance Act ment to employ the best available technique for reducing green- (81/1998), all companies whose activities involve a material risk house gas emissions in industrial operations. If the operations

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of environmental damage or whose operations cause harm to In March 2019, the parliament approved an act by which coal- the environment in general shall be covered by environmental fired power and heating generation will be prohibited as from damage insurance. Voluntary insurance types, such as liability the year 2029. As a substitute for the use of coal, the parliament insurance and property insurance, are also available. passed a law to gradually increase the use of transport biofuels and biofuel oil for heating and machinery. The new Finnish government programme includes several 11.2 What is the environmental insurance claims experience in your jurisdiction? objectives for future policy, which are challenging for the mining industry should these be implemented. Such objectives include, e.g., measures to improve the rights of indigenous peoples and The environmental insurance claims experience in Finland is environmental protection in mining, such as the possibility to limited, as there is only one case involving a dispute over the define conservation areas as no-go areas for exploration. An statutory environmental damage insurance. amendment of the Mining Act is currently under preparation, but so far no fundamental revisions have been proposed. 122 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.

In June 2019, the Finnish parliament approved the Act on Integration of Certain Environmental Permit Procedures (the Integration Act, 764/2019) with amendments to several environmental laws, such as the FEPA and the Water Act. This legislative reform introduces, inter alia, a more focused supervision system and a lighter environmental permitting procedure by adopting a one-stop-shop model. The one-stop-shop model combines various permits, such as an environmental permit, water permit and building permit into one application procedure. The model allows the combination and temporal coordination of various environmental matters. The new one-stop- shop model will enter in force in September 2020.

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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.

Borenius Attorneys Ltd Tel: +358 20 713 3288 Eteläesplanadi 2 Email: [email protected] 00130 Helsinki URL: www.borenius.com Finland

Henna Lusenius (LL.M. 2007, University of Turku; Senior Associate) advises clients in the fields of environmental, energy and land use law. Henna has extensive experience in a wide range of environmental and natural resources law assignments with a specific focus on the sectors of mining and exploration, wind power and land extraction. Henna regularly advises on matters relating to e.g. environmental permitting, zoning and land use, nature conservation and environmental contamination. Henna has also successfully represented clients in numerous administrative court proceedings related to environmental law and natural resources.

Borenius Attorneys Ltd Tel: +358 20 713 3587 Eteläesplanadi 2 Email: [email protected] 00130 Helsinki URL: www.borenius.com Finland

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 on strategic advice for large projects requiring coordination of a number of regulatory proceedings and complex stakeholder relations. We frequently advise 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. www.borenius.com

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Vincent Brenot

August Debouzy Emmanuelle Mignon

12 Environmental Policy and its 1.3 To what extent are public authorities required to provide environment-related information to interested Enforcement persons (including members of the public)?

1.1 What is the basis of environmental policy in your The Environmental Charter and the Environmental Code both jurisdiction and which agencies/bodies administer and grant the public with a general right of access to environment-re- enforce environmental law? lated information held, received or established by public authorities. The conditions of such are governed by the environmental French environmental policy is based on European law, particu- code and the code ruling over the relations between the adminis- larly on the Treaty on the Functioning of the European Union, as tration and the public (“code des relations entre le public et l’administra- well as relevant regulations and directives. Then, at the national tion”). It is worth noting that access may be limited to informa- level, the environmental code provides for the main regulations tion whose communication does not present a threat to national concerning environmental policy. The Environmental Charter security, defence or other secret information protected by law. adds key constitutional-level principles such as the right to live In addition, any public decision presenting an impact on the in a balanced and healthy environment, the obligation for public environment is subject to public participation. The public is authorities to act in line with the precautionary principle and the also invited to submit comments on plans and projects that are “polluter pays” principle. likely to impact the environment through the process of public At a national level, the Ministry of Ecological and inquiries. Those are taken into account by the administrative Solidarity Transition (the name of the Ministry in charge of authorities when making their decision regarding the project. the Environment since June 2017) is in charge of managing Public participation and transparency in decision-making and developing environmental policies in a number of fields concerning environmental issues have been further reinforced including energy, climate change, air and water pollution, biodi- by a 2016 ordinance that increases the dialogue ahead of the deci- versity, transport and urban development. At a local level, there sion-making process, at a stage where future decisions can still are the regional directorates for the environment, planning evolve easily to take into account the observations of the public. and housing (“Direction Régionale de l’Environnement, de l’Aménage- Public participation is also made easier through its demateriali- ment et du Logement”, “DREAL”), under the supervision of the sation: the public, for some projects, can provide their observa- Ministries of Ecological and Solidarity Transition and Territorial tions, feedback and comments via the internet. Cohesion, whose objective is to implement the State’s environmental policies, assess the environmental impact of these actions 22 Environmental Permits and inform and raise citizens’ awareness of the challenges of sustainable development. There are also prefects (“préfets”), representing the State, who are vested with the power to admin- 2.1 When is an environmental permit required, and may ister and deliver permits for certain installations registered for environmental permits be transferred from one person to another? 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 Since March 2017, a new procedure for environmental author- installations present, as well as the nature of the activities, such isations has been established. Structures, works and activities environmental authorisations impose different formalities to the affecting water (“IOTA”) and ICPE installations are subject to operators. The competencies of local governments are residual. 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 had to go 1.2 What approach do such agencies/bodies take to through individually with respect to their activity. Nonetheless, the enforcement of environmental law? note that the legal framework applicable to such unified environmental authorisation, apart from its issuance procedure, Civil penalties and criminal fines can be imposed to secure remains the legal framework applicable to each environmental the enforcement of environmental laws and permits. Certain authorisation for which such unified environmental authorisa- serious and wilful violations can result in imprisonment (rare). tion is substituted to. Administrative sanctions are usually taken following on-site Regarding transfer of ICPE authorisation, registration or inspections revealing non-compliance with permits. The rehabil- declaration, such permit can be transferred to a new operator itation of a polluted site can also be ordered.

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provided that notice is given to the competent préfet within three can be subject to the following sanctions: mandatory deposit of months following this transfer. However, for certain facilities a sum corresponding to the amount needed for the works to be (those showing the highest level of risk), transfer is subject to the implemented; suspension of the facility’s operation until it has préfet’s prior authorisation with a three-month notice. 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 2.2 What rights are there to appeal against the decision of an environmental regulator not to grant an authority can set the necessary measures to prevent serious and environmental permit or in respect of the conditions imminent dangers to public health, security or the environment. contained in an environmental permit? 32 Waste The implementation of the unique environmental authorisation has also modified the litigation regime applicable to ICPE 3.1 How is waste defined and do certain categories of permits. Such authorisations, or any related decision (modifi- waste involve additional duties or controls? cation, sanction, non-issuance, etc.) can be challenged by peti- tioners or operators before the competent administrative court Waste is defined as any substance, object or, more generally, any within two months as from the date on which the contested movables which the holder discards or intends or is required to decision has been notified to them. discard. The fact that the substance can or will be reused or Moreover, please note that the issuance of such authorisations recovered does not exclude it from the definition of waste nor (including any modified authorisation or a change of operator) does it release the holder from the obligations that come with can also be appealed by any interested third parties, including it. Only when a substance has undergone a specific treatment municipalities, within four months as from the date of perfor- and recovery process that makes it correspond to certain criteria mance of the last required publication measure (for instance, will it cease to qualify as waste. Finally, when the substance is publication of the decision on the prefecture internet website or not likely to be reused or recovered under the current technical in the town hall). and economic conditions, it is ultimately considered to be waste. Several categories of waste are subject to more stringent 2.3 Is it necessary to conduct environmental audits requirements. These are the following: hazardous waste; radi- or environmental impact assessments for particularly oactive waste; used oil; medical waste; electrical and electronic polluting industries or other installations/projects? equipment waste; household waste derived from particularly dangerous chemical products; furniture; packaging waste; as Unique environmental authorisation applicants are required to well as waste containing PCB. join an environmental impact assessment to their application. They are also required to provide a risk assessment only for 3.2 To what extent is a producer of waste allowed ICPE installations. to store and/or dispose of it on the site where it was Nonetheless, those are not the only projects that are subject produced? to those types of requirements. Indeed, the environmental code lays down categories of projects that may have a signifi- In principle, waste storage is only allowed in waste storage facili- cant impact on the environment or human health. Depending ties. Thus, waste cannot be stored on the site other than tempo- on their characteristics, such projects can either be automatically rarily unless the site qualifies as one of these facilities. Even subject to an environmental assessment or after a case-by-case so, producers are required to sort and safely store said waste analysis performed by the Environmental Authority. pending its removal by certified contractors. The environmental assessment must contain information However, the operator may use geological cavities for the regarding the impact of the installation or project on the envi- underground storage of his waste. For this purpose, he may ronment, as well as the contemplated measures to avoid them and carry out research works on geological cavities provided that he reasonable alternative solutions. Special requirements are added has the consent of the owner and has declared it to the préfet. for transport infrastructures, ICPE and nuclear installations. This exception does not apply to radioactive waste.

2.4 What enforcement powers do environmental 3.3 Do producers of waste retain any residual liability regulators have in connection with the violation of in respect of the waste where they have transferred it permits? to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/ The violation of a permit or operation without one can result in disappears)? criminal sanctions including fines ranging from EUR 75,000– 300,000 and/or imprisonment sentences up to five years. Those Producers of waste remain responsible for its management until fines can be multiplied by five for convicted legal entities. its elimination or final recovery, even when it is transferred for Finally, in addition to those sanctions, parties can be ordered to treatment to third parties. Hence, producers are jointly and suspend their activities for a maximum period of a year or what severally liable with waste holders for any damage caused by the is required to rehabilitate the affected area. waste at stake. They shall ensure that their contractors are enti- Notwithstanding those criminal sanctions, the préfet may take tled to treat waste. administrative measures against an operator when a breach of In case of unlawful waste management or disposal, public permit occurs. Once they identified an offence, administrative authorities may carry out the necessary measures at the produc- authorities can issue a formal notice to the operator. If the latter er’s or holder’s expense, suspend the facility’s operation and does not comply with the notice within the prescribed time, it impose fines and daily penalties.

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3.4 To what extent do waste producers have 4.3 Can directors and officers of corporations attract obligations regarding the take-back and recovery of their personal liabilities for environmental wrongdoing, and waste? to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities? Waste elimination is considered as a last resort measure in the environmental code. Indeed, other methods should be favoured First, directors and officers can be held criminally liable for the such as treatment for re-use, recycling or any other form of waste breach of an environmental regulation that provides for crim- recovery, especially if its intended use is for energy purposes. inal sanctions. Moreover, if the damage they caused harmed Moreover, under the producer’s enlarged responsibility prin- a third party, D&Os can be held civilly liable. Nonetheless, ciple, producers, distributors or importers of products gener- claimants bear the somewhat difficult burden of proving that ating waste can be required to take over or contribute to waste the damage resulted from an intentional and serious fault that prevention and management. They can do so either by estab- was incompatible with the regular exercise of their corporate lishing individual systems of waste collection and treatment or functions. For that reason, acting against the company in itself by using collective treatment organisations. Those take-back might be a more strategic recourse. Interestingly, a company can schemes apply only to certain types of waste, including house- also be held criminally liable, along with or independently from hold waste deriving from chemical products, end-of-life vehi- their D&Os, for criminal offences committed by its representa- cles, furniture and electronic equipment. tives on their behalf. D&Os can get insurance for criminal liability to the extent 42 Liabilities 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. 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? 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? Any violation or incident can trigger civil, administrative, criminal and environmental liabilities. Through civil liability, third parties affected by environmental Liability can be attached to the current operator of a site, or the damage can seek compensation if they can prove wrongful or last operator if the site is not currently operated. In the context of careless conduct, damage and causation. Where contributory a share sale, the operator does not change and, as such, liabilities negligence from the plaintiff can be proven, indemnities can fully remain with the entity in question. In the case of an asset be reduced. Another possibility is to resort to the “abnormal purchase, a change of operator should be notified to (or more private nuisance” in the absence of any violation of the law or rarely authorised by) the competent authorities and all liabilities of a permit. will be transferred to the new operator. Note that in case of pollu- Those violations can also carry administrative liabilities tion resulting from a previous activity conducted at the site and consisting in various sanctions (facility’s operation suspension, which is not carried on by the new operator, liability attaches to fines, etc.), as mentioned above (see question 2.4). Those are the operator having previously conducted the polluting activity usually triggered after a party fails to comply with a notice issued which is not conducted by the current operator. by the administration requiring that certain corrective measures be taken by the party. 4.5 To what extent may lenders be liable for Certain articles of the environmental code directly provide environmental wrongdoing and/or remediation costs? for criminal sanctions (see question 2.4). Other than that, criminal liability can be brought on the basis of general criminal In principle, lenders are not liable for their borrowers’ envi- grounds, including the endangerment of a person’s life. Those ronmental wrongdoings. However, note that lenders could be sanctions consist of fines and/or imprisonment. found liable for those damages if they are shown to have had Finally, an environmental liability regime was created in 2008 direct control over the polluter. Moreover, in certain circum- that applies to direct and indirect damages caused to the envi- stances, parent companies may be held liable for environmental ronment. These include deteriorations affecting soils that could damages caused by one of their bankrupted subsidiaries. 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 52 Contaminated Land required to take preventive measures to avoid the occurrence of the damage and, in case of damage, are required to rehabilitate 5.1 What is the approach to liability for contamination the polluted site and to eliminate any risk of serious damage to (including historic contamination) of soil or human health. groundwater?

4.2 Can an operator be liable for environmental Concerning soil pollution originating from an activity listed in damage notwithstanding that the polluting activity is article L.165-2 of the environmental code or from an ICPE or operated within permit limits? 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 Environmental permits are granted subject to the rights of third (see question 4.4), in case of a change of activity. Where soil parties. As such, operation under and compliance with a permit contamination has another origin, persons at the origin of the does not constitute a safeguard against liability for environ- contamination or holders could be liable. Furthermore, if none mental damage. French law does not have an equivalent to the of the above parties can be held responsible, the owner of the “permit defence” system.

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polluted land is liable when negligent or involved in any manner Finally, at the time of site closure, an interested party (usually a in that pollution. land developer) can be substituted to the last operator and bear Where the liable person cannot be identified or is insol- all the remediation work, depending on his intended future use vent, the State can charge the Agency for the environment and of the land. Should the substituting party fail to comply with its energy control (“Agence de l’environnement et de la maîtrise de l’énergie”, obligations or lack the necessary financial guarantees, the former “ADEME”), or any other competent public entity, with the operator will be the one liable for the rehabilitation of the site. remediation of the site. Note that, for ICPE installations, site contamination is mainly 5.5 Does the government have authority to obtain from dealt with at the moment of site closure. Operators are respon- a polluter, monetary damages for aesthetic harms to sible for the remediation of the site that should be left environ- public assets, e.g. rivers? mentally safe in accordance with its future intended use. Under torts, the government can claim damages if it suffered 5.2 How is liability allocated where more than one a prejudice (commercial, reputational, moral, aesthetic, etc.) person is responsible for the contamination? as a result of harm caused to the environment. Moreover, the government can obtain monetary damages to compensate for an Under the environmental liability regime, when environmental environmental harm in and for itself (the “ecological prejudice”) damage is caused by several parties, the prevention or remedia- and not only through another type of prejudice exposed above. tion costs are allocated among the parties according to the contri- The notion of “ecological prejudice”, created by the courts bution of their activity to the damage or its imminent threat. following the “Erika” shipwreck, was indeed introduced in the Concerning ICPE installations in particular, site operators are Civil Code in 2016. Similarly, local governments are entitled to the ones responsible for contamination. The last operator of the act against a party who caused damage to the environment on site remains liable after closure, regardless of a land sale, until a their territory, following a violation of environmental laws. new operator takes over the installation. Once the change of operator is notified to (or authorised by) the competent authorities, the 62 Powers of Regulators former operator is discharged from any liability for contamination towards authorities (save in case of change of activities, see 6.1 What powers do environmental regulators have to section 4). Contractual agreements modifying this allocation of require production of documents, take samples, conduct responsibilities are not enforceable towards authorities. site inspections, interview employees, etc.? Landowners cannot be held liable per se under the ICPE installation regime. Nonetheless, their liability can be retained in Environmental inspectors are commissioned by public author- certain circumstances, in particular if the pollution is caused by ities and given authority to visit the installations, collect docu- waste and not by the operation of the site and the producer or ments, take samples for analysis, and they may call upon experts holder is not known (see question 5.1). to help in this regard. In case the operator refuses those agents access to the site, visits can be authorised by the competent court 5.3 If a programme of environmental remediation (tribunal judiciaire). is “agreed” with an environmental regulator, can the regulator come back and require additional works or can a third party challenge the agreement? 72 Reporting / Disclosure Obligations

Remediation orders constitute unilateral administrative acts 7.1 If pollution is found on a site, or discovered to be migrating off-site, must it be disclosed to an issued by the préfet that can be challenged before the administra- environmental regulator or potentially affected third tive courts, including by third parties. Once the rehabilitation parties? 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 modi- The environmental code lays down general prevention measures, fied at a later stage, no additional measures can be required from including the obligation to report without delay to the authori- the last operator unless he is the one who decided to implement ties any damage or persistent threat of damage to the environ- the modification. ment. 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 5.4 Does a person have a private right of action to concerning ICPE installations. For those, the operator is under seek contribution from a previous owner or occupier of the duty to report any incidents resulting from the operation of contaminated land when that owner caused, in whole or the facility and that present a risk for public health, security or in part, contamination; and to what extent is it possible the environment. Similarly, it is required to report to the author- for a polluter to transfer the risk of contaminated land liability to a purchaser? ities any incidents likely to affect water quality and conservation.

The new operator of a site can act against the former one in 7.2 When and under what circumstances does a person several settings: breach of pre-contractual information obliga- have an affirmative obligation to investigate land for tions; pollution caused by a former activity that he did not pursue; contamination? or non-compliance with site closure remediation obligations. Through contractual clauses, the seller and the buyer of For projects subject to environmental authorisation such as a contaminated land may allocate the risk of liability as they ICPE installations, operators shall carry out an impact study choose. Note, however, that those agreements will not be including a description of the current condition of the land and enforceable against third parties, including the administration. its environment. Moreover, in the course of operations and

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under certain circumstances, soil and water investigations can by the entity at stake. However, under provisions of the envi- be ordered. For example, whenever a notable change occurs in ronmental code, the corporate veil may give in. Corporations operating conditions of ICPE installations, the operator is under that hold more than 50% of the capital of another company and the obligation to conduct a soil pollution assessment. Finally, having committed a significant fault resulting in their subsidi- with the closure of such sites comes an obligation to investigate ary’s insolvency may be responsible for the financing of all the land for pollution and propose remedial measures. environmental remediation measures falling to their affiliate. Those kinds of soil investigations are also required for any Moreover, the environmental code defines the “operator” as project happening on any site registered as polluted. 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. 7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective Under provisions of the civil code, French national courts purchaser in the context of merger and/or takeover have jurisdiction over cases in which the plaintiff or the transactions? defendant has French nationality.

The environmental code provides that if an ICPE installation 8.4 Are there any laws to protect “whistle-blowers” who has ever been active on a site, the seller of that site has an obli- report environmental violations/matters? gation to inform the buyer in writing. If not, and in case a pollution renders the site unfit for the use specified in the contract, Before 2016, the law protected whistle-blowers who reported the buyer can obtain, in a two-year period after the discovery of environmental and health-related violations. In 2016, a law was the pollution, the cancellation of the sale, the rehabilitation of the passed that extended protection to any person who reveals, self- site at the seller’s expense or the restitution of part of the price. lessly and in good faith, any crime, misdemeanour or serious Similarly, the seller or lessor of a land classified as one with a violation of the law, as well as any threat that could harm the risk of soil pollution must inform the buyer or tenant, otherwise public interest. Protections include preservation of their privacy, the same contractual sanctions will be applied. as well as protection from any sanction, dismissal or discrimina- In most cases, however, there is no particular obligation to tory measure taken on the grounds of those revelations. 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 8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary any case, it is recommended to always conduct an environmental damages available? audit during the due diligence process to avoid any risk of future liability. A 2016 law created the mechanism of group actions in environ- 82 General mental 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 admis- 8.1 Is it possible to use an environmental indemnity sibility of this environmental group action is subordinated to to limit exposure for actual or potential environment- the proof, in the context of an environmental pollution, that related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. several individuals have suffered a harm having the same cause remediation) discharge the indemnifier’s potential and the same author. Those actions can only be brought by liability for that matter? 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. Environmental indemnities can be used contractually and be Punitive damages are not applicable in France. 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 8.6 Do individuals or public interest groups benefit party who is designated by law as being the one liable for the from any exemption from liability to pay costs when pollution in question. pursuing environmental litigation?

8.2 Is it possible to shelter environmental liabilities off Individuals or public interest groups do not benefit from any balance sheet, and can a company be dissolved in order exemption from liability to pay legal costs when pursuing environ- to escape environmental liabilities? mental 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 The dissolution of a company is subject to specific corporate legal costs incurred, as part of the financial harm they suffered. 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. 92 Emissions Trading and Climate Change

9.1 What emissions trading schemes are in operation 8.3 Can a person who holds shares in a company in your jurisdiction and how is the emissions trading be held liable for breaches of environmental law and/ market developing there? or pollution caused by the company, and can a parent company be sued in its national court for pollution caused by a foreign subsidiary/affiliate? France participates in the European Union Emissions Trading System (“EU ETS”), a carbon market that was set up in 2005 In principle, shareholders are not liable for actions committed to meet the European Union’s commitments under the Kyoto

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Protocol. This system functions as a cap-and-trade programme. Litigation has mostly developed against employers, who can be Indeed, the European Union imposes a limit on the total held liable on gross negligence grounds. Note that gross negli- amount of emissions coming from industries enrolled (thermoe- gence was almost systematically assessed, whenever an employee lectric, cement, refinery, aviation, etc.). Those are then allocated had contracted an asbestos-related disease in the workplace. quotas corresponding to a certain level of emissions. If their However, a 2015 decision now suggests a relaxing of that rule: emissions go beyond this level, they are required to obtain the wherever an employer can prove he took all the necessary and quotas corresponding to this excess. To cover their emissions, legally imposed security measures to avoid the risk, he will not be companies are given two options: buy allowances on the carbon held liable. Workers who have not yet developed any disease but market from industries emitting less than expected; or buy have been exposed to asbestos are also automatically entitled to international credits (in limited amounts) from emission-saving compensation from their employer under an “anxiety prejudice”. projects in other parts of the world. The price of a tonne of Criminal convictions have been more uncommon so far. carbon is currently very low and fluctuates around five euros per tonne on the ECX, a platform for carbon emissions trading. 10.2 What are the duties of owners/occupiers of Over the years, the sum of quotas allocated free of charge and premises in relation to asbestos on-site? 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. 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. 9.2 Aside from the emissions trading schemes Owners of properties built before that date have an obli- mentioned in question 9.1 above, is there any other gation to perform a tracking on components identified in the requirement to monitor and report greenhouse gas code of public health in order to assess the potential presence emissions? of asbestos. The results of this tracking will determine whether or not additional actions (periodic evaluations, containment or Private entities employing more than 500 people (or more than removal work, etc.) are necessary. This information must all be 250 people if the entity is located outside Metropolitan France) kept in an “asbestos file”, accessible to different parties. Special as well as the State, certain decentralised public authorities and requirements are imposed at the time of sale or demolition. public entities employing more than 250 people are required to Under the labour code, it is the employer’s duty to conduct establish an assessment of their greenhouse gas emissions. This risk assessment concerning asbestos. appraisal is made public and updated every four years for private entities and every three years for public ones. The record is also 112 Environmental Insurance Liabilities sent to the competent administrative authority.

11.1 What types of environmental insurance are 9.3 What is the overall policy approach to climate available in the market, and how big a role does change regulation in your jurisdiction? environmental risks insurance play in your jurisdiction?

France has been accelerating the development of environmental Insurance against nuclear risks and hydrocarbon sea pollution is policies since the introduction of a 2001 law making the fight mandatory. In addition to this, optional environmental insur- against climate change a national priority. Through the adop- ance has developed. The two main ones are the civil respon- tion of climate plans, revised every other year, as well as with sibility insurance for environmental damage and the environ- the Grenelle I and II legal frameworks, France has committed to mental responsibility insurance. The first one includes damages numerous matters including emissions reduction, waste recovery suffered by third parties and caused by environmental damages and biodiversity conservation. In this respect, the French created by the entity; the second covers environmental damages Biodiversity Office was created in July 2019 to restore biodiver- that did not harm any third party. Note that none of those cover sity and ensure a balanced water management in coordination environmental damages caused by intentional fault, violations of with the policy to combat global warming. Finally, the law for the law or poor maintenance condition of the facility. Energy and Climate has been adopted, in November 2019, with a commitment to reach carbon neutrality by 2050, and to reduce 11.2 What is the environmental insurance claims fossil fuels by 40% by 2030 (compared to 2012 levels). experience in your jurisdiction?

102 Asbestos There does not seem to be any particularity to the environmental insurance claims experience and any disagreement between the 10.1 What is the experience of asbestos litigation in insured and his insurance are settled by the competent judge. your jurisdiction? 122 Updates In 2000, a compensation fund (“FIVA”) was created to compensate asbestos victims. Eligible beneficiaries must seek indemni- 12.1 Please provide, in no more than 300 words, a ties by filing an application for compensation with the FIVA. summary of any new cases, trends and developments in They can also initiate litigation against their past employer in environment law in your jurisdiction. order to obtain indemnities. However, once the victim has been compensated by the FIVA, the damages he/she might obtain In a decision, dated 12 July 2017, the Conseil d’Etat (French through legal action will be allocated to the reimbursement supreme administrative court) enjoined the government to take of the costs incurred by the FIVA, unless the court decides to all “necessary measures” to efficiently act against the bad air quality provide the victim with an additional compensation. in highly-polluted parts of France. Then, France adopted a new

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air quality plan to significantly reduce emissions of nitrogen At the same time, several citizens suffering from severe disor- dioxide and fine particles PM10. ders have filed appeals against the State. In June 2019, the Despite the adoption of this plan, France has not succeeded French courts acknowledged that the State’s inability to comply in reaching the concentration levels authorised by the European with the 2008 directive constituted a fault. However, it was not directive of 21 May 2008 on ambient air quality and cleaner for proven that the pathologies were directly due to the fault of the Europe. On 24 October 2019, the European Union Court of State. The courts refused to recognise the causal link in these Justice condemned France and requested that it takes rapidly cases and to award damages. different measures to comply with the 2008 directive, or it will be financially penalised.

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Vincent Brenot is a partner in the Public Regulatory Environment team since 2014 and 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.

August Debouzy Tel: +33 1 45 61 79 73 8 Avenue de Messine Email: [email protected] Paris, 75008 URL: www.august-debouzy.com France

Emmanuelle Mignon, a member of the French Council of State (the supreme administrative court), joined August Debouzy’s Public Regulatory Environment team 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 with Nicolas Sarkozy for eight years, 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 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.

August Debouzy Tel: +33 1 45 61 79 73 8 Avenue de Messine Email: [email protected] Paris, 75008 URL: www.august-debouzy.com France

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. www.august-debouzy.com

Environment & Climate Change Law 2020

Dr. Thomas Christner

Görg Partnerschaft von Rechtsanwälten mbB Dr. Benedikt Walker

12 Environmental Policy and its 1.3 To what extent are public authorities required to provide environment-related information to interested Enforcement persons (including members of the public)?

1.1 What is the basis of environmental policy in your Rights to information can arise both from the Environmental jurisdiction and which agencies/bodies administer and Information Act (Umweltinformationsgesetz, UIG) and laws enacted enforce environmental law? by the Federal States. With the creation of the Environmental Information Act, In Germany, the principles governing the environmental policy Germany has fulfilled its obligation under European Council are laid out in Art. 2 Para. 2 and Art. 20a of the German Basic Directive 90/313/EEC on the freedom of access to information Law (Grundgesetz, GG). Art. 2 Para. 2 GG states that everyone on the environment. Further developments in this area were has the right to life and health. It generally follows from this significantly influenced by the “Aarhus Convention”, which provision that every individual has a protective right against for the first time enshrined corresponding rights at the level of any State intervention and, in addition, that the State needs to international law. protect from any unlawful interference by other private individ- The aim of the Environmental Information Act is to create uals. Therefore, it is often referred to as the ecological substance a legal framework for access to environmental information by minimum. bodies obliged to provide information. While its scope of appli- Art. 20a GG provides that the State shall protect the natural cation is limited to Federal bodies subject to the obligation to basis of life and animals through legislation and, in accordance provide information and to Federal direct legal entities under with law and justice, through executive and court proceedings. public law, the Federal States have issued their own environ- The reference to the natural basis of life implies its relevance mental information laws which provide for access to environ- also for climate protection. In contrast to Art. 2 Para. 2 GG, mental information against State bodies. However, if the disclo- however, Art. 20a is not a fundamental right and does not estab- sure of this information reveals data worthy of protection, such lish a right for the individual to defend itself against the State. as business and trade secrets, the laws provide for grounds for It constitutes a State declaration of aim (Staatszielbestimmung) refusal and thus limit the right to information. and as such provides a mean of interpretation of enacted law to A greater level of knowledge of citizens with regard to envi- ensure conformity with the Basic Law, a guiding principle in the ronmental information should indirectly lead to an improve- application of discretionary provisions and support in planning ment in environmental protection. This is based on the idea processes for weighing up interests. Consequently, it also binds of the environmentally conscious citizen, who uses the infor- State authorities and courts. mation available as an opportunity to enquire whether environ- The federal States in Germany (Bundesländer) play a deci- mentally damaging actions are in line with legal requirements. sive role in administering and enforcing environmental law. While the legislative competence rests with the Federation, the 22 Environmental Permits Federal States implement and administer the German environmental law. Only in exceptional cases are Federal administrative organs, such as the Federal Environmental Agency, responsible. 2.1 When is an environmental permit required, and may environmental permits be transferred from one person to another? 1.2 What approach do such agencies/bodies take to the enforcement of environmental law? Whether an environmental permit is required depends on the different sectors which are regulated by different legal regimes, Environmental law is enforced with various instruments. First, such as water or emissions law. For example, facilities that there are instruments that serve direct behavioural control, such concern waste disposal or cause air emissions are subject to prior as approval procedures, codes of conduct, monitoring and inter- authorisation by the competent authorities. At the same time, ventions by public authorities. Second, environmental levies, environmental impact assessments required by European law as environmental subsidies and environmental information can be part of the planning and approval procedure and the regional regarded as indirect behaviour control. In addition, there are planning procedure might be required. instruments under environmental criminal law which are laid Environmental permits are mainly issued for specific facil- down, e.g., in the Environmental Damage Act. ities (object-related permits, sachbezogene Genehmigungen). Such

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permits are transferred either automatically or from one entity (Kreislaufwirtschaftsgesetz). § 3 Para. 1 of the Act defines waste to another. In the latter case, however, the approval or notifica- as any substance or object which its owner discards, intends to tion of the competent authority is usually required. There may discard or is required to discard. The aggregate State is irrele- also be personal-related permits (personenbezogene Genehmigungen) vant for qualification as waste. which take reference to specific individual qualifications and, The Act foresees obligations to register, record, notify and thus, cannot be transferred. obtain permissions, especially for hazardous waste. If the waste in question is hazardous, the owner is subject to registration obligations in accordance with § 49 Para. 1 and 3 and record obliga- 2.2 What rights are there to appeal against the decision of an environmental regulator not to grant an tions in accordance with § 50 Para. 1 of the Act. For the more environmental permit or in respect of the conditions precise determination of hazardous waste, the list in the Waste contained in an environmental permit? Catalogue Ordinance (Abfallverzeichnisverordnung) is authoritative. Furthermore, the Act contains special provisions for collec- tors, carriers, dealers and marketers of (hazardous) waste in §§ The rights to appeal can, in the first instance, depend on the 53 and 54 of the Act. Federal States. In some States, an administrative objection procedure must be carried out before filing a claim. In all States, however, the denial of a permit or certain conditions therein 3.2 To what extent is a producer of waste allowed can then be challenged by filing a claim with the administra- to store and/or dispose of it on the site where it was tive courts. The legal instrument usually is an action for rescis- produced? sion. There are three instances for administrative proceedings: the Administrative Courts; the Higher Administrative Courts Pursuant to § 7 Para. 3 of the Closed Substance Cycle Waste of the States; and the Federal Administrative Court in Leipzig. Management Act, producers or owners of waste are obliged to Appeals and revisions may take the proceedings to the next level. recover their waste. The recovery of waste has priority over its disposal. According to the so-called waste hierarchy in 2.3 Is it necessary to conduct environmental audits § 6 of the Act, producers and owners of waste are obliged to or environmental impact assessments for particularly implement waste management measures: avoidance of waste; polluting industries or other installations/projects? preparation for recovery; recycling; other types of recovery (in particular use for energy generation); and disposal. When storing or disposing the waste, measures must be taken that best For particular undertakings, German environmental law protect human health, the environment, the public order and provides for environmental impact assessments. There are security. In general, the public interest may not be adversely two types of assessments: environmental impact assessment affected according to § 15 Para. 2 of the Act. This may include (Umweltverträglichkeitsprüfung, UVP); and strategic environmental storing and handling the waste separately, § 15 Para. 3 of the Act. assessment (Strategische Umweltprüfung, SUP). The environmental impact assessment is an instrument of environmental precaution with the aim of assessing the possible 3.3 Do producers of waste retain any residual liability environmental impacts of relevant projects before their approval. in respect of the waste where they have transferred it to The Strategic Environmental Assessment is relevant for another person for disposal/treatment off-site (e.g. if the examining environmental aspects in strategic planning proce- transferee/ultimate disposer goes bankrupt/disappears)? dures such as urban land-use planning procedures or federal planning procedures. According to § 22 of the Closed Substance Cycle Waste Management Act, parties obliged to recover and dispose of waste may entrust third parties with their obligations. However, the 2.4 What enforcement powers do environmental regulators have in connection with the violation of responsibility remains unaffected and continues until disposal or permits? recovery have been finally and properly completed. They have been completed when the qualification as waste ends or the waste has been successfully recovered. The producer or holder can, Enforcement powers are regulated in administrative and crim- however, request information on the economic and financial inal law. Where an entity fails to comply with certain condi- conditions of a third party in order to limit his own liability risk. tions or time limits set out in the permit, the authority may prohibit (Untersagung) or close down (Stillegung) the operation of the facility. As a last resort, the authorities may order 3.4 To what extent do waste producers have obligations removal (Beseitigung) of the facility. Non-compliance with addi- regarding the take-back and recovery of their waste? tional requirements (Auflagen) set out in the permit can also be enforced by administrative coercion (Verwaltungszwang). § 23 of the Closed Substance Cycle Waste Management Act Lastly, the violation of environmental permits can lead to constitutes that every developer, manufacturer, processor criminal or administrative offence proceedings, which can or distributer holds a product responsibility. The product entail fines and imprisonment. responsibility entails that products need to be designed in a way that allows the take-back and environmentally compat- 32 Waste ible recovery of their waste, § 23 Para. 2 No. 5 of the Act. For further clarification, the Federal Government has been enti- 3.1 How is waste defined and do certain categories of tled to enact regulations, Para. 4. These have taken form, for waste involve additional duties or controls? instance, in the Packaging Ordinance for Packaging Material (Verpackungsverordnung) and the End-of-Life Vehicles Ordinance (Altfahrzeug-Verordnung). Other regulations can also be found in The relevant law for the recovery and disposal of waste in the Battery Act (Batteriegesetz) and the Electrical and Electronic Germany is the Closed Substance Cycle Waste Management Act Equipment Act (Elektro- und Elektronikgerätegesetz).

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42 Liabilities 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? 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? In principle, an asset purchase offers the possibility of selecting only certain assets in a transaction. However, the differences between a share sale and an asset purchase are not very deci- In Germany, there are two legal regimes that impose types of liabil- sive under German law, at least with regard to the contamina- ities in environmental law. First, the Environmental Damage Act tion of soil and groundwater as a result of the particularities of (Umweltschadensgesetz) and, second, the Environmental Liability the contaminated site regime. Here, German environmental law Act (Umwelthaftungsgesetz). provides for liability of the current and the former owner of a The Environmental Damage Act covers the violation of contaminated site (see question 5.1 below). private interests through the contamination of the environment and provides a civil liability in this regard. The Environmental Liability Act, in contrast, provides for a liability for the harm 4.5 To what extent may lenders be liable for to the environment itself under public law, thereby setting the environmental wrongdoing and/or remediation costs? public liability for environmental damage that was introduced by the EU Directive 2004/35 on Environmental Damage. It In Germany, the lender is not held liable for environmental contains a list of occupational activities that entail a strict damage caused to a borrower. liability and constitutes negligence liability for other occupational activities if there is damage to species and natural habi- 52 Contaminated Land tats, water damage or soil damage. Moreover, the German law of torts generally provides a liability for damages to persons or property, see § 823 of the 5.1 What is the approach to liability for contamination (including historic contamination) of soil or German Civil Code. And lastly, non-compliance with environ- groundwater? mental protection requirements can also result in an administrative offence and/or criminal prosecution, for example, if the company operates without a permit, or if the provisions or ancil- The German Federal Soil Protection Act (Bundesbodenschutzgesetz) lary provisions of the permit are disregarded. stipulates that it is at the discretion of the competent authorities to choose and proceed against the entity or person responsible for the decontamination of soil or groundwater. § 4 of the Act 4.2 Can an operator be liable for environmental names the polluter, the current owner, the previous owner (if damage notwithstanding that the polluting activity is the land was sold after 1999) or the user (including the tenant) operated within permit limits? as responsible. The authorities usually tend to proceed against the current owner. However, if the current owner has insuffi- It is recognised that a validly issued facility or operating permit cient resources, the authorities can also select the polluter or the protects the operator against executive intervention, provided tenant, if applicable. Consequently, the purchaser of a contami- that the operator acts within the limits of the permit. German nated site is in principle liable for the contamination of soil and environmental law now generally recognises the permit defence groundwater on the acquired land. (Legalisierungswirkung von Genehmigungen) since an early ruling of the Federal Administrative Court from 2 December 1977 (file No. IV C 75.75). However, this effect is only significant with 5.2 How is liability allocated where more than one person is responsible for the contamination? regard to those aspects that are actually legally comprised by the permit. If a permit does not contain a regulation to a certain aspect, it cannot justify a corresponding behaviour of the permit As mentioned above, several people can be held liable for the holder. For example, emissions are often not regulated by contamination of soil or groundwater. The authorities can exer- plant-related permits, such as building permits. cise full discretion and proceed against the person responsible who, in their opinion, is best able to carry out the remediation. Pursuant to § 24 Para. 2 Federal Soil Protection Act, however, 4.3 Can directors and officers of corporations attract there is joint and several liability (Gesamtschuld) between the personal liabilities for environmental wrongdoing, and potentially responsible. Consequently, the person proceeded to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities? against has a right of recourse against the others. The obligation to compensate and the extent of compensation are determined by the degree and extent to which the risk or damage has Company managers, in particular board members, supervisory been predominantly caused by one or the other. board members and managing directors, are subject to civil and criminal liability. Under civil law, they are liable without limitation and personally with their private assets for culpable 5.3 If a programme of environmental remediation breaches of duty. In addition, there is criminal responsibility is “agreed” with an environmental regulator, can the with the risk of being sentenced to fines and imprisonment. As regulator come back and require additional works or can a third party challenge the agreement? the company itself cannot be held liable, its corporate bodies’ representatives face criminal liabilities personally; and these liabilities can extend to other employees. In this respect, it is Usually, a formal remediation agreement in accordance with possible to take out insurance under director and officers’ insur- the Federal Soil Protection Act serves as the basis for the ance policies. remediation of contaminated sites. Due to the binding nature of such an agreement, unilateral orders by the authorities are usually unlawful. In case of different legal requirements or new

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scientific or technical findings, the authorities need to apply for indication or an obvious indication), of a harmful soil change or an adjustment of the contract in accordance with the princi- a contaminated site. Furthermore, the Federal Soil Protection ples of administrative law. This, however, is only possible if the Ordinance (Bundesbodenschutzverordnung) provides that indica- remediation has not yet been completed as the agreement is no tion of a harmful soil change or contaminated site exists in longer applicable upon completion. For third parties, it is only particular if pollutants have been treated over a longer period of possible to challenge a remediation agreement if their personal time or in considerable quantities on land and where operation, rights are affected. management or other methods applied in the individual case, or disturbance of proper operation, suggest significant inputs of such pollutants into the soil. In order to assume a concrete or 5.4 Does a person have a private right of action to seek contribution from a previous owner or occupier of obvious indication, investigations must show that the test values contaminated land when that owner caused, in whole or (Prüfwerte), according to Annex 2 of the Federal Soil Protection in part, contamination; and to what extent is it possible Ordinance, have been exceeded. for a polluter to transfer the risk of contaminated land liability to a purchaser? 7.2 When and under what circumstances does a person have an affirmative obligation to investigate land for While the purchaser may be held liable under public law by the contamination? competent authority, he may himself take action against the polluter according to § 24 Para. 2 Federal Soil Protection Act There is no general obligation to investigate land for contam- (see question 5.2 above). Accordingly, joint and several liabil- ination. If, however, there is a concrete indication that there ities arise between the potential polluters, with the major part is a suspicion of a harmful change in the soil or residual pollu- of the remediation costs being imposed on the major polluter. tion, the competent authority may order the polluter, the current Consequently, the buyer would have to clean up the contami- owner, the former owner (if the land was sold after 1999) or the nated land completely on their own and take action against the user (representing a tenant) to carry out the necessary investiga- actual polluter. However, the potentially responsible parties tions to assess the dangers involved. can make contractual agreements deviating from this joint and several liability, with the effect that the provision of § 24 Para. 2 of the Act no longer applies. 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 5.5 Does the government have authority to obtain from transactions? a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers? According to German contract law, the seller should disclose all existing environmental problems to the prospective purchaser. In principle, aesthetic harms to public assets cannot be subject to Otherwise, the seller may be risking allegations of fraudulent financial damages. Damages to the natural habitats and biodiver- conduct and may no longer invoke limitations of liability. In sity, however, are regulated by the Environmental Damages Act. 2017, the Federal Court of Justice ruled that a mere suspicion of contamination already constitutes a material defect (BGH, judg- 62 Powers of Regulators ment 21 July 2017, V ZR 250/15).

6.1 What powers do environmental regulators have to 82 General require production of documents, take samples, conduct site inspections, interview employees, etc.? 8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment- One of the fundamental principles of German public law related liabilities, and does making a payment to another is the principle of investigation (Untersuchungsgrundsatz). In person under an indemnity in respect of a matter (e.g. line with this principle, it is the responsibility of the environ- remediation) discharge the indemnifier’s potential liability for that matter? mental authorities to obtain relevant facts themselves in terms of type and scope. They may ask for statements of any kind, such as statements by participants, witnesses and experts, as Typically, the purchaser requires the remaining environmental well as demand for official documents and files and carry out liability risks (from contamination prior to conclusion of the legal controls. According to the administrative regulations, the contract) either to be adequately considered in the purchase price parties are not obliged to appear before an authority or to make by deducting the remediation costs from the purchase price, a declaration, but rather only to provide assistance in finding where possible, or to be covered by a uniform environmental evidence and facts. indemnification under the Asset Purchase Agreement. However, any payments made under an indemnity only relate to contrac- 72 Reporting / Disclosure Obligations tual arrangements between the parties and do not discharge the indemnifier’s potential liability. Obligations under public law (see question 5.1) remain unaffected and are not transferable. 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 8.2 Is it possible to shelter environmental liabilities off parties? balance sheet, and can a company be dissolved in order to escape environmental liabilities? According to State legislation of the Federal States, there may be an obligation to report to the competent authorities. Such In Germany it is not possible to avoid environmental liability by an obligation then exists if there is an indication (a concrete dissolving a company. Pursuant to § 4 Para. 3 S. 4 Federal Soil

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Protection Act, the person who is legally responsible for a legal The carbon market is currently undergoing rapid develop- entity that owns the land for commercial or corporate reasons ments. The price of a carbon credit has risen by almost a fifth is obligated to reorganise the company. This includes cases of this year, reaching a record EUR 29.27 in July 2019, twice as undercapitalisation or qualified group dependence. high as in January 2018.

8.3 Can a person who holds shares in a company 9.2 Aside from the emissions trading schemes be held liable for breaches of environmental law and/ mentioned in question 9.1 above, is there any other or pollution caused by the company, and can a parent requirement to monitor and report greenhouse gas company be sued in its national court for pollution emissions? caused by a foreign subsidiary/affiliate? Shipping companies are not part of the EU ETS, but they have In Germany, the parent company can be held liable for the been obliged to monitor their emissions under the EU Regulation contamination of land, provided that there is undercapitalisa- 2015/757 on the Monitoring, Reporting and Verification of tion or a qualified group dependence (see question 8.2). Carbon Dioxide Emissions from Maritime Transport. German jurisdiction does not apply to pollution caused by Furthermore, the Carbon Offsetting and Reduction Scheme foreign subsidiaries of German parent companies outside of for International Aviation (CORSIA) of the International Civil Germany. Aviation Organisation (ICAO) requires all aircraft operators to monitor, report and verify their carbon emissions from flights 8.4 Are there any laws to protect “whistle-blowers” who between airports within and outside the EU. report environmental violations/matters? In addition, EU Regulation (EU) No. 517/2014 applies to manufacturers, importers and exporters of fluorinated greenhouse gases (f-gases), as well as companies that use a comparable According to the current legal situation, German environmental quantity of f-gases. law does not provide for any protection of environmental “whistle-blowers”. 9.3 What is the overall policy approach to climate change regulation in your jurisdiction? 8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary damages available? Climate protection has become one of the top priorities of German environmental and energy policy. Despite the lack of one climate protection act, there are several legal acts devoted To date, there are no group or “class” actions possible in to reduce greenhouse gas emissions. The enormous develop- Germany for the prosecution of environmental damage. ment of renewable energy sources and the phasing out of coal as The Law on the Introduction of a Civil Proceedings Model well as the reduction of car emissions are the focus of this envi- Determination Action (Gesetz zur Einführung einer zivilprozes- ronmental policy. At the Federal States’ level as well, particular sualen Musterfeststellungsklage) passed in June 2018 only concerns attention is being paid to energy efficiency and reduction in the consumer law. Furthermore, there are no concepts of crim- building sector. A number of new laws have also been passed inal or exemplary damages comparable to US-American legal in the area of planning and regional planning that keep in mind concepts. climate change.

8.6 Do individuals or public interest groups benefit 102 Asbestos from any exemption from liability to pay costs when pursuing environmental litigation? 10.1 What is the experience of asbestos litigation in your jurisdiction? In principle, there is no cost privilege for individuals or public interest groups in German environmental law. While public interest groups have so far only had the opportunity to sue in Except in the real estate and insurance sectors, there are hardly environmental matters in nature conservation cases, the ratifi- any environmentally-related asbestos lawsuits in the German cation of the Aarhus Convention and the EU Directive 2011/92 jurisdiction. introduced a general procedural right for public interest groups with regard to environmental damage. 10.2 What are the duties of owners/occupiers of premises in relation to asbestos on-site? 92 Emissions Trading and Climate Change Specific obligations to remove asbestos do not exist in the 9.1 What emissions trading schemes are in operation asbestos guidelines (Asbest-Richtlinien) of the federal States. in your jurisdiction and how is the emissions trading Generally, however, the existence of a health threat is sufficient market developing there? to establish duties of owners or occupiers. Friable asbestos, for example, is capable of posing a risk to human health which in Germany holds the largest share of installations and emis- consequence establishes a duty to remove the asbestos. The sions under the EU Emissions Trading Scheme (EU ETS). All asbestos guidelines contain criteria for determining the urgency aircraft operators operating flights within the EU and conti- of remediation measures, which can range from immediate nental flights to and from Europe, as well as operators of large measures to interval-related risk assessments. When removing energy plants and energy-intensive industrial plants are part of and disposing of the asbestos material, the owner or occupier the emission trading system in Germany. must sometimes observe specific safety measures, which can be cost-intensive.

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112 Environmental Insurance Liabilities 122 Updates

11.1 What types of environmental insurance are 12.1 Please provide, in no more than 300 words, a available in the market, and how big a role does summary of any new cases, trends and developments in environmental risks insurance play in your jurisdiction? environment law in your jurisdiction.

Environmental insurance for operators of industrial or commer- In September 2019, the German government adopted a climate cial plants in Germany became unavoidable with the entry into package (Klimapaket). As part of this package, several legislative force of the Environmental Liability Act (1 January 1991) and the proposals were presented. These include the draft of a Federal Environmental Damage Act (14 November 2007). Accordingly, climate protection act (Bundes-Klimaschutzgesetz), in order to achieve German insurance companies offer a large number of different the greenhouse gas reduction targets of the Climate Protection types of environmental insurances. Plan 2050 within the defined sectoral targets by 2030. As a further measure to implement the climate package, the Federal government passed a law in October introducing a national emissions 11.2 What is the environmental insurance claims experience in your jurisdiction? trading scheme for fuels. In addition, a legislative proposal was passed to promote the implementation of the Climate Protection Programme 2030 in fiscal terms. This includes, in particular, Environmental insurance claims are rarely brought to court. subsidies for energy-saving renovation measures and a reduc- Those that are mostly concern contaminated land. tion of the turnover tax in public passenger rail transport. The Government also decided to amend the Packaging Act, which is intended to establish a ban on plastic bags in the future. Moreover, the ban of certain diesel cars is still an issue in Germany. Several courts have decided that it might be reasonable to ban those cars from city centres if the responsible authorities cannot find other measures adequate to reduce the carbon emissions.

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Dr. Thomas Christner is a partner in the Cologne office of Görg and specialises in the areas of public and administrative law. He advises companies and the public sector in planning and approval processes of complex construction and infrastructure projects, in particular in planning approval procedures and emission control approval procedures, including representation in court and in early possession and expropriation procedures. He advises companies from the chemical and food industries on legal issues relating to waste water disposal. Furthermore, he has many years of experience in advising on the operation and recultivation of landfills and the handling of contaminated areas. He has published extensively on these topics and lectures regularly.

Görg Partnerschaft von Rechtsanwälten mbB Tel: +49 221 3366 0724 Kennedyplatz 2 Email: [email protected] Cologne, 50679 URL: www.goerg.de Germany

Dr. Benedikt Walker is an associate in the Cologne office. He advises companies and municipalities on public law issues especially regarding power generation projects (conventional power plants, offshore and onshore windfarms, photovoltaic plants) as well as on approval procedures under emission control law. Representation in court in premature property transfer and expropriation proceedings are the other focuses of his work.

Görg Partnerschaft von Rechtsanwälten mbB Tel: +49 221 3366 0724 Kennedyplatz 2 Email: [email protected] Cologne, 50679 URL: www.goerg.de Germany

GÖRG is one of the top independent commercial law firms in Germany, a nationwide leader in insolvency and reorganisation and holds top positions in all core areas of commercial law. At the five GÖRG offices in Berlin, Frankfurt am Main, Hamburg, Cologne and Munich, more than 290 lawyers and tax consultants with many years of national and international consulting experience work to advise each of our clients personally, pragmatically, in partnership and with a high level of competence. Our clients include many well-known domestic and foreign companies, medium-sized companies, financial investors and listed corporations from all sectors of the economy and the public sector. www.goerg.de

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India India

Tavinder Sidhu

M.V. Kini Kshitez Kaushik

12 Environmental Policy and its 1.2 What approach do such agencies/bodies take to the enforcement of environmental law? Enforcement

The interactions between these enforcement agencies and regu- 1.1 What is the basis of environmental policy in your jurisdiction and which agencies/bodies administer and lated entities still tend to be based on a carrot-and-stick approach. enforce environmental law? As a result, only a few companies tend to be proactive or forthcoming with their environmental compliance issues. That said, in our experience, voluntary disclosures are well received by all The Indian Constitution lays down the foundation for all envi- enforcement agencies, although there are no formal guidelines ronmental laws. The “Directive Principles of State Policy” relating to such situations, and explicit rewards are absent for cast a duty upon every State that it “shall endeavour to protect such voluntary disclosures, so local companies often lack the and improve the environment and to safeguard the forests and confidence to approach enforcement agencies. Some of the wildlife of the country”. Further, it is a fundamental duty of newer environmental laws, such as the E-Waste (Management) every citizen “to protect and improve the natural environment Rules, 2016 (“E-Waste Rules”), have incorporated a “self-dec- including forests, lakes, rivers and wildlife and to have compas- laration” mechanism, e.g. relating to the Reduction in the use sion for living creatures”. Since the late 1980s and early 1990s, of Hazardous Substances (“RoHS”) requirements. However, there has been a clear trend of environmental policies being such approaches remain the exception rather than the rule. driven by the (activist) judiciary in India. The fundamental Some States have also adopted an “auto-renewal” of Consent right to life enshrined in Article 21 of the Constitution has Orders (i.e. environmental permits) based on self-certification been expanded by judicial interpretation to include the right to if certain criteria are met, such as when there is no increase in a clean, healthy and pollution-free environment. The doctrine the overall production capacity and pollution load, or if there is of sustainable development, the “polluter pays” and the precau- only a marginal increase (up to a maximum of 10%) in the capital tionary principle, were all first acknowledged by the judiciary investment, etc. before these principles were explicitly embedded in more recent The SPCBs tend to issue “show cause notices” (“SCNs”) in environmental legislation (such as the National Green Tribunal the event of non-compliance, giving the companies generally 15 Act, 2010). to 30 days to reply and explain why criminal prosecution should The Ministry of Environment, Forest & Climate Change not be undertaken or electricity/water supply to these compa- (“MoEF&CC”), along with the Central Pollution Control Board nies should not be stopped. The power of the SPCBs to cut (“CPCB”), and State Pollution Control Boards (“SPCBs”) of off these basic supplies can at times be unnecessarily harsh on each of the 28 States and nine Union Territories (“UTs”) in a company, but seems to be the only effective tool which the India, administer and enforce environmental laws. There are SPCBs have at their disposal to enforce environmental laws. separate regulatory bodies for various environmental laws, Hence, all companies must ensure that they take these SCNs such as: the State-level Environment Impact Assessment very seriously and duly reply, ideally with legal guidance. As Authority, supervising Environmental Clearance applications per the respective environmental laws, all companies are also and Environmental Impact Assessment reports; the Ozone Cell, granted the right to be heard before such drastic measures such supervising compliance with the Ozone-Depleting Substances as the stoppage of basic supplies will be enforced. Moreover, if Rules; the Forest Advisory Committee (“FAC”) for forest diver- a site is found to be in grave non-compliance (such as operating sions; and National and State-level Coastal Zone Management without an environmental permit), the SPCBs will not hesitate Authorities, supervising the Coastal Regulation Zone (“CRZ”) to commence a proceeding before the NGT, with a request to Notification, etc. impose a penalty and, in some cases, criminal prosecution of We may also add here that there is only one Supreme Court the directors or management of a company can also be initiated. (“SC”) in India, but each of the States has its own High Court. Importantly, various benches of the National Green Tribunal (“NGT”) were established in 2010 – dividing India geographi- 1.3 To what extent are public authorities required to cally into several jurisdictional zones, with the Principal Bench provide environment-related information to interested in Delhi, and four other NGTs in Bhopal, Pune, Kolkata and persons (including members of the public)? Chennai – for the speedy disposal of cases where a substantial question relating to environment is involved, and for giving Under the Right to Information Act, 2005 (“RTI Act”), a citizen relief and compensation for damages to persons and property. can request all government authorities to provide any particular

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information which they hold, at a minimal fee. There are some 2.2 What rights are there to appeal against the exemptions to this otherwise broadly drafted right to informa- decision of an environmental regulator not to grant an tion, such as: personal information of officers; evidence yet to be environmental permit or in respect of the conditions presented in a court of law; and also, importantly, commercially contained in an environmental permit? confidential information, trade secrets or intellectual property, the disclosure of which would harm the competitive position of One can file an appeal against the decision by a SPCB not to grant a third party, unless the competent authority is satisfied that the or renew a Consent Order before a State-level Appellate Authority larger public interest warrants the disclosure of such informa- (which is part of the State-level Environment Department). A subse- tion. For instance, if local residents were to file an RTI petition quent appeal against a decision by the Appellate Authority would lie seeking information about a company’s off-site groundwater before the NGT (see Section 16 of the NGT Act). Similarly, an pollution, the larger public interest would warrant that all infor- order granting or refusing an Environment Clearance passed by a mation available to the government authority be shared with the regulatory authority can also be challenged before the NGT. citizens seeking this information. We may also add here that many SPCBs and authorities supervising EC applications increasingly place information on their 2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly respective websites pertaining to applications received, pending, polluting industries or other installations/projects? refused and granted.

22 Environmental Permits Yes, in line with the Prior Environmental Clearance Notification, 2006, about 40-odd projects or activities require a prior Environmental Clearance (“EC”), some of which also 2.1 When is an environmental permit required, and may require a detailed Environmental Impact Assessment (“EIA”) environmental permits be transferred from one person to report, including: another? ■ Petro-chemical complexes. ■ Mining of minerals. The most common Consent Orders or environmental permits ■ Offshore and onshore oil and gas exploration, development to be obtained from the SPCBs/UTPCC (by, e.g. manufacturing and production. companies) are the Consent to Establish (“CTE”) under the ■ Oil and gas transportation pipelines passing through Water (Prevention and Control of Pollution) Act, 1974 (“Water ecologically sensitive areas. Act”) and the Air (Prevention and Control of Pollution) Act, ■ Thermal power plants. 1981 (“Air Act”) in which a company submits its initial plans, ■ Nuclear power projects and processing of nuclear fuel. shares its manufacturing capacity, pollution load, etc. for initial ■ Metallurgical industries (ferrous and non-ferrous). construction approval; which has to be followed by a Consent to ■ Asbestos milling and asbestos-based products. Operate (“CTO”) which must be obtained prior to any opera- ■ Chlor-alkali industry. tions being initiated by the company. Do note that an integrated ■ Chemical fertilisers. permit system is in place in most States. For instance, the CTO ■ Pulp and paper industry. and its subsequent renewals under the Water Act, Air Act and ■ Airports. Hazardous and Other Wastes (Management and Transboundary ■ All shipbreaking yards including shipbreaking units. Movement) Rules, 2016 (“HW Rules”) can typically be obtained ■ Townships and area development projects, etc. by submitting a “Combined Consent” Application to the rele- Environmental Audits have not yet been made mandatory but vant SPCB. It is worth noting that separate pieces of legislation some of the States such as Gujrat, Maharashtra and Karnataka; will trigger separate permit obligations. For instance, the recent do offer incentives to the industrial units obtaining an ISO E-Waste Rules introduce the new concept of an “Extended 14001: 2015 certification. The incentives are a longer validity Producer Responsibility – Authorisation of Producers” which period of a Consent/Authorisation, reduction in the number of would only require one centralised application with the CPCB. routine inspections, and expeditious clearance of their renewal Hence, depending on the type of activities undertaken by a applications. Many export-oriented industries also undertake company, multiple permits may need to be obtained. environmental audits, driven by their global clients. Importantly, in August 2018, a new online environmental portal was launched by the MoEF&CC, named “PARIVESH” – which stands for “Pro-Active and Responsive facilitation by 2.4 What enforcement powers do environmental Interactive, Virtuous and Environmental Single-window Hub” regulators have in connection with the violation of permits? – to facilitate online submission and tracking of various environmental clearance applications: https://parivesh.nic.in. More As mentioned in question 1.2 above, the SPCBs have far-reaching specifically, it will allow a single registration and single sign-in powers to impose a stoppage of essential services such as elec- for all types of clearances (i.e. Environment, Forest, Wildlife tricity and water, if a company is found to be operating in viola- and CRZ, and create a unique ID for each project for most envi- tion of the conditions mentioned in the Consent Order. The ronmental clearances). SPCBs can initiate prosecution before the courts. Moreover, Consent Orders issued by the SPCBs, as well as Environmental Environmental Compensation amounts can also be imposed on Clearances (obtained under the EC Notification), are readily trans- the polluting industries (see question 12.1 below). ferable, and a straightforward procedure has to be followed: the transferor would need to provide a written “No Objection” to the 32 Waste concerned regulatory authority; and the transferee must submit an application, along with an undertaking that it will comply with 3.1 How is waste defined and do certain categories of all the conditions specified in the Consent Order, along with waste involve additional duties or controls? supporting documents (explaining the underlying reason for the transfer, change of name, change of management, etc.). Various waste rules contain different definitions of wastes and

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impose different sets of obligations on different entities, such of electrical and electronic equipment (“EEE”) has a duty to as the occupier, the transporter, the recycler, the importer or channel back the e-waste and ensure the environmentally sound exporter, etc. The HW Rules define “waste” as materials that management of such waste. The EPR may consist of setting are not products or by-products, for which the generator has no up a take-back system or collection centres, or having arrange- further use for the purposes of production, transformation or ments with an authorised dismantler or recycler, or through a consumption. The HW Rules further clarify that waste includes Producer Responsibility Organisation (“PRO”). The producer the materials that may be generated during the extraction of would need to obtain a prior EPR Authorisation from the CPCB raw materials, the processing of raw materials into interme- approving its proposed EPR approach and take-back targets. diate and final products, and the consumption of final products, but excludes residuals recycled or reused at the place of genera- 42 Liabilities tion. A by-product is defined as a material that is not intended to be produced but gets produced in the production process of 4.1 What types of liabilities can arise where there is a the intended product and is used as such. “Hazardous waste” breach of environmental laws and/or permits, and what is a more complex definition which takes into account several defences are typically available? technical factors, and uses both a list-based approach as well as concentration limits; and the international trade dimension of The Water Act, the Air Act and the Environment (Protection) hazardous wastes is in line with the Basel Convention on the Act, 1986 (“EP Act”) – under which all the waste-related Rules Control of Transboundary Movements of Hazardous Wastes were adopted – all contain penalty provisions. Failure to obtain and Their Disposal, 1989 (“Basel Convention”), to which India the required Consent Order or environmental permit will is a party. trigger the penalty provisions. For instance, under the Water Other waste-specific legislation will define the waste Act, any person who breaches the consent application process is being targeted respectively, such as: the Bio-Medical Waste punishable with imprisonment for at least 18 months, which can Management Rules, 2016; the Municipal Solid Waste be extended to six years, and a fine. Management Rules, 2016; the Construction and Demolition Importantly, the NGT Act contains penalty provisions which Waste Management Rules, 2016; the Plastic Waste Management are considerably higher compared to previously adopted envi- Rules, 2016 (“PWM Rules”); and the E-Waste Rules. ronmental laws. Most likely all existing environmental laws will be amended (at some point) to be aligned with the NGT 3.2 To what extent is a producer of waste allowed Act penalty provisions. More specifically, section 26(1) of the to store and/or dispose of it on the site where it was National Green Tribunal Act states that a person who fails to produced? comply with an order or award or decision of the Tribunal is punishable with imprisonment for a term of up to three years, Different waste rules impose different responsibilities and or with a fine of up to INR10 crore, or both (1 crore is equal to requirements regarding waste storage; for instance, the 10 million). If the failure or contravention continues, an addi- E-Waste Rules – which are based on the Extended Producer tional fine applies up to INR25,000 for every day the failure/ Responsibility (“EPR”) – only allow the storage of e-waste contravention continues, after conviction for the first failure or on-site up to 180 days after its generation (which can exception- contravention. Moreover, if a company fails to comply with any ally be extended up to 365 days), and impose the further obli- order, award or decision of the Tribunal, the company is punish- gation on the producer to ensure that the e-waste, at end of life, able with a fine up to INR25 crore. If the failure or contraven- finds its way to a registered recycler or an authorised treatment tion continues, an additional fine applies up to INR100,000 for storage disposal facility (“TDSF”). every day the failure/contravention continues, after conviction for the first failure or contravention. The Water Act, Air Act and EP Act all contain specific provi- 3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it to sions for offences committed by companies. Under these Acts, another person for disposal/treatment off-site (e.g. if the every person who is in charge when an offence is committed, transferee/ultimate disposer goes bankrupt/disappears)? and is responsible to the company for the conduct of its business, is guilty of the offence and liable to be prosecuted and punished accordingly. However, such person will not be held Once the title has been transferred to another party, no such liable if he proves that the offence was committed without his residual liability will be retained by the generator/producer of knowledge, or that he exercised all due diligence to prevent the the respective waste(s) as this is not specified in any environ- offence. Further, if the offence was committed with the consent mental law, nor developed via case law. Various environmental or connivance of, or is attributable to any neglect by, a director, laws do specify that all the parties (be it manufacturer, producer, manager, secretary or other officer of the company, the other importer, transporter, dismantler, recycler, etc.) shall be liable person is also guilty of the offence, and liable to be prosecuted. for any damages caused to the environment or third party due to Moreover, the Supreme Court and the State High Courts can improper handling and management of their (respective) waste, and do impose exemplary damages for damage to the environ- but this is based on fault-based liability which will have to be ment. For instance, in the Sterlites Industries case (2013), one of proved in court based on general tort law principles. the largest copper smelter plants in India was found to be operating without a valid renewal of its environmental consent to 3.4 To what extent do waste producers have obligations operate. When assessing the company’s liability to pay damages, it regarding the take-back and recovery of their waste? reviewed the company’s annual report, and determined that 10% of the profit before depreciation, interest and taxes (“PBDIT”) The concept of EPR is embedded in several more recent pieces had to be paid as compensation, which amounted to INR1 billion. of environmental legislation, such as the E-Waste Rules and the About 30 years ago, the Supreme Court evolved two PWM Rules. Hence, under the E-Waste Rules, the producer far-reaching environmental civil liability concepts which are now engrained in Indian case law:

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■ Enterprises engaged in hazardous or inherently dangerous liabilities, but the parties can contractually decide otherwise. activities are absolutely liable to compensate those affected This is because environmental laws in India do not address by an accident (such as the accidental leakage of toxic gas). historical pollution and the regulatory authorities in India typi- Such absolute liability is not subject to any of the excep- cally connect environmental liability to the current occupier, tions under the tort principle of strict liability in Rylands v i.e. the entity having current control over the site, without any Fletcher (that is, act of God, act of third party, consent of further investigation in terms of previous ownership. As a victim and statutory authority). result, parties will settle this point via the insertion of contrac- ■ The measure of compensation must be correlated to the tual warranties relating to environmental liabilities, which high- magnitude and capacity of the enterprise. The larger and lights the importance of a robust environmental due diligence more prosperous the enterprise, the greater the amount of prior to the purchase. compensation payable by it for harm caused by an accident, in the carrying on of hazardous or inherently dangerous 4.5 To what extent may lenders be liable for activities. environmental wrongdoing and/or remediation costs?

4.2 Can an operator be liable for environmental In India, lenders do not directly incur liability for environ- damage notwithstanding that the polluting activity is mental wrongdoing and/or remediation costs for contami- operated within permit limits? nated land, unless they are directly responsible or liable for the management of the company, with a board position or substan- Yes, the principle of absolute liability (discussed above under tial shareholding and involvement in the day-to-day running of question 4.1), combined with the “polluter pays” principle, the the company. However, lenders increasingly undertake an envi- precautionary principle and the sustainability principle – which ronmental risk assessment of the projects of their customers are well established in many environmental cases – could hold and will include contractual clauses pertaining to environ- a company liable for environmental pollution or damage even mental compliance in their loan documents. Lenders normally if a company complies with its current environmental permit. undertake prior due diligence and insist on appropriate condi- For instance, we could think of a situation of off-site ground- tions before granting a loan, requiring the management of the water pollution caused by both historic pollution and current company to take effective measures to minimise their environ- activities which can be traced back to the company’s site and mental liability. have a combined effect of negatively impacting the groundwater quality – a situation which was otherwise not covered by the 52 Contaminated Land environmental permit, but is negatively impacting the environment and health of neighbouring farmers or making the water 5.1 What is the approach to liability for contamination unusable for irrigation purposes. (including historic contamination) of soil or groundwater?

4.3 Can directors and officers of corporations attract Unlike many other jurisdictions, environmental laws in India personal liabilities for environmental wrongdoing, and do not explicitly address the situation of historic pollution and to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities? related remediation. As a result, even for historic pollution the current owner/occupier will be held liable. Similarly, India has no specific legislation addressing soil contamination and remedi- As discussed under question 4.1, the Water Act, Air Act and ation yet, but major changes with a step-wise approach are in the EP Act state that every person who was in charge of, and was pipeline. The first proposed short-term implementation strategy responsible for, the conduct of a company’s business along with proposed is the draft “Contaminated Sites (Identification and the company, shall be deemed to be guilty of all offences and Management) Rules” containing standards for soil and water shall be liable to be proceeded against and punished accord- pollution, carrying out mandatory site assessment and reporting, ingly. For example, the Supreme Court has imposed personal and the determination of a contaminated site. Environmental liability to the tune of one year’s salary on a managing director consultants have already prepared reports mapping the priority – but such personal liabilities for environmental damage are (most contaminated) sites which should be covered in a first still rather exceptional and tend to be imposed in grave situa- stage. Importantly, the remediation would not be merely param- tions of non-compliance and serious environmental damage. As eter-based but takes into account the expected use of the land. mentioned above, defences are provided in these laws as well, The longer-term implementation strategy would require an and a person will not be held liable if he proves that the offence amendment of the EP Act addressing the liability of parties, was committed without his knowledge, or that he exercised all including for historic contamination; and the subsequent draft due diligence to prevent the offence. “Remediation of Polluted Sites Rules” would have a wider appli- The market for insurance policies for personal liability is not cation beyond the initially identified contaminated sites. mature in India, whereas such insurance is available to cover companies against environmental damage claims. 5.2 How is liability allocated where more than one person is responsible for the contamination? 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? Allocating environmental liability is not always an easy undertaking, particularly in industrial zones, or manufacturing or chemical clusters, with a long history of different activities As is the case in many other jurisdictions, in the event of a share having been undertaken over the years. However, the NGT in sale, the buyer also acquires all liabilities, including environ- many cases has divided the cost of remediation equally amongst mental liabilities, incurred by the company. Typically, in India, the responsible parties, when it is found that more than one legal even in the event of an asset sale, the buyer will take over these person is responsible for such contamination.

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5.3 If a programme of environmental remediation initiate proceedings to levy penalties on a company or criminal is “agreed” with an environmental regulator, can the liability on the occupier if they are found violating the provi- regulator come back and require additional works or can sions of the EP Act, Air Act or Water Act. a third party challenge the agreement? 72 Reporting / Disclosure Obligations The environmental regulatory authority could impose additional works or remediation activities, particularly if the desired 7.1 If pollution is found on a site, or discovered to be result is not being achieved within the agreed time. However, migrating off-site, must it be disclosed to an environmental the principles of natural justice would apply, and such decisions regulator or potentially affected third parties? by the regulator could be challenged by a company based on the grounds that the decision is arbitrary, unreasonable, no personal Yes, the occupier of the land is under an obligation to imme- hearing was granted, etc. diately inform the concerned authorities and affected third A third person could approach a civil court or the NGT either parties in the event of discharges of pollutants above the stand- by filing a Public Interest Litigation (“PIL”) or if he establishes ards contained in the General Standards specified under the EP that the issue at hand (i.e. including the agreement between the Act and related Rules, or in the event of an accident as regu- company and the regulator) relates to “a substantial question lated under, e.g., the Water Act. The issue is not as obvious relating to the environment” falling under the jurisdiction of in cases where the off-site migration is caused by activities the NGT, linked to the environmental laws enumerated under which neither infringe the valid Consent Order or environ- Schedule I of the NGT Act, and seeks relief and compensation mental permit, nor exceed the generally applicable discharge of as a victim of pollution and other environmental damage; seeks environmental pollutant standards, simply because such situa- restitution of property damaged; or more generally seeks restitu- tions have not been foreseen by environmental laws in India. tion of the environment, as the NGT may think fit. However, companies may still decide to inform the regulatory authorities in such situations. 5.4 Does a person have a private right of action to seek contribution from a previous owner or occupier of 7.2 When and under what circumstances does a person contaminated land when that owner caused, in whole or have an affirmative obligation to investigate land for in part, contamination; and to what extent is it possible contamination? for a polluter to transfer the risk of contaminated land liability to a purchaser? There is no statutory obligation for investing land contam- As mentioned above, there is no specific law in India addressing ination except for the obligation to submit a pre-feasibility contaminated land and historical pollution. Hence, the regu- Environmental Impact Assessment report as part of the latory authorities will always hold the current owner/occupier Environmental Clearance approval process. As mentioned, this as the liable entity, whether currently observed on-site/off-site. regulatory lacuna relating to land contamination is currently Such private rights seeking contribution from the previous being studied by the MoEF&CC and new legislation may be owner would, therefore, have to be contractually foreseen, adopted in the future to address this legal vacuum. otherwise the purchaser would have no such right. 7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective 5.5 Does the government have authority to obtain from purchaser in the context of merger and/or takeover a polluter, monetary damages for aesthetic harms to transactions? public assets, e.g. rivers?

Material information affecting the buyer’s decisions must be Yes, the Supreme Court, High Courts and the NGT have all disclosed to him by the seller. The transferor must disclose a recovered environmental damages from companies for the pollu- detailed schedule highlighting liability issues. Non-disclosure tion of public or historical assets, or public assets such as rivers. of existing environmental liability could equate to questioning For instance, a company was held liable for INR1 billion for loss of the contractual validity in M&A transactions. of ecology as well as pollution caused in the Arabian Sea near the port city of Mumbai. Also, the industries operating within a 100km radius from the Taj Mahal monument were ordered to 82 General shut down. Furthermore, in a series of judgments, the NGT as well as the Supreme Court imposed costs on industries which 8.1 Is it possible to use an environmental indemnity were directly or indirectly polluting the River Ganges. 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. 62 Powers of Regulators remediation) discharge the indemnifier’s potential liability for that matter? 6.1 What powers do environmental regulators have to require production of documents, take samples, conduct The enforcement of indemnification for limiting actual or poten- site inspections, interview employees, etc.? tial environmental liability is possible. However, such contractual indemnity will only be binding between the parties, and not The officials of the SPCBs are empowered to inspect sites, discharge the indemnifier’s liability vis-à-vis third parties, or in examine and test the processes and plants, take samples for the eyes of the environmental regulatory authorities. testing and conducting research, verify records and give directions to industries in order to control environmental pollution caused by companies. The CPCB and SPCBs are empowered to

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8.2 Is it possible to shelter environmental liabilities off 92 Emissions Trading and Climate Change balance sheet, and can a company be dissolved in order to escape environmental liabilities? 9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading A company is under an obligation to disclose potential environ- market developing there? mental liabilities as contingent liabilities in its financial audit. Non-disclosure of any such liability in the account shall be There is no specific carbon trading scheme in place in India. treated as fraud or falsification of accounts, which are punish- India ratified the UN Framework Convention on Climate able with imprisonment or fine or both. Change (“UNFCCC”) in 1993 and the Kyoto Protocol in 2002 but, not being an Annex-I country, it did not take part in the 8.3 Can a person who holds shares in a company flexibility mechanisms foreseen for developed countries (emis- be held liable for breaches of environmental law and/ sion trading and joint implementation). On the other hand, or pollution caused by the company, and can a parent India has been a leading host country of Clean Development company be sued in its national court for pollution Mechanism (“CDM”) investments, enabling Annex-I countries caused by a foreign subsidiary/affiliate? to invest in emission-reducing projects in developing countries (thereby earning certified emission reductions). Under Indian law, a company is a separate legal entity deemed to be Under the National Mission on Enhanced Energy Efficiency acting through its directors. Thus, the shareholders of a company (“NMEEE”), India launched a National Action Plan on Climate cannot be held liable for breach of environmental law unless there Change in 2008, which focuses on the following eight areas or is no distinction between the shareholders and directors and the “missions”: (1) solar; (2) enhanced energy efficiency; (3) sustain- facts require lifting of the corporate veil. Lifting the corporate veil able habitat; (4) water; (5) sustaining the Himalayan ecosystem; shall take place in limited scenarios such as fraud, account falsifi- (6) a “green” India; (7) sustainable agriculture; and (8) strategic cation and misleading public disclosures; and in such situations, a knowledge for climate change. foreign parent company can be held liable for its subsidiary’s activ- As part of the NMEEE, the Perform, Achieve and Trade ities. Moreover, based on the few known environmental cases (“PAT”) Mechanism was launched, a first-of-its-kind, market- where parties tried to sue a parent company in national courts, based mechanism in India to promote energy efficiency among such foreign courts (as per their own domestic laws) will dismiss energy-intensive large industries by allowing trade in ener- such claims based on the “forum non conveniens” principle. gy-saving certificates (“ESCerts”). The Energy Conservation Act, 2001 identified Specific Energy Consumption reduction 8.4 Are there any laws to protect “whistle-blowers” who targets for 478 “Designated Consumers” from eight industrial report environmental violations/matters? sectors which could take part in the PAT mechanism, viz.: thermal power stations; fertiliser; cement; iron and steel; chlor-alkali; aluminium; textile; and pulp and paper. The ESCerts may be India adopted the Whistle-blower Protection Act, 2014, with a traded among companies to meet their mandated compliance prescribed mechanism to investigate alleged corruption and misuse requirements or may be banked for the next cycle of energy of power by public servants and to protect anyone who exposes savings requirements. alleged wrongdoing in government bodies. However, no such whistle-blower laws are applicable to private companies. However, many larger companies in India have adopted internal whistle-blower 9.2 Aside from the emissions trading schemes mentioned guidelines based on good corporate governance principles. in question 9.1 above, is there any other requirement to monitor and report greenhouse gas emissions?

8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary There are no mandatory GHG reporting obligations, but there damages available? are several industry-driven voluntary initiatives to encourage such GHG reporting. Yes, there are instances where class action suits have been filed by groups of affected people. The more common route in India 9.3 What is the overall policy approach to climate is for citizens or non-governmental organisations (“NGOs”) to change regulation in your jurisdiction? file Public Interest Litigations (“PILs”). As mentioned above, exemplary damages are frequently imposed by the Supreme India submitted its Intended Nationally Determined Contribution Court as well as NGT benches (with amounts at times being as (“INDC”) in October, 2015, which outlines the post-2020 climate high as INR1 billion). actions the country intends to take. India’s INDC includes, inter alia, the reduction in the emissions intensity of its GDP by 8.6 Do individuals or public interest groups benefit 33%–35% by 2030 from 2005 levels, and to create an additional from any exemption from liability to pay costs when carbon sink of 2.5–3 billion tonnes of CO2 equivalent through pursuing environmental litigation? additional forest and tree cover by 2030. India is an active member of the International Solar Alliance launched between various In India, there are hardly any procedural hurdles for any citizen or countries in 2015 and in the recent UN Climate Action Summit, NGO to file a PIL, as long as the issue highlighted is in the public India announced its renewable energy target would be 450 GW. interest. Historically, the locus standi was deliberately lowered, The COP25 of the UNFCCC was held between 2–13 December, particularly to ensure that the poor and deprived had access to the 2019, and India played an active role during this meeting. See also courts. Since then, PILs have flourished and are omnipresent, to the answer to question 9.1 above. the point that courts have started imposing fines for abuse of the PIL process.

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102 Asbestos 122 Updates

10.1 What is the experience of asbestos litigation in 12.1 Please provide, in no more than 300 words, a your jurisdiction? summary of any new cases, trends and developments in environment law in your jurisdiction. The Supreme Court imposed a ban on the manufacturing and mining of blue and brown asbestos (Kalyaneshwari v. Union of Recently, the NGT, while dealing with a matter pertaining to India) but India remains a major importer of chrysotile (white) illegal coal mining, held that a State failing to enforce the rules asbestos, and a PIL filed to ban white asbestos was dismissed properly would be considered as conniving or colluding with the (Consumer Education & Research Centre v. Union of India). In 2009, polluters. Further, in a matter questioning the Environmental and again in 2014, a draft Bill, the “White Asbestos (Ban on Clearance granted to a project developer, the Supreme Court Use and Import) Bill, 2014”, was tabled in Parliament, but has held that the arbitrary actions of the government officials still not been adopted. The Supreme Court also addressed the against the environment is to be considered as a direct violation harmful consequences of asbestos, making the employer respon- of the Public Trust Doctrine. As a result, the environmental sible to pay damages to workers whose health has been affected clearance relating to the project was quashed. due to asbestos exposure. On the regulatory side, the CPCB has devised a formula for the calculation of Environmental Compensation. The genesis of preparation of the formula to compute the Environmental 10.2 What are the duties of owners/occupiers of Compensation came after the directions of the NGT, ordering premises in relation to asbestos on-site? the CPCB to ensure that the discharge quality of environmental pollutants should remain within the notified standards, and Owners/occupiers of premises have no specific duties to left it open for CPCB to take penal actions and to assess and discharge regarding asbestos on-site, other than the general recover compensation for damage caused to the environment by occupational health and safety regulations applicable to all defaulting parties. The number of days of violation is one of the industries under, among other things, the Factories Act 1948 multiple factors in the formula, along with location factor which (and asbestosis has been notified as an occupational hazard is determined on the basis of distance from densely populated under the Factories Act). areas or cities. Another important development is the adop- Asbestos-related activities fall into the red category, that is, the tion of the new Coastal Regulation Zone (“CRZ”) Notification most polluting industries, and environmental permit/consent and Island Coastal Regulation Zone (“ICRZ”) Notification, applications are reviewed accordingly by the SPCBs. A prior envi- wherein the coastal zones were re-classified. This is relevant ronmental clearance must be obtained and a related EIA report given India’s large coastal areas and cities such as Mumbai being must be prepared for industries proposing to engage in activities directly affected by the CRZ Notification. relating to asbestos milling and asbestos-based products. Furthermore, in April 2019, a “zero draft of the Environment Impact Assessment Notification” was circulated to States 112 Environmental Insurance Liabilities inviting their comments, which, once adopted, is expected to make the current Environmental Clearance process more trans- 11.1 What types of environmental insurance are parent, effective and decentralised. available in the market, and how big a role does Following the orders of NGT, the MoEF&CC has issued a environmental risks insurance play in your jurisdiction? policy for the environmental management of critically and severely polluted areas. In its related report, the CPCB had The Public Liability Insurance Act 1991 (“PLI Act”) requires listed more than 100 polluted industrial clusters in India, based an insurance policy to be taken out by owners, users or trans- on their pollution indexes. The policy provides for constituting porters of hazardous substances, as defined under the EP Act, individual committees to prepare an action plan for every state which exceed the minimum quantity specified in the PLI Act. separately. It further provides for inclusion of Industrial repre- The public liability policy can be extended to cover pollution sentatives in the said committees of the states. Further, the risk subject to a “no objection” certificate from the SPCB. policy states that in case CEPI scores of a particular Critically Under the PLI Act, the Any One Accident (“AOA”) must repre- Polluted Area continue to be in the critical category for a year, sent the paid-up capital of the company, subject to a maximum MoEF&CC may review the action plans with the concerned of INR50 million. The AOA limit is fixed at a maximum of State Govt./Union territory and impose additional safeguards INR150 million. Under the PLI Act, the excess of any award such as revising the time limits for implementation of action that exceeds the AOA limit is paid by the Government through points, imposing supplementary action points and may recom- the Environment Relief Fund. The insured must contribute mend penal action against the authorities responsible for imple- an amount to this fund which is equivalent to the premium mentation of an action plan for environmental management paid under the PLI Act Policy. The environmental risks insur- of Critically Polluted Areas/Severely Polluted Areas. One of ance market is growing but is still limited compared to other most important changes this policy brings is that any project jurisdictions. or activity which requires Environment Clearance from state regulators, would be appraised at the Central Level if located in whole or in part within 5km from the boundary of Critically 11.2 What is the environmental insurance claims Polluted Areas or Severely Polluted Areas. experience in your jurisdiction? The Prime Minister of India, in his public address during India’s 73rd Independence Day, urged the people to join the As mentioned, the environmental risk insurance market is still government’s commitment of banning single-use plastic. This in its infancy and not much is publicly available pertaining to was followed by a statement made by the Union Minister for such insurance claims. Environment, through his Twitter handle, whereby he has

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hinted to “launch a massive campaign to make India single-use plastic-free”. Therefore, new changes and amendments in the present PWM Rules are expected. This is in line with events on World Environment Day, where the then Union Minister for Environment pledged that the country would make efforts to phase out single-use plastic by 2022. In response to this call for action, the Railways department has announced that it would ban single-use plastic within its (vast) department and the federal Parliament (Lok Sabha) has also announced it would ban non-reusable plastic items from its premises.

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Tavinder Sidhu is an Advocate on Record with the Supreme Court of India and is qualified to practise as a Solicitor in the Courts of England and Wales. Tavinder’s expertise extends to issues relating to government contracts, tender laws, labour and employment-related matters. Tavinder heads the environmental, health and safety (“EHS”) law department in the Delhi office and oversees cases before the National Green Tribunals, the Delhi High Court and the Supreme Court. He also represents clients before regulatory authorities to obtain environmental clearances and approvals relating to Coastal Regulation Zone (“CRZ”) areas, wildlife, and use of protected areas for non-forest purposes for infrastructure projects of national importance. He regularly advises clients on laws pertaining to water pollution, hazardous waste, e-waste and plastic waste, and in this context represents clients before the Ministry of Environment, Forests and Climate Change, the Central Pollution Control Board and the State Pollution Control Boards.

M.V. Kini Tel: +91 99997 80987 Kini House Email: [email protected] 6/39 Jangpura-B URL: www.mvkini.com New Delhi 110 014 India

Kshitez Kaushik is a practising Advocate and enrolled with the Bar Council of Delhi. Kshitez regularly interacts with environmental government agencies in the context of obtaining approvals and registration required under the environment law spectrum, including the MoEF&CC; the CPCB; the Directorate General of Foreign Trade (DGFT) and custom authorities. Kshitez is member of the environmental, health and safety (“EHS”) law department in the Delhi office and oversees cases before the National Green Tribunals, the Delhi High Court and the Supreme Court. He also represents clients before regulatory authorities to obtain environmental clearances and approvals relating to Coastal Regulation Zone (“CRZ”) areas, wildlife, and use of protected areas for non-forest purposes for infrastructure projects of national importance. He regularly advises clients on laws pertaining to water pollution, hazardous waste, e-waste and plastic waste, and in this context represents clients before the Ministry of Environment, Forests and Climate Change, the Central Pollution Control Board and the State Pollution Control Boards.

M.V. Kini Tel: +91 98999 35565 Kini House Email: [email protected] 6/39 Jangpura-B URL: www.mvkini.com New Delhi 110 014 India

M.V. Kini, which was established 30 years ago, currently counts about 150 lawyers. M.V. Kini is a full-service law firm and its practice areas range from corporate and commercial law, tax law, banking law, capital markets and infrastructure law, to labour law, environmental law, aviation law, government relations team, litigation and arbitration. With our head office in Mumbai and several branches throughout India, including in Delhi, Pune, Goa, Bangalore, Hyderabad, Lucknow and Calcutta, we are able to provide India-wide services to our clients. www.mvkini.com

Environment & Climate Change Law 2020 © Published and reproduced with kind permission by Global Legal Group Ltd, London 112 Chapter 16 Indonesia Indonesia

Alexandra Gerungan

Makarim & Taira S. Raditya Anugerah Titus

12 Environmental Policy and its violating the environmental regulations. The AMDAL Appraisal Commission assesses environmental documents and Enforcement provides input and basic considerations for decision-making and the environmental feasibility of business/activities to the MOE, 1.1 What is the basis of environmental policy in your Governors, or Regents/Mayors. The National Water Resources jurisdiction and which agencies/bodies administer and Board formulates national regulations and management strat- enforce environmental law? egies for water resources, and provides considerations for the determination of river areas and groundwater basins and their Environmental protection in Indonesia is principally regulated control and evaluation. The MOE has quite recently established by Law No. 32 of 2009 on The Management and Protection of a Security and Law Enforcement for Environment and Forests the Environment (“Environmental Law”). Under the Law on Unit which conducts activities for the reduction of the interfer- Regional Governments (Law No. 23 of 2014 as lastly amended ence, threats and violations of environmental and forestry law. by Law No. 9 of 2015), which grants regional autonomy to regional Governments, including the protection of the environ- 1.3 To what extent are public authorities required to ment, implementing regulations of the Environmental Law are provide environment-related information to interested formulated at a national as well as regional level. persons (including members of the public)? The Environmental Law is primarily administered and enforced by the Ministry of the Environment (“MOE”), Under the Environmental Law, everyone has the right to access Governors, and Regents/Mayors according to their respective data or information related to environmental protection and authorities. Other institutions have also been established to management, which according to its nature and objectives is open deal with specific issues related to the protection of the environ- to the public, such as environmental impact analysis documents, ment, for example, the Regional Environmental Management reports and the evaluation of the results of environmental moni- Agency (“BPLHD”) for regional control, AMDAL Appraisal toring, whether for compliance or changes in the quality of the Commission for administering environmental impact assess- environment and layout plan. The Environmental Law requires ments (“AMDAL”), a National Water Resources Board (Dewan the MOE, Governors or Regents/Mayors, according to their Sumber Daya Air) for water resources control, and a Security respective authorities, to publish every application and environ- and Law Enforcement Center for Environment and Forests mental licence decision and organise public participation, espe- (Balai Pengamanan dan Penegakan Hukum Lingkungan Hidup dan cially to provide an opportunity to raise objections in hearings, Kehutanan). which are part of environmental permit decision-making. Under the Environmental Law and MOE Regulation No. 1.2 What approach do such agencies/bodies take to 6 of 2011, the MOE has an integral and coordinated environ- the enforcement of environmental law? mental public information system to publish information as per requests from the public and to announce, among other things, The MOE, Governors, and Regents/Mayors, according to their the official website of the MOE and notice boards. respective authorities – for the purposes of, among other things, protecting and managing the environment, and supervising 22 Environmental Permits compliance by parties responsible for businesses and/or activities in their areas with the relevant regulations on the protection 2.1 When is an environmental permit required, and may and management of the environment and with their environ- environmental permits be transferred from one person to mental permits – may appoint environmental supervision offi- another? cials from among the civil servants of the technical institutions responsible for environmental matters. An environmental permit is required to obtain a business licence Each province and regency/municipality have their own for any business and/or activity for which an AMDAL or technical institution in charge of environmental matters in the Environmental Management and Monitoring Program (“UKL– region. For example, the Badan Pengendalian Lingkungan UPL”) is required. Under the Environmental Law and MOE Hidup Daerah (“BPLHD”), established at provincial or Regulation No. 5 of 2012, the criteria for business and/or activi- regency/municipal level, monitors and controls activities that ties that require an AMDAL include those that: cause changes to may damage the environment, implements environmental poli- the formation of land and landscape; exploit natural resources, cies formulated by the MOE, and issues warnings to parties

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whether renewable or non-renewable; potentially cause environ- 32 Waste mental pollution and/or damage as well as squander and degrade natural resources in their utilisation; and apply technology predicted to have a significant potential to influence the envi- 3.1 How is waste defined and do certain categories of ronment. An UKL–UPL will be required for, among others, waste involve additional duties or controls? business and/or activities which do not meet the criteria for the requirement to have an AMDAL, or which are not located in The Environmental Law divides waste into: (a) residue of a busi- and/or directly adjacent to a protected area. ness/activity; and (b) Hazardous and Toxic (“B3”) Waste that is Under Government Regulation (“GR”) No. 27 of 2012, in the the residue of a business/activity containing substances, energy event of a change of ownership of a business, the environmental and/or other components which, due to their nature, concen- licence may be transferred from the initial owner to its successor tration and/or quantity, can both directly and indirectly pollute by submitting an application for an amendment to the existing and/or damage the environment, public health and the sustain- environmental permit to the MOE, Governor or Regent/Mayor, ability of human and other life forms. according to their respective authority. 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 2.2 What rights are there to appeal against the according to their respective authorities. Further, according decision of an environmental regulator not to grant an environmental permit or in respect of the conditions to GR No. 101 of 2014 (“GR 101/2014”), B3 Waste producers contained in an environmental permit? must implement B3 Waste management, including the reduction, storage, collection, transport, utilisation, processing, and/ or hoarding of B3 Waste. GR 101/2014 divides B3 Waste into The environmental regulations do not provide a right of appeal two categories based on its risk: (i) B3 Waste which is acute and against such decisions. However, under the Law on The has a direct impact on humans and on the environment (“B3 Administrative Courts (Law No. 5 of 1986 as amended lastly Waste Category 1”); and (ii) B3 Waste which has a delayed effect by Law No. 51 of 2009), decisions of State administrative offi- and has an indirect impact on humans and the environment cials that are concrete, individual, and final, from which legal and sub-chronic or chronic toxicity (“B3 Waste Category 2”). consequences arise, can constitute the grounds for a lawsuit in According to its sources, B3 Waste consists of: (i) B3 Waste from the administrative courts. Therefore, a decision of an environ- non-specific sources; (ii) B3 Waste from expired B3, spilled B3, mental regulator not granting an environmental permit may be or B3 which does not meet the specifications of the products brought to the administrative court. MOE Regulation No. 17 of to be discarded and former packaging of B3; and (iii) B3 Waste 2012 allows anyone to file a lawsuit in the state administrative from specific sources which are either specific general sources court against a decision on an environmental permit. or specific special sources.

2.3 Is it necessary to conduct environmental audits 3.2 To what extent is a producer of waste allowed or environmental impact assessments for particularly to store and/or dispose of it on the site where it was polluting industries or other installations/projects? produced?

Any business/activity likely to have a significant impact on the Under GR 101/2014, producers of B3 Waste may store up to 50kg environment requires an AMDAL. This includes Polluting of B3 Waste per day for up to 90 days after production. If the B3 industries or installations/projects. The criteria for significant Waste produced is less than 50kg per day, the producer may store impact and the types of businesses/activities which require an the B3 Waste for 180 days after production for Category 1 B3 AMDAL are provided in MOE Regulation No. 5 of 2012 (as Waste, and 365 days after production for Category 2 B3 Waste explained in question 2.1. above). An Environmental Audit to from non-specific sources and specific general sources. For evaluate compliance with Government requirements and poli- Category 2 B3 Waste from specific special sources, the producer cies is only required for certain ‘high-risk’ businesses or activi- may store the B3 Waste for 365 days after production. Producers ties (e.g., petrochemical, oil and gas refineries, and nuclear power must have a B3 Waste Management Licence to store B3 Waste. plants) and in the event of non-compliance with the regulations. The licence is valid for five years and can be extended.

2.4 What enforcement powers do environmental 3.3 Do producers of waste retain any residual liability regulators have in connection with the violation of in respect of the waste where they have transferred it permits? to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/ Administrative sanctions may be imposed for violations of envi- disappears)? ronmental licences. These include written warnings, compulsory action (including suspension of production or all business Under GR 101/2014, transferring B3 Waste to another party for activities, the cancellation of production facilities, the closure disposal/treatment off-site does not reduce the responsibility of of waste water or emission disposal tunnels, demolition, confis- the producer for the management of the B3 Waste it produces. cation of goods or equipment that can potentially lead to viola- Therefore, the producer retains residual liability for its B3 Waste. tions, and other actions aimed at stopping the violation and restoring the environmental function) and the suspension of, or revocation of, an environmental licence. Repairing any damage 3.4 To what extent do waste producers have obligations caused to the environment may also be required. regarding the take-back and recovery of their waste?

GR 101/2014 obliges B3 Waste producers to implement B3 Waste

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management, including reduction, storage, collection, trans- to environmental liability for, or on behalf of, the company. A port, utilisation, processing, hoarding and holding the licences purchaser of assets will not be held liable for any environmental required for these activities. The aims of these activities are to damage caused by the company. The liability may be transferred eliminate or reduce the risks that may arise from B3 Waste and to the purchaser if it is acknowledged in the sale and purchase also reduce B3 Waste dumping, so that it is primarily used as a agreement. last resort. If a B3 Waste producer cannot do so, it may assign its B3 Waste collection, utilisation, processing and hoarding activi- 4.5 To what extent may lenders be liable for ties to another party which has the relevant licence. However, B3 environmental wrongdoing and/or remediation costs? 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. Under the Environmental Law, liability for the environmental wrongdoing committed by a business entity is held by the busi- 42 Liabilities ness 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 4.1 What types of liabilities can arise where there is a wrongdoing or any remediation costs to the extent set forth in breach of environmental laws and/or permits, and what the loan agreements. defences are typically available? 52 Contaminated Land The Environmental Law has a strict liability provision which applies to any party engaged in a business and/or activities 5.1 What is the approach to liability for contamination using B3, producing and/or managing B3 Waste and/or causing (including historic contamination) of soil or a serious threat to the environment by which it is fully respon- groundwater? sible for any damage without the plaintiff having to prove that party was at fault. The defendant may argue that the compensation which can Under the Environmental Law, a party guilty of contaminating be sought should be limited to a certain amount in accord- the soil or groundwater may be required to perform certain ance with MOE Regulation No. 7 of 2014 on Compensation for actions and/or pay compensation. These actions may include Contamination and/or Damage to the Environment (“MOE the recovery of the pollution and/or destruction, taking certain Regulation 7/2014”) as the guideline for calculating the compen- actions to guarantee that there will be no recurring pollution sation and remedial action that must be taken. or destruction, and taking certain actions to prevent negative impacts on the environment.

4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is 5.2 How is liability allocated where more than one operated within permit limits? person is responsible for the contamination?

The Environmental Law embodies the strict liability principle, The liability is allocated through a court decision or a consent which means that even if the person found liable was not at fault reached by agreement among the disputing parties through the or negligent, he/she can be held liable for the environmental environmental dispute resolution mechanism. damage which occurred. 5.3 If a programme of environmental remediation 4.3 Can directors and officers of corporations attract is “agreed” with an environmental regulator, can the personal liabilities for environmental wrongdoing, and regulator come back and require additional works or can to what extent may they get insurance or rely on other a third party challenge the agreement? indemnity protection in respect of such liabilities? Once the parties enter into a remediated settlement agreement Under the Environmental Law, criminal sanctions may be outside the courts, they must register the settlement agreement imposed on the business entity and/or person who gave the with the district court to obtain a deed of settlement which is order or acted as the leader in a criminal act committed by, for, legally enforceable. Then, neither party, nor any third party can or on behalf of a business entity. If the crime was committed on challenge the agreement. the orders of a director or other company officer, they may be held liable. MOE Regulation No. 18 of 2009 (“MOE Regulation 5.4 Does a person have a private right of action to 18/2009”) requires companies whose main activity is B3 Waste seek contribution from a previous owner or occupier of management to have environmental insurance cover of at least contaminated land when that owner caused, in whole or IDR5 billion. Directors and other officers may have insurance in part, contamination; and to what extent is it possible only for B3 Waste management. for a polluter to transfer the risk of contaminated land liability to a purchaser?

4.4 What are the different implications from an environmental liability perspective of a share sale on the Anyone who suffers a loss because of contamination by a one hand and an asset purchase on the other? 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 Regardless of a share sale, environmental liability remains Waste it produced. Therefore, liability cannot be transferred to with the company, unless it can be proved that the purchaser the purchaser, unless the purchaser acknowledges the B3 Waste intervened by giving the order or leading the activity that led risk in the sale and purchase agreement.

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5.5 Does the government have authority to obtain from which caused the pollution or damage to the environment must a polluter, monetary damages for aesthetic harms to pay damages and/or take remedial action, and is also liable public assets, e.g. rivers? to criminal sanctions. In a contract, the seller and purchaser may agree to limit their exposure to environmental liability. Yes, under MOE Regulation 7/2014, aesthetics is one of the factors However, criminal sanctions may still be imposed on companies used to calculate the compensation to be paid to the Government. for environmental crimes.

62 Powers of Regulators 8.2 Is it possible to shelter environmental liabilities off balance sheet, and can a company be dissolved in order to escape environmental liabilities? 6.1 What powers do environmental regulators have to require production of documents, take samples, conduct site inspections, interview employees, etc.? Neither sheltering environmental liabilities off balance sheet, nor escaping environmental liabilities through the dissolution Environmental supervision officials appointed by the MOE, of the company is possible. Under the Environmental Law, Governors, and Regents/Mayors have the authority and power damages must be paid by a business for any damage to the envi- to monitor and inspect equipment and take samples and photo- ronment or pollution caused by its activities. It must also take graphs, under the Environmental Law. This is to ensure compli- remedial action and could be liable to criminal sanctions. ance by all parties whose business/activities are covered by the environmental and management regulations. 8.3 Can a person who holds shares in a company be held liable for breaches of environmental law and/ 72 Reporting / Disclosure Obligations or pollution caused by the company, and can a parent company be sued in its national court for pollution caused by a foreign subsidiary/affiliate? 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? 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 Under the Environmental Law, reporting is a right of each duly authorised to act on its behalf) and/or the persons giving person, not an obligation. Anyone has a right to report any the instruction to commit the crime or acting as the leader in alleged pollution and/or destruction of the environment to the criminal action. Additional sanctions may be applied to the Minister, the Governor, Regent/Mayor, head of local companies, such as closure of the company and/or the activity Government agencies responsible in the environmental field. (completely or partly) and the imposition of obligations to remedy the effects of the crime or to repair any environmental damage. 7.2 When and under what circumstances does a person Therefore, the shareholder cannot be held liable for breaches of have an affirmative obligation to investigate land for the Environmental Law and neither can the parent company. contamination?

8.4 Are there any laws to protect “whistle-blowers” who Under the Environmental Law, the police or civil servant investiga- report environmental violations/matters? tors 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 gather all the facts, and There is no specific regulation regarding the protection of whis- provide relevant evidence before deciding whether to prosecute. tle-blowers in an environmental violation/matter. However, under Supreme Court Regulation No. 4 of 2011, some protection of whistle-blowers is provided for crimes such as corrup- 7.3 To what extent is it necessary to disclose environmental tion, money laundering, drug trafficking, terrorism, human traf- problems, e.g. by a seller to a prospective purchaser in the ficking and other organised crimes. context of merger and/or takeover transactions?

8.5 Are group or “class” actions available for pursuing There is no specific requirement under Law No. 40 of 2007 on environmental claims, and are penal or exemplary Limited Liability Companies (the “Company Law”) for a seller damages available? to disclose environmental problems to a prospective purchaser. However, companies conducting a merger and/or takeover transactions are required to disclose any issues which have Yes, according to Article 91 of the Environmental Law, commu- affected their activities during the current book year. These may nities have a right to file a class action on their own behalf and/or include environmental problems. for the benefit of the people, 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. 82 General Under the Environmental Law, penal or exemplary damages are available and may be imposed for certain environmental crimes. 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 8.6 Do individuals or public interest groups benefit under an indemnity in respect of a matter (e.g. remediation) from any exemption from liability to pay costs when discharge the indemnifier’s potential liability for that matter? pursuing environmental litigation?

In principle, the person responsible for the business or activity Under Law No. 48 of 2009 on The Powers of the Judiciary,

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claimants may request exemptions from liability to pay court preparing the climate change adaptation action. Further, the costs when pursuing litigation. If the claimant does not have MOE has also established a Control for Climate Change and the economic resources to pay the costs, they will be paid by Land and Forest Fire Unit which, among other things facilitates the State. the mitigation of climate change, inventory of greenhouse gas, and evaluation and reporting of local action plans in reducing 92 Emissions Trading and Climate Change greenhouse gases.

9.1 What emissions trading schemes are in operation 102 Asbestos in your jurisdiction and how is the emissions trading market developing there? 10.1 What is the experience of asbestos litigation in your jurisdiction? Indonesia implements the clean development mechanism (“CDM”), which generates emission credits through projects Since Indonesia does not prohibit asbestos, there is no case that reduce greenhouse gas emissions in various sectors. The related to asbestos litigation to date. CDM is one of the mechanisms under the Kyoto Protocol, which will expire in 2020. A Presidential Regulation on The 10.2 What are the duties of owners/occupiers of State Action Plan to Reduce the Greenhouse Effect was issued premises in relation to asbestos on-site? 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, Under Decree 1985, the management of a business entity (i.e. the and waste management, as well as how to monitor and report employer) using asbestos (or any B3) must provide its workers greenhouse gas emissions. with protective equipment (clothing). It must also measure In order to reduce greenhouse gas emissions and miti- asbestos dust particles in the air in the work environment every gate climate change, the Indonesian Government also has a three months or with a certain frequency. A proper ventilation programme called the Reducing Emissions from Deforestation system must be installed in every work area/room and is subject and Forest Degradation Plus (“REDD+”). REDD+ has gained to inspection every three months. The results of these inspec- great momentum in Indonesia, particularly after the Government tions must be kept on file for at least three years. Asbestos waste signed a letter of intent (“LoI”) with Norway in 2010. In 2015, must be disposed of by spreading it out evenly on the ground Presidential Regulation No. 16/2015 was issued under which BP and covering it with earth up to a depth of at least 25cm or in REDD+ and the National Council on Climate Change (“DNPI”) some other appropriate way. is integrated into the Ministry of the Environment and Forestry. The MOE has now issued the guidelines for preparing the climate 112 Environmental Insurance Liabilities change adaptation action. 11.1 What types of environmental insurance are available in the market, and how big a role does 9.2 Aside from the emissions trading schemes environmental risks insurance play in your jurisdiction? mentioned in question 9.1 above, is there any other requirement to monitor and report greenhouse gas emissions? Only one type of environmental insurance to cover the impact of B3 waste is available in Indonesia. This is mandatory under Various CDM-related regulations have been issued for the rele- MOE 18/2009 which requires any company whose main activity vant sectors, such as energy, power-generation and forestry. is managing and/or processing B3 waste which does not origi- For example, Ministry of Forestry Regulation No. P.14/ nate from its own activity to have an environmental insurance Menhut-II/2004 governs the procedures for afforestation for its B3 waste management. According to Central Statistical and reforestation within the framework of the CDM. MOE Agency data, in 2014 there were 83 loss insurance companies in Decree No. 206 of 2005 set up a National Commission on the Indonesia. However, only a few of them provide environmental Clean Development Mechanism whose main role is to approve insurance in the market. proposed CDM projects if they meet the national sustainable development criteria and to monitor and evaluate the progress 11.2 What is the environmental insurance claims of each project. experience in your jurisdiction?

9.3 What is the overall policy approach to climate Unfortunately, we know of no environmental insurance claims change regulation in your jurisdiction? having been submitted in Indonesia. Since the Environmental Law is relatively new, there is no precedent for environmental The primary overall policy approach is to reduce the green- insurance claims. house effect, as shown in the State Action Plan to Reduce the Greenhouse Effect. Indonesia has also ratified the United 122 Updates Nations Framework Convention on Climate Change (under Law No. 6 of 1994) and the Kyoto Protocol (under Law No. 12.1 Please provide, in no more than 300 words, a 17 of 2004). Since ratifying these two conventions, under the summary of any new cases, trends and developments in Environmental Law, the Government, through the MOE, has environment law in your jurisdiction. the duty to identify greenhouse gas emissions. Law No. 31 of 2009 on Meteorology, Climatology, and Geophysics requires the In early 2017, the Government was sued by people who believed identification of greenhouse gas emissions to formulate policies that it was not doing enough to overcome the disastrous forest on climate change. The MOE has also issued the guidelines for fires in Kalimantan. In their ruling on the case Number 3555

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K/PDT/2018, the District Court judges considered that disaster ■ the President had to issue a Government Regulation or management in any country, including Indonesia, is the respon- Presidential Regulation as the legal basis for the formation sibility of the government, and therefore the Plaintiffs’ legal of a joint team to handle environmental issues; and action was a right and proper way to make the government aware ■ the Governor of Kalimantan had to create special teams of the problem. for the early prevention of forest, land and plantation fires The court’s ruling included the following orders to the throughout Central Kalimantan Province in each village Government: area consisting of members of the local community. ■ President Jokowi had to issue implementing regulations The ruling was upheld by the High Court on 22 March 2017. of Law Number 32 of 2009 on Environmental Protection The Government then appealed to the Supreme Court, but in and Management, which were important for the preven- July 2019, the Supreme Court ruled in the Plaintiffs’ favour and tion and control of forest and land fires, involving the dismissed the Government’s appeal. participation of the public;

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Alexandra Gerungan is a Partner in the Litigation and Dispute Resolutions department of Makarim & Taira S. and has extensive experience in handling litigation and dispute resolution cases including civil lawsuits, arbitration and alternative means of resolving disputes, anti-corruption investigations, police investigations into allegations of forestry and environmental crimes, internal/independent investigations and terminations of employment, and has handled liquidation, bankruptcy and due diligence, general corporate and commercial issues, as well as power projects.

Makarim & Taira S. Tel: +6221 2521 272 / 5200 001 Summitmas I, 16th–17th Floors Fax: +6221 2522 751 / 2522 750 / 2521830 Jl. Jendral Sudirman Kav. 61–62 Email: [email protected] Jakarta 12190 URL: www.makarim.com Indonesia

Raditya Anugerah Titus 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.

Established in 1980 by two Harvard graduates, Nono Anwar Makarim M&A, the firm has long become the favoured, trusted Indonesian counsel in and Frank Taira Supit, Makarim & Taira S. is a leading business law firm providing practical solutions and advice on every aspect of doing business in Indonesia offering a full range of corporate, banking, litigation and in Indonesia. specialist legal services to national and international clients. Our long- www.makarim.com 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

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Italy Italy

David Röttgen

Ambientalex - Studio Legale Associato Andrea Farì

12 Environmental Policy and its to anyone asking for it. Environmental information that must be published is also subject to civic access legislation (art. 40 of Enforcement Legislative Decree no. 33/2013).

1.1. What is the basis of environmental policy in your 22 Environmental Permits jurisdiction and which agencies/bodies administer and enforce environmental law? 2.1 When is an environmental permit required, and may environmental permits be transferred from one person to Italy’s environmental policy is based, amongst others, on the another? principle of sustainable development, prevention, precaution and “the polluter pays”. These EU principles are codified in As a matter of principle, any human activity having any impact Legislative Decree no. 152/2006 (hereinafter, the “Code”). on the environment is subject to prior authorisation. Italian They apply to public and private figures as well as lawmakers. legislation provides for a wide variety of permit types. An oper- An important role is played by the Ministry of the Environment ator shall apply for a permit on the basis of the type of activity (hereinafter, “MoE”). Important administrative functions planned or conducted and its output, and the environmental are also assigned to regional and local authorities (hereinafter, aspects which the system considers potentially at risk as a result “Administrations”). Technical surveys and assessments are of the activities in question. Some permits are issued on the carried out by technical organisations, such as the Institute basis of the applicant’s subjective characteristics. Consequently, for Environmental Protection and Research (hereinafter, though the permit of an operator running the activity may “ISPRA”), which provides back-up for the MoE and coordi- be transferred, as a matter of principle, notification to the nates the regional and provincial environment agencies. Administration for assessment/transferral is required.

1.2 What approach do such agencies/bodies take to 2.2 What rights are there to appeal against the the enforcement of environmental law? decision of an environmental regulator not to grant an environmental permit or in respect of the conditions In order to ensure that environmental law is applied, public contained in an environmental permit? figures are provided with traditional scheduling and “command and control” tools. With such tools, Administrations establish An operator may appeal, before the authority that is hierarchi- the relevant limits and then ensure that they are complied with. cally superior to the environmental Administration, against a Administrations are also given the power, when envisaged by decision not to grant an environmental permit or a decision in the law, to enter into agreements (between an Administration respect of the conditions contained in the permit. Alternatively, and the party(ies) concerned). The law also regulates economic an appeal may be lodged with the competent Regional tools that are aimed at internalising environmental costs or Administrative Tribunal within 60 days from the issuance of the benefits in exchange processes. decision, or alternatively, within 120 days with the President of the Republic. The parties that are entitled to lodge an appeal are 1.3 To what extent are public authorities required to operators applying for the permit, external promoters of envi- provide environment-related information to interested ronmental protection and public safety schemes, as well as any persons (including members of the public)? Administration involved in the issuing procedure.

With Legislative Decree no. 195/2005, implementing Directive 2.3 Is it necessary to conduct environmental audits 2003/4/EC, the legislator created a system of rules regulating or environmental impact assessments for particularly environmental information and the public’s right of access. polluting industries or other installations/projects? On the one hand, the Administration is given an active role in divulging information on the state of the environment regard- An environmental impact assessment (hereinafter, “EIA”) less of whether requests for access are made by individuals. is required for the plants referred to in annexes II and III On the other, it is provided that every natural or legal person of the Second Part of the Code. The projects referred to in who is assigned public functions connected with environ- annexes II-bis and IV ibid. are subject to a preliminary check mental topics must make environmental information available to assess whether the EIA procedure should be initiated. The

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EIA consists of the carrying out, presentation and evaluation of an environmental impact study. For existing and new “high 3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it threshold” installations, subject to “Seveso legislation”, a “safety to another person for disposal/treatment off-site (e.g. report” must be drawn up (Legislative Decree no. 105/2015). if the transferee/ultimate disposer goes bankrupt/ Environmental audits may also be requested by a permit granted disappears)? according to IPPC legislation. Environmental audits, on the other hand, are carried out mainly in connection with environ- A waste producer/holder, unless entitled otherwise, has to ment certifications voluntarily obtained by the operator (e.g. consign the waste, as a matter of priority, to duly authorised third UNI EN ISO 14001). parties or to municipal waste management operators with which the waste producer/holder has entered into a specific agree- 2.4 What enforcement powers do environmental ment. Liability only ceases if the waste is handed over to the regulators have in connection with the violation of public collection service or to duly authorised entities, provided permits? that the waste producer receives back the duly completed certificate ( formulario di identificazione dei rifiuti). The responsibility When permits are violated or activities are conducted without of the waste producer/holder, however, lacks precise bounda- the required authorisation, the competent authority (hereinafter, ries, as the topic has been the subject of criminal courts’ rulings “CA”) has the power to caution the company and oblige it to which have enlarged, sometimes far beyond the literal wording remedy the violations committed. If the violations are repeated, of art. 188 of the Code, such responsibility. the CA may caution and suspend activities for a fixed period. The CA may also revoke the permit and require the closing 3.4 To what extent do waste producers have down of a plant. An installation operating without authorisa- obligations regarding the take-back and recovery of their tion may be closed down by the CA. Furthermore, the admin- waste? istrative and criminal sanctions envisaged in the Code may be imposed, as well as the environmental crimes of the Italian On the basis of the “polluter pays” principle, for some prod- Criminal Code (art. 452-bis to 452-terdecies), including the crimes ucts, specific extended producer responsibility (hereinafter, of environmental pollution and environmental disaster, which “ ”) schemes have been introduced (packaging, electrical are punishable with weighty sanctions. EPR and electronic equipment, batteries, end-of-life vehicles, mineral waste oils, edible waste oils, tyres, PVC). New EPR schemes 32 Waste are likely to be introduced in the future. In view of the transposition of Directive (EU) 851/2018, said EPR schemes are 3.1 How is waste defined and do certain categories of currently subject to legislative reform. Italian EPR schemes waste involve additional duties or controls? differ very much from one other in regard to their functioning. Non-compliance with specific obligations set forth under the Some waste definitions are identical to waste definitions related EPR scheme may be subject to sanctions. provided by European legislation, and others are not, as Italian legislation also identifies additional categories of waste. Some 42 Liabilities of these categories are identical to waste categories governed by European legislation (e.g. packaging, WEEE, etc.). In addi- 4.1 What types of liabilities can arise where there is a tion to the aforesaid categories, the Italian legislator has also breach of environmental laws and/or permits, and what identified other waste types (e.g. some types of excavated soil defences are typically available? and rocks). All of the above types of waste are either classified as “municipal waste” or as “non-municipal waste” (rifiuti Liability may be of a criminal nature in more serious situations speciali – some of which, under certain conditions, can be clas- (e.g. in connection with environmental disasters and pollution, sified as municipal waste – rifiuti assimilati). The definition of waste, IPPC permits, remediation), of an administrative nature waste is, like in other jurisdictions, heavily debated in front of (e.g. in connection with the EIA) or of a remedial nature (e.g. in the Italian courts (especially criminal courts, but also adminis- connection with liability for environmental damage). The meas- trative courts). ures that should be taken to avoid this type of liability are to obtain a permit and to comply diligently with the relevant condi- 3.2 To what extent is a producer of waste allowed tions. According to the type of liability, the ordinary remedies to store and/or dispose of it on the site where it was may be sought before the ordinary (criminal or civil) and/or produced? administrative judicial authorities.

The original waste producer has to comply with all conditions 4.2 Can an operator be liable for environmental set forth by art. 183, para. 1, lit. bb) of the Code. Storage (deposito damage notwithstanding that the polluting activity is temporaneo) can solely occur in the area where the waste-gener- operated within permit limits? ating activity is carried out. Secondly, storage is subject, up to the discretion of the waste producer, either to time limits or to The implementation of Directive 2004/35/EC led to the intro- quantitative limits. Thirdly, storage can only be carried out for duction of objective liability imposed on certain operators. This homogeneous categories of waste and in compliance with the may lead to situations in which an operator is held liable even related technical rules (e.g. for dangerous substances). Only in when its conduct complies with the permit granted. This is a exceptional cases, and after a formal notification procedure, is controversial issue, however, as it conflicts with the provisions the waste producer entitled to dispose of the non-hazardous of art. 308, para. 5 of the Code. According to art. 308, an oper- waste it produces (autosmaltimento). ator will not be held liable if it can demonstrate that it is not

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responsible for any negligent or wilful conduct and that the the remedial operations lies with the subject responsible for the “damage” was caused by an emission or event expressly envis- contamination. The liability principle also applies to “historic aged in the permit that was granted. contamination” (i.e. contaminations existing prior to 29 April 2006). An owner who is “innocent” is not obliged to carry out remedial works. He is nevertheless obliged to give notification 4.3 Can directors and officers of corporations attract personal liabilities for environmental wrongdoing, and and to take preventive measures. He may be obliged, up to the to what extent may they get insurance or rely on other increase in value of the land, to reimburse the expenses incurred indemnity protection in respect of such liabilities? in carrying out the remediation works by the CA if the subject responsible for the contamination cannot be identified or does not carry out the necessary remedial works (see infra question Directors and managers may attract personal liability for envi- 7.2). ronmental wrongdoings committed in the company’s interests. Environmental functions may also be delegated to a specific director or manager. In this case, the delegate will be held liable, 5.2 How is liability allocated where more than one both personally and jointly with the company. Liability relates person is responsible for the contamination? to the activities carried out on behalf of the company and may be either civil or criminal. There also exists a system covering Even though Italian legislation on the remediation of contami- administrative liability for crimes by bodies (Legislative Decree nated sites does not contain any specific rules regarding the allo- no. 231/2001), which includes environmental wrongdoings cation of liability in situations in which the contamination was amongst the predicate offences envisaged. Professional insur- caused by more than one contributing factor, the administra- ance against environmental wrongdoings may cover all financial tive line of authorities has confirmed that in these situations, aspects, including the cost of legal proceedings, with the excep- the operators will be held liable on the basis of their share of the tion of criminal sanctions that restrict personal liberty. overall liability (i.e. to the extent to which they are responsible for contributing towards the relevant causes), thereby excluding 4.4 What are the different implications from an the application of civil law principles regarding joint and several environmental liability perspective of a share sale on the liability for compensation. one hand and an asset purchase on the other? 5.3 If a programme of environmental remediation The Italian legal system allows M&A deals to be structured is “agreed” with an environmental regulator, can the in various manners. The type of structure chosen affects the regulator come back and require additional works or can degree to which environmental liability is transferred or not a third party challenge the agreement? transferred, or even shared. In case of mergers, for example, environmental liability is also transferred. Generally speaking, The remediation procedure is divided into various stages, the in case of a share deal, the environmental liability is transferred. outcome of which conditions the development of later stages. In case of an asset deal or a company splitting up, the transfer- New evidence that arises in such stages may require the entire ence of the environmental liability must be evaluated on a case- procedure to be revised or adjusted. Furthermore, if the use by-case basis. As a matter of principle, the different implications to which a remedied area is put is altered, a new obligation to from an environmental liability perspective need to be evaluated remedy may arise. A completed remediation procedure does not very carefully, also taking into account the evolving case law. preclude an action for environmental damage, which constitutes a self-regulating procedure even though not totally independent. 4.5 To what extent may lenders be liable for A third party may challenge the legitimacy of the approval of environmental wrongdoing and/or remediation costs? the remediation programme before the courts when he has an interest in taking action, and the approval in question would cause specific prejudice to his person or assets. Generally speaking, the line taken by authorities is consistent in holding lenders not liable for environmental wrongdoings committed by the lendee, provided that the lender’s conduct is 5.4 Does a person have a private right of action to autonomous and cannot be legally attributed to the lendee. In seek contribution from a previous owner or occupier of fact, art. 27, para. 1 of the Italian Constitution sets forth, as far contaminated land when that owner caused, in whole or in part, contamination; and to what extent is it possible as criminal offences are concerned, the principle of personal for a polluter to transfer the risk of contaminated land liability. When it comes to remedial operations, however, the liability to a purchaser? innocent owner is nevertheless bound by certain obligations such as, whenever he discovers that the contamination threshold concentration has been exceeded or there is risk that it will be Under certain conditions, extra-contractual liability (e.g. exceeded, to notify the regional, provincial and municipal CA compensation for remediation costs) of the previous owner, or and take preventive measures. the operator who caused contamination, can be invoked. In the case of an asset deal, the purchaser may bring a legal action 52 Contaminated Land in accordance with the provisions of civil law, enforcing the legal warranty against defects of the asset sold or any contractual warranty clauses. The Civil Supreme Court excluded dual 5.1 What is the approach to liability for contamination liability (contractual as well as extra-contractual liability) in the (including historic contamination) of soil or event of mere damage to the right of ownership. Any agree- groundwater? ment reached by the contracting parties as to liability has effects exclusively on the parties themselves and will not influence, if The regime dealing with liability for remedial works, inspired by transferred, any obligations under public law. the “polluter pays” principle, provides that the responsibility for

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stages in the remediation procedure are to be complied with. 5.5 Does the government have authority to obtain from Subjects who are not responsible for the contamination – a polluter, monetary damages for aesthetic harms to though not obliged to do so – are nevertheless entitled to carry public assets, e.g. rivers? out investigation (in order to prove their “innocence”) and/or remediation operations on their own initiative. If the polluter Aesthetic harm is not a category of damage regulated by specific cannot be identified or does not take action, or a third party legislation. However, damage to the aesthetic landscaping does not take action of his own accord, the necessary operations value of an asset may fall within the definition of “environ- are carried out by the CA. mental damage”. Legislation regulating environmental damage does not provide for compensation of the monetary equivalent. There is, however, scope for other policymaking subjects (e.g. 7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective local public bodies) to take, under certain conditions, action purchaser in the context of merger and/or takeover under civil law to obtain compensation for damage caused to transactions? property belonging to the community. Art. 167 of Legislative Decree no. 42/2004 provides that, under certain conditions, the subject who carried out the works without landscaping author- Italian environmental legislation imposes a wide range of disclo- isation or with inadequate authorisation is subject to paying sure obligations that vary according to the matrices affected by the “monetary compensation”. environmental problems. Disclosure obligations may also origi- nate from permits granted. Recent legislation regulating social and environmental disclosure also imposes disclosure obligations 62 Powers of Regulators on the subjects indicated therein. In dealings between a buyer and seller, the failure to notify situations that do not meet environ- 6.1 What powers do environmental regulators have to mental standards may, depending on the nature of the asset being require production of documents, take samples, conduct sold, give rise to precontractual and contractual liability. site inspections, interview employees, etc.? 82 General Environmental regulators, at both state and local level, have a wide range of powers to prevent and sanction administrative or 8.1 Is it possible to use an environmental indemnity criminal offences affecting the environment. The specific regu- to limit exposure for actual or potential environment- lations are mainly contained in the Code of Criminal Procedure related liabilities, and does making a payment to another (inspections, searches, sequestration, etc.), in Law no. 689/1981 person under an indemnity in respect of a matter (e.g. and in the Code. The authorities are permitted to carry out inspec- remediation) discharge the indemnifier’s potential tions aimed at verifying that the conditions set in the permits have liability for that matter? been met, or to collect and analyse samples, benefitting from the services of various technical bodies. When carrying out the inves- Generally speaking, environmental indemnities agreed within tigations, the authorities may ask for documents to be submitted, M&A transactions cannot limit, vis-à-vis the competent public and for any subjects informed to be questioned. authorities, the environmental liabilities of the target company. Nevertheless, environmental indemnities, which are increas- 72 Reporting / Disclosure Obligations ingly being used in Italy, do represent an effective means for reducing the buyer’s financial exposure by allowing him, if 7.1 If pollution is found on a site, or discovered properly drafted, to claim from the seller costs and damages to be migrating off-site, must it be disclosed to an incurred, or even to govern the procedures relating to the environmental regulator or potentially affected third clearing of environmental liabilities. Depending on the type parties? of transaction chosen under Italian law, in general terms and except for very limited cases, the payment – between the parties When an event arises that may potentially contaminate the site, to an M&A transaction – of an agreed environmental indemnity, the subject responsible and the “innocent” owner/operator are does not limit potential environment-related liabilities. obliged to notify the CA immediately. Obligations to give notification also apply to Administrations that, in the performance 8.2 Is it possible to shelter environmental liabilities off of their duties, identify sites which are potentially contaminated. balance sheet, and can a company be dissolved in order This is also the case when historical contamination is discovered, to escape environmental liabilities? whether active or inactive. Failure to give notification to third parties may also be relevant, as far as civil liability is concerned; The balance sheet is required by law to include, in compliance for example, for the purpose of establishing the compensation with the principle of caution, any existing potential environ- due for damage by contamination of the surrounding area. mental liabilities (provisions for risks and charges), according to paras 47–60 of ITA GAAP no. 31/2016. A situation may arise in 7.2 When and under what circumstances does a person which shareholders of an extinguished company, that have limited have an affirmative obligation to investigate land for liability, may avoid the obligation to remediate seeing that they contamination? are liable for the company’s obligations only to the extent of the resources designated when the winding-up was completed on the When an event arises that may potentially contaminate the site, basis of a sui generis succession phenomenon. This is true unless, the polluter (but not the “innocent” owner/operator), having on the basis of criminal law, the underlying conditions are satis- taken preventive measures, must also perform a preliminary fied for holding the managers, directors, receiver and any jointly investigation in the area in order to establish whether further responsible shareholders liable for the pollution in question, even after the company has been wound up.

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Cassazione stated that punitive damage is not in itself incompat- 8.3 Can a person who holds shares in a company ible with the Italian legal system (Joint Sections, no. 16601/2017). 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 8.6 Do individuals or public interest groups benefit caused by a foreign subsidiary/affiliate? from any exemption from liability to pay costs when pursuing environmental litigation? The shareholder has a limited liability in stock companies except for those cases defined by the law (e.g. the sole shareholder is The Italian legal system does not provide for any specific exemp- responsible for the obligations assumed by the company in the tion from liability in litigation brought to safeguard environ- event of its insolvency, but only under specific conditions as per mental interests. Applications for access to information of an arts 2325 and 2462 Civil Code). According to case law, anyone environmental nature are, however, exempt from the standard managing the company in the absence of investiture is consid- court fee (art. 13, para. 6-bis, Legislative Decree no. 115/2002). ered an administrator de facto and can be held liable. The holding and the controlled company are two separate legal entities except 92 Emissions Trading and Climate Change for limited cases set forth by the law (art. 2497 Civil Code), or if the subsidiary has no autonomy with regard to decision-making. 9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading 8.4 Are there any laws to protect “whistle-blowers” who market developing there? report environmental violations/matters? Emission quota trading is subject to the European Emissions Italy has enacted specific legislation for “whistle-blowing”. Trading System (hereinafter, “ETS”), for which Directive The scope of such legislation is very broad and can also cover 2003/87/EC establishes the fundamental rules. According to environmental matters. Public employees acting as “whis- the “cap and trade” mechanism, emission caps are allocated to tle-blowers” are protected as to their identity. Furthermore, each plant or aircraft (CO2 quotas in tonnes). If the real emis- they cannot be sanctioned, downgraded, removed, terminated sions exceed the quotas assigned, the operator must purchase or rendered subject to any sort of organisational actions having, quotas to be surrendered covering its emissions. If the real emis- directly or indirectly, negative effects on their working condi- sions are lower than the set allowances, the difference can be sold tions. The above protection schemes do not apply in case the once quotas have been surrendered to cover the emissions. Since “whistle-blower” acted to defame or slander someone, or s/he 2013, power plants must purchase quotas to cover their needs. committed crimes related to wilful/gross negligent conduct. Manufacturing plants are entitled to allowances free of charge. Protection schemes are also available for employee or personnel “whistle-blowing” offences in the private sector. 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 8.5 Are group or “class” actions available for pursuing emissions? environmental claims, and are penal or exemplary damages available? Legislative Decree no. 30/2013 establishes that no plant in Italy Legislative Decree no. 198/2009 regulates a particular type of is permitted to engage in activities subject to the ETS without a collective action that may be brought against the Administration permit to emit greenhouse gas. Operators must make an applica- and concession holders for public services. This legislation tion for a permit to the MoE at least 90 days prior to the date on seems to also apply to administrative functions and environ- which the plant starts to operate. The ensuing obligations consist mental services. Such “public” class actions, however, rule out of monitoring and subsequently surrendering, on an annual basis, the possibility of obtaining, with the same remedy, compensa- a number of quotas corresponding to the CO2 emissions released tion of damage. This does not affect the right to seek ordinary in the previous calendar year. The national inventory of all emis- compensatory remedies. sions (not only those originating from industrial plants covered by An action for compensation of environmental damage, under- the ETS Directive) is managed by ISPRA. stood to be in the public interest, may be taken solely by the State Administration (art. 311 of the Code). Other public or private 9.3 What is the overall policy approach to climate subjects are entitled to act only in the case of damage of another change regulation in your jurisdiction? kind – that affecting his or her personal legal position (health, property, business activities, etc.) – as a result of actions or facts Concrete measures to combat climate change are not limited to that have caused damage to the environment. the implementation of Community regulations on ETS but also Criminal action against conduct amounting to criminal include the “Effort Sharing” Directive applying to non-ETS offences may be brought by the judicial authorities. The subject sectors (e.g. transport, agriculture, etc.). Concrete measures incurring damage or injury as a result of the crime may bring relate to all the legislation linked to incentives for renewable a civil action before the criminal courts, a right that is also energy resources and energy efficiency. An important aspect vested in bodies and associations representing those damaged of the contribution made towards the reduction of CO2 levels or injured as a result of the crime in question. also lies in the methods adopted to operate motor cars, buses Compensation of damage aims at restoring the injured party’s or trucks for the transportation of people and goods. The main assets, eliminating the consequences of the damage incurred. topics (renewable energy sources, energy efficiency and mobility) This would not cover a claim of damage with a punitive or sanc- are regulated by EU Directives, which are implemented in Italy tioning function though, recently, the Italian Suprema Corte di by the legislative system.

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102 Asbestos 11.2 What is the environmental insurance claims experience in your jurisdiction? 10.1 What is the experience of asbestos litigation in your jurisdiction? There are currently no comprehensive data on developments in the requests for environmental insurance cover. However, The number of actions being brought before the courts by according to ISPRA data reported in November 2018, inci- associations and families of victims of exposure to asbestos is dences of environmental damage are continually increasing. increasing. The outcome of disputes before the courts at first Between 2017 and 2018, ISPRA and the various local environ- instance and the Court of Appeal frequently differ. The main mental agencies investigated, on behalf of the MoE, 217 cases of difficulty lies in establishing the effects of exposure to asbestos environmental damage around the country. Given the increased at the time the carcinogenic process experienced by the victim number of reported cases of environmental damage, it can be develops. The previous approach, proving to be advantageous assumed that the measures taken – and therefore the requests to employers, has been disproved by a number of recent rulings. for insurance cover – are constantly increasing. Nevertheless, The latest approach, more favourable to asbestos victims and the degree to which environmental insurance schemes cover their associations, is yet to be consolidated before the Joint environmental damage, is still considered a problematic area. Sections of the Italian Supreme Court. 122 Updates 10.2 What are the duties of owners/occupiers of premises in relation to asbestos on-site? 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 obligations imposed on the owner or the person responsible for the operations carried out are regulated at different legislative levels. General sources include Law no. 257/1992 and the The development of environmental law in the Italian legal Ministerial Decree dated 6 September 1994, Legislative Decree system is characterised by a marked fragmentation of regula- no. 81/2008, integrated by regional laws and plans dealing with tions and the introduction of new laws, and the associated prob- orientation and monitoring, as well as individual Municipal lems of interpretation and enforcement. Regulations (e.g. Milan). The owner must notify the local health The implementation of European legislation, however, provides authorities (local health service – “ATS”) of the presence of clear guidelines for future legislative initiatives. Over the last few asbestos. Actions to be undertaken (including timing) depend years, Italy has complied promptly with the conditions laid down on the state of conservation which is assessed by applying a by the EU without any significant deviation – at times even setting so-called Degradation Index. The owner must also appoint a environmental standards higher (gold-plating) than those estab- person responsible for controlling and coordinating all mainte- lished at a supranational level (for example, dealing with green nance operations that may involve asbestos-containing materials. public procurement) – and this seems likely to continue in the future. 112 Environmental Insurance Liabilities At a legislative level, on the one hand, the objective is to simplify administrative procedures by creating a “single”, or all-encom- passing, permit mechanism (e.g. granting the Single Environmental 11.1 What types of environmental insurance are Permit – the so-called – for small available in the market, and how big a role does Autorizzazione Unica Ambientale environmental risks insurance play in your jurisdiction? and medium-sized businesses, not envisaged at a European level). On the other hand, we are witnessing a trend towards the centralisation of functions, unlike what we have seen in the past. An association of insurers and reinsurers (Pool Inquinamento) An example of this is the new EIA regulations. offers insurance products to cover damage by pollution. The approach taken by the courts is, at times, an expression of Various policies are envisaged, depending on the type of activity a conservative stance, firmly based on outdated perceptions. A conducted. Cover from insurance companies that do not form number of rulings regarding waste, though the result of objective part of the Pool Inquinamento is also available. These companies uncertainty regarding the legislation, including European laws, offer insurance products as alternatives to those generally avail- have confused economic operators even more (e.g. end-of-waste, able on the Italian market. Environmental insurance cover is in by-products). constant expansion, acknowledged by the fact that businesses A new criminal sanctions system introduced in 2015 is desig- obtaining ISO 14001 Certification or EMAS registration pay nating an increasingly important role to the regional agencies for reduced insurance fees. State and regional laws provide that in environmental protection, in collaboration with, though not always certain cases a guarantee must be lodged for an amount calcu- fully coordinated, with public prosecutors. lated on the basis of pre-set criteria (e.g. activities likely to cause an environmental impact). Acknowledgment The authors would like to thank the team of Ambientalex (Francesco Fonderico, Maria Valeria Vecchio, Omar Hagi Kassim, Ermanno Fonderico, Francesca Allocco, Elettra Monaci and Anna Deborah Urso), as well as Sebastiano Serra, for contributing to the preparation of this chapter.

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David Röttgen is the founding partner of Ambientalex law firm. Prior to setting up Ambientalex in 2008, David worked with Freshfields Bruckhaus Deringer (Milan). Subsequently he held a managerial role in a leading Italian multinational company (Pirelli Group). David is specialised in environmental law, providing extrajudicial assistance to multinational companies and trade associations as well as to other law firms. He is a member of the Commission for Integrated Environmental Authorisation (IPPC) within the Italian Ministry for Environment. Furthermore, he is a representative within the Permanent Observatory relating to ILVA-Steel-works, set up according to DPCM 29 September 2017. As of January 2019, David is a member of the Ministerial expert commission nominated for the transposition, into Italian law, of the circular economy package, adopted by the EU in 2018. In 2012/2013, he was part of the Minister for Environment’s Technical Secretariat. David is the author of many articles and publications on his specialised topics, and frequently takes part as a speaker in conferences, work- shops and training courses on environmental law.

Ambientalex - Studio Legale Associato Tel: +39 06 4201 4545 Via V. Veneto, 108 Fax: +39 06 5656 1604 00187 – Rome Email: [email protected]; [email protected] Italy URL: www.ambientalex.com

Andrea Farì is a partner of Ambientalex law firm. He is specialised in administrative and environmental law. Andrea has been Deputy Head of the Legal Department of the Italian Ministry for Environment, and legal counsel to the Minister for Environment in the previous two legislatures. He is also a consultant to the Bicameral Commission of the Italian Parliament’s Inquiry into illegal activities related to the waste cycle and related environmental offences. Andrea is a Professor of Environmental Law at the Faculty of Law of the University of Rome III and also at the Libera Università Maria Ss. Assunta (LUMSA) in Rome. He has obtained the national qualification as an Associate Professor in Administrative Law. He publishes regularly and also takes part, as a speaker, in various Master’s, PhD and professional specialist courses in Italy and abroad.

Ambientalex - Studio Legale Associato Tel: +39 06 4201 4545 Via V. Veneto, 108 Fax: +39 06 5656 1604 00187 – Rome Email: [email protected]; [email protected] Italy URL: www.ambientalex.com

Founded by lawyers boasting consolidated professional experience, the Ambientalex law firm has offices in Milan, Rome and Florence. practice areas of Ambientalex law firm focus on the various sectors of Business is conducted in Italian, English, German and French. environmental law, including energy. www.ambientalex.com One of the inspiring principles of Ambientalex law firm is to prevent any conflicts or disputes arising by virtue of accurate and expert advice, and wherever possible, also taking into consideration any legislation about to be issued. The firm provides customised ad hoc services and solutions which include, where appropriate, legal counselling and consultancy services as well as assistance in front of any competent Italian courts. Clients of Ambientalex law firm include Italian and foreign multinational companies, trade associations and law firms. In order to ensure that its clients receive the most comprehensive and expert services, the firm also works with external consultants with proven experience in the specific areas concerned.

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Hajime Kanagawa

Kanagawa International Law Office Yoshiko Nakayama

12 Environmental Policy and its also enact their own local environmental ordinances (i) regulating those legal areas not covered by national laws, or (ii) expanding Enforcement the scope of regulations or providing more stringent rules than national laws. 1.1 What is the basis of environmental policy in your The national governmental body in charge of administering and jurisdiction and which agencies/bodies administer and enforcing environmental laws is the Ministry of the Environment. enforce environmental law? Local governments also have a role in administering and enforcing environmental law, as further explained in this section. The basis of Japanese national environmental policy is the Basic Environment Law of 1993 (the “BEL”). Under the BEL, the 1.2 What approach do such agencies/bodies take to government must establish a Basic Environmental Plan, and this the enforcement of environmental law? plan is subject to a regular six-year review (please see https:// www.env.go.jp/policy/kihon_keikaku/plan/plan_5.html). In April 2018, the Fifth Basic Environment Plan was adopted by According to the Fifth Basic Environment Plan, the following the National Cabinet. The Fifth Basic Environment Plan set six approaches satisfy specific policy objectives of the Japanese major strategic goals for future environmental policy, i.e.: (i) the governmental agencies/bodies: formulation of a “green” economic system for achieving sustain- (i) a direct regulation approach, whereby direct regulation able production and consumption; (ii) improvement of the value specifies certain goals to be achieved and the government of national land as stock; (iii) sustainable community develop- enforces the law to achieve those goals. This approach ment using local resources; (iv) realisation of a healthy and pros- is effective for prevention of environmental pollution and perous life; (v) development and dissemination of technology land use control to protect the environment; supporting sustainability; and (vi) demonstration of Japan’s (ii) a regulatory framework approach, whereby the govern- leadership through international contribution and building stra- ment presents a framework as a goal with mandatory tegic partnerships. actions and processes to achieve it. This approach is Various national laws provide specific regulations that, aimed at preventing new environmental pollution in areas together with the general policy declared in the BEL, form the when quantitative targets or specific compliance matters system of Japanese environmental law. These laws include: cannot be set; (i) laws addressing general environmental policy, including (iii) an economic approach, which seeks certain policy objec- the Environment Impact Assessment Act (1997) (“EIA”); (ii) tives by using economic incentives such as subsidies, tax laws addressing specific environmental issues, such as (a) laws benefits or fines. An example of this approach is feed- concerning global environmental issues, (b) laws preventing in-tariffs (“FIT”). This approach is effective for those to public nuisances and pollution, (c) laws restricting polluting whom direct regulation or a regulatory framework may substances, and (d) laws protecting or preserving natural not be efficient, by changing market prices to incentivise resources; (iii) laws concerning who bears the burden of various stakeholders to take measures that would reduce expenses necessary for the protection of the environment; (iv) environmental burdens/costs; laws providing judicial or administrative solutions for pollution (iv) a voluntary approach, whereby the government only or other environmental issues; and (v) laws concerning envi- encourages businesses to set voluntary targets to achieve ronmental administrative organs. In addition, there are other policy objectives. This approach is effective in cases where environment-related laws governing nuclear facilities and radia- businesses have widely expressed their commitment to tion, regulation of urban development and protection of cultural society; assets, which are not necessarily covered by the legal system (v) an information approach, whereby the government under the BEL. promotes the disclosure and provision of informa- Japanese environmental policy is also realised through tion so that private sectors actively engaging in envi- various local ordinances and regulations enacted by each local ronment-friendly actions, products and services can be government. In addition to the local ordinances introduced for selected for investment and procurement; the purposes of enforcing national laws taking into consider- (vi) a procedural approach, whereby certain environmental ation the characteristics of local areas, local governments may considerations are included in the decision-making process, such as the EIA or Pollutant Release and Transfer Register (“PRTR”); and

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(vii) an action approach, whereby public bodies such as national but it does function as a permit in some sense (i.e. certain parties, or local governments directly implement the actions neces- such as parties holding a certain quantity of potentially hazardous sary to achieve policy objectives. 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). 1.3 To what extent are public authorities required to provide environment-related information to interested Local governments also impose a permit system for certain persons (including members of the public)? conduct. For example, the Tokyo Municipal Government requires any person planning to construct and operate any factory in Tokyo to obtain a permit. Government authorities are required to proactively make public Many environmental permits are not transferrable without certain environment-related information, including publishing further review. For example, permits relating to the opera- environmental policies and plans under the BEL and noti- tion of businesses or plants are granted based on a review of the fying the public about environmental standards and pollution operator holding the licence, and therefore may not be trans- measurement results under certain laws (e.g. the Air Pollution ferred without another review. However, in case of a succes- Prevention Act). sion by operation of law, such as a merger or company split, the The government is also required to collect information from requirements for transfer of permission are usually less strin- non-governmental entities and to notify the public about such gent. Other types of permits remain attached to property irre- information. Such requirements include the Law Concerning spective of transfer of ownership (e.g. under the Forest Act, in Pollutant Release and Transfer Register, which was enacted based general, a permit to develop forested land is effective in favour on the recommendations of the OECD, and the Greenhouse of a transferee of the subject forested land). Effect Gas Measurement Enhancement Act. The national government is also statutorily required to disclose information under the Act on Access to Information 2.2 What rights are there to appeal against the Held by Administrative Organs (similar to the Freedom of decision of an environmental regulator not to grant an Information Act in the United States). Under this act, national environmental permit or in respect of the conditions contained in an environmental permit? governmental organisations must disclose information upon specific request from any person, unless the requested information is non-disclosable information (such as personally identi- Applicants for regulatory permits may challenge the decision of fiable information, information where disclosure would have a the regulator by filing (i) a complaint under the Administrative harmful influence on the operation of the government, informa- Complaint Review Act (“ACRA”) within three months from the tion having a negative impact on the competitive position of a day when the applicant becomes aware of the regulator’s deci- private person (corporation), etc.). Almost all local governments sion (or within one year from the date of decision), or (ii) liti- have similar ordinances. gation within six months from the day when the complainant becomes aware of the decision (or within one year from the 22 Environmental Permits date of decision) (the litigation deadline will be extended for the time spent in the ACRA process when the complainant files an ACRA complaint in advance of litigation), pursuant to the 2.1 When is an environmental permit required, and may Administrative Case Litigation Act (which provides special rules environmental permits be transferred from one person to another? based on civil litigation procedural law). ACRA provides the government’s internal process for correcting erroneous or inappropriate administrative decisions. Generally, environmental permits are required when a person The process under ACRA had often been criticised, claiming conducts certain designated businesses or development work that the reviewers in many cases were not neutral, but the process having substantial environmental impact, or constructs or oper- has been moving towards a pro-user approach (for example, a ates plants having certain kinds of environmental impact. more independent review board system was introduced in 2016). For example, the Waste Management and Cleaning Act If a claim is successful, the regulator’s decision may be cancelled (“WMCA”) requires business owners to obtain business permits (and the party may reapply) or, in some cases, the regulator may from relevant local governments before conducting business be ordered to grant a permit. Parties may file litigation at the involving the collection, transportation, and/or disposal of same time as challenging a decision through ACRA. However, waste. Also, the Act on Evaluation of Chemical Substances where both processes are pending, the court may suspend the and Regulation of Manufacture, etc. (or Chemical Substances litigation process until the ACRA process is concluded. Control Law; “CSCL”) requires any person intending to conduct business that will produce certain specified hazardous chemicals to obtain a permit from the national government. 2.3 Is it necessary to conduct environmental audits Other statutes impose requirements for persons who or environmental impact assessments for particularly polluting industries or other installations/projects? 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 The EIA requires a mandatory environmental assessment controlling chemical substances (including the Poisonous and process (or screening process) before beginning certain types of Deleterious Substances Control Act and the CSCL) require a construction and development activities, including the construc- permit before producing, importing, or constructing production tion of highways, airports, waste disposal plants and certain plants for hazardous chemicals and chemicals having potential types of power plants, if (i) the size exceeds certain prescribed environmental impacts. thresholds, and (ii) additional statutory requirements are satis- Various laws also provide “notification” requirements. This is fied. Many prefectural governments also have their own assess- a unilateral action and does not require administrative permits, ment requirements for certain development plans that are not covered under the EIA.

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There are additional statutory audit requirements for (c) Duties and controls over Industrial Waste recording and reporting obligations depending on the type of The standards of storage, collection, transportation, pollution (e.g. the Air Pollution Prevention Act and the Water and disposal of Industrial Waste and the standards of Pollution Control Act). outsourcing for licensed service companies are prescribed in detail under the WMCA and related regulations, and there are also regulations on outsourcing agreements for 2.4 What enforcement powers do environmental regulators have in connection with the violation of the purpose of clarifying the responsibility of Industrial permits? Waste Producers. Those regulations include: (i) outsourcing agreements must be documented and only certain prescribed eligible persons, such as licensed service compa- The initial actions taken by the environmental regulator are often nies, can manage Industrial Waste; and (ii) re-outsourcing by making inquiries to potential violators and/or providing guid- licensed service companies is basically prohibited unless an ance or amenable instructions to potential violators to voluntarily Industrial Waste Producer approves it. Moreover, Industrial correct any inappropriate conduct, within the scope permitted Waste Producers must enter into contracts separately with by law. Such inquiries are not compulsory, and the regulator is companies that collect and transport Industrial Waste and prohibited from unreasonably treating a private person unfa- intermediate and/or final processing/disposal companies. vourably due to non-compliance with such inquiries or guidance. When outsourcing the transport and/or processing of The regulator may monitor compliance or investigate as to Industrial Waste, Industrial Waste Producers have a duty to whether a violation has occurred, and it has statutory authority monitor whether the Industrial Waste is properly handled to investigate any violation of relevant statutes (please also see through the process chain up until its final disposal. section 6 herein for more information on investigatory powers). Industrial Waste Producers having their own processing/ Once a violation is identified, the regulator may issue an order disposal facilities must designate a person in charge of to suspend permitted business or to correct operations, and if Industrial Waste management. Also, Industrial Waste such order is not duly complied with, then criminal charges Producers who have places of business that produce a great such as fines or administrative measures such as cancellation of deal of Industrial Waste must make a plan for reducing permits may follow. Certain permits trigger criminal charges the amount and disposal of the waste, submit the plan and directly upon violation (e.g. a person who produces certain spec- report the implementation status of the plan to the prefec- ified poisonous substances without a permit). The process for tural governor. a criminal charge may be initiated by the police independently The standards for Specially Managed Industrial Waste from the regulator, or the regulator may make a formal request are similar to the standards for Industrial Waste, but are to the police to commence a criminal investigation process. generally stricter. (d) Regulation of scrap material 32 Waste The amended WMCA, which came into force in April 2018, requires business operators dealing with scrap mate- 3.1 How is waste defined and do certain categories of rial, including noxious substances, to (i) notify the local waste involve additional duties or controls? government about their storage and handling of such scrap materials, and (ii) comply with certain regulations in the (a) Definition of waste storage and disposal of them. These scrap materials may “Waste” is defined under Article 2 of the Waste Management not fall under the definition of “waste” as they can be sold and Cleaning Act (“WMCA”), and generally includes any as valuable items, but the handling of these materials has “filthy and unnecessary matter” other than radioactive waste. become subject to the WMCA regulations. Under the WMCA, in general, waste is divided into two main categories: “General Waste” and “Industrial Waste”. 3.2 To what extent is a producer of waste allowed General Waste means any waste that is not Industrial to store and/or dispose of it on the site where it was Waste. Industrial Waste encompasses certain types of produced? waste produced from business activities, such as cinders, sludge, waste oil, waste acid, waste alkali, waste plastic, and Under the WMCA, the storage and processing/disposal of certain kinds of imported waste. Industrial Waste generally depends on whether it is done by an Within the categories of General Waste and Industrial Industrial Waste Producer itself or is outsourced to a third party. Waste, any waste that is explosive, poisonous or infectious When Industrial Waste Producers themselves process/dispose is sub-categorised as “Specially Managed General Waste” of Industrial Waste or Specially Managed Industrial Waste, the or “Specially Managed Industrial Waste”, respectively. storage period and the quantity are regulated (e.g. the cap on the (b) Responsible parties for management of waste storage quantity is, in general, the product of the quantity of the Local governments are basically responsible for the processing/disposal ability per day of the disposal plant multi- management of General Waste (including Specially plied by 14). Managed General Waste). When Industrial Waste Producers outsource the management Business operators who produce Industrial Waste of Industrial Waste or Specially Managed Industrial Waste, the (“Industrial Waste Producers”) are responsible for the Industrial Waste Producers must store such waste so as not to management of Industrial Waste and should bear the costs interfere with the local environment until the waste is removed. of managing it. However, Industrial Waste Producers may On the other hand, there is no specifically prescribed cap on outsource their management of Industrial Waste to licensed the storage quantity and length of the period for which Industrial service companies and, under certain circumstances, a local Waste Producers can store General Waste under the WMCA. government may manage the Industrial Waste.

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3.3 Do producers of waste retain any residual liability One possible defence against criminal charges is that a breach in respect of the waste where they have transferred it was not intentional. However, such a defence is rarely successful to another person for disposal/treatment off-site (e.g. because, in most cases, mere knowledge of the situation where if the transferee/ultimate disposer goes bankrupt/ a breach occurs would be sufficient for an intentional breach of disappears)? the regulatory laws.

Industrial Waste Producers may have residual liability even 4.2 Can an operator be liable for environmental after transferring waste to another person under certain damage notwithstanding that the polluting activity is circumstances. operated within permit limits? For example, Industrial Waste Producers may be subject to imprisonment and/or fines if they breach certain outsourcing Yes, notwithstanding compliance with regulatory permit standards, such as by (i) entering into improper outsourcing limits, an operator may be liable for environmental damages agreements with service companies, (ii) improperly moni- to the extent that such pollution has resulted from the inten- toring the handling of the Industrial Waste through the process tional action or the negligence of the polluter. Compliance chain up until the final processing/disposal, or (iii) outsourcing with the regulatory permit limit is one of the major consider- Industrial Waste management to unlicensed service companies. ations in assessing the existence and scope of liability but it is Also, an Industrial Waste Producer may be ordered to remove not a complete safe harbour. In certain cases, the regulatory Industrial Waste or pay the cost of removal, for example, if: (i) the body setting such a limit may also be liable for not taking a more Industrial Waste Producer outsources the processing/disposal of prudent approach. the Industrial Waste at an unusually low price to someone who then processes/disposes of it illegally; (ii) the Industrial Waste Producer becomes aware that one of its outsourcees has been 4.3 Can directors and officers of corporations attract illegally dumping or storing Industrial Waste, but the Industrial personal liabilities for environmental wrongdoing, and Waste Producer continues to outsource to such outsourcee; to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities? (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 Directors and officers may be personally liable under civil tort revoked; or (v) an outsourcee becomes bankrupt. 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 3.4 To what extent do waste producers have sanctions may not be imposed on directors or officers unless the obligations regarding the take-back and recovery of their waste? 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, regard- Please see question 3.3 above. less of if the wrongdoing was done in the name of a company instead of its directors or officers. 42 Liabilities Insurance policies are available to cover liability of the directors arising from a company’s misconduct (i.e. D&O insurance) 4.1 What types of liabilities can arise where there is a but such policies are subject to maximum payment amounts and breach of environmental laws and/or permits, and what various conditions. defences are typically available?

4.4 What are the different implications from an Breaches of environmental laws and/or permits are subject to environmental liability perspective of a share sale on the criminal charges, administrative measures, and civil liability. one hand and an asset purchase on the other? In certain cases, a breach would directly trigger criminal sanctions (including imprisonment and fines) and, in other cases, A purchaser of shares cannot carve out specific risk or liability criminal sanctions would be brought only after a party did not of a company. However, liability of a shareholder is gener- comply with administrative orders. ally indirect in that administrative/criminal sanctions are not As for administrative measures, a regulator may make correc- imposed on shareholders solely because of their shareholding, tive orders or suspension orders or cancel permits, and may also and shareholders are usually not liable for damages caused by the take remedial steps or seek to recover costs from a breaching party. company (please see section 8 below). Civil liability for breach of environmental laws would typi- A purchaser of assets of a company will bear the environ- cally be a tort claim. If a contract requires compliance with envi- mental liability of such assets. However, any administrative or ronmental laws, a breaching party may be subject to contractual criminal charges already imposed on the seller related to such sanctions as well. assets will not, in principle, be transferred to the purchaser of Typical defences relating to criminal, administrative and civil such assets. 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 4.5 To what extent may lenders be liable for (iii) an assertion that the party has taken remedial measures environmental wrongdoing and/or remediation costs? promptly after discovering the breach. These defences influence the degree of the criminal offence, the necessity of taking Lenders are not liable, in principle, for how a borrower uses severe administrative measures, and the amount of damages to borrowed funds. In theory, if a lender was aware that borrowed be compensated in related civil liability cases. funds would be used for environmental contamination, such lender may be deemed to be a joint offender, but we are not

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aware of any such court case precedent related to environmental costs from the previous owner or occupier who caused contami- wrongdoing and/or contamination. It has been argued that nation by way of tort claims or other legal grounds. banks should bear social (not legal) liability as to how loaned On the other hand, these liability risks may transfer from the funds are used, and Japanese banks may hesitate to lend money seller to the purchaser (but not vis-à-vis any other third parties) if to entities bearing potentially serious environmental risks. they agree that the seller sells the land “as is”.

52 Contaminated Land 5.5 Does the government have authority to obtain from a polluter, monetary damages for aesthetic harms to 5.1 What is the approach to liability for contamination public assets, e.g. rivers? (including historic contamination) of soil or groundwater? The Supreme Court of Japan has expressed a view that aesthetic Contamination of soil or groundwater is mainly governed under harm (in this case, harm to a scenic view caused by a large the Water Pollution Prevention Act (“WPPA”) and the Soil building) may be worthy of legal protection. Accordingly, Contamination Countermeasures Act (“SCCA”). assuming that a scenic view of public assets (i.e. the property The WPPA identifies and regulates factories that produce owned by the government) is actually damaged by a polluter, harmful substances, imposes limits on emission of pollution, “theoretically” speaking, future courts may, depending on and authorises the government to order persons responsible ongoing developments in case law, acknowledge the govern- for the factories to remediate pollution to groundwater if water ment’s authority to obtain monetary damages for pollution that containing harmful substances affects groundwater. causes aesthetic harm, although this is fairly difficult as a matter The SCCA provides for inspection of land having facilities of practice under the current case law precedents. likely to have contaminated soil or where contamination has been discovered. Contaminated areas are designated according 62 Powers of Regulators to whether there is any suspected threat of health hazards based on the results of the inspections. The land owner or occupant 6.1 What powers do environmental regulators have to may be ordered to take measures to remove contamination. The require production of documents, take samples, conduct transportation of contaminated soil is also regulated. site inspections, interview employees, etc.?

5.2 How is liability allocated where more than one Environmental regulators have the power to investigate as person is responsible for the contamination? provided by specific regulatory statutes. These powers include on-site inspections and requests to provide reports and other If the persons who caused the contamination are identified, then information. In most cases, unreasonable rejection of these they are severally liable under the SCCA. Each of the polluters investigations or provision of false information is subject to will be ordered to take measures to remove the contamination criminal sanctions (including imprisonment and fines) or civil that they are determined to have individually caused. sanctions (such as cancellation of permits). However, if the persons who caused the contamination are not identified, then the land owners or occupants are liable for 72 Reporting / Disclosure Obligations any contamination. 7.1 If pollution is found on a site, or discovered to be 5.3 If a programme of environmental remediation migrating off-site, must it be disclosed to an environmental is “agreed” with an environmental regulator, can the regulator or potentially affected third parties? regulator come back and require additional works or can a third party challenge the agreement? In cases where any soil contamination is identified due to the statutorily required investigation under the SCCA, such inves- There is currently no system for “agreement” with envi- tigation results shall be reported to the relevant authority. On ronmental regulators about a programme of environmental the other hand, the SCCA also provides for a voluntary noti- remediation. fication system when anyone discovers any soil contamination However, under new legislation that has been enforced from through their voluntary investigation, but there is no legal obli- April 1, 2019, if environmental remediation has been ordered gation requiring such notification, nor is there any penalty for by a regulator, the regulator may order submission of the meas- non-compliance. In this way, the regulatory regime is relatively urement plan for contamination removal and amendment of the lenient towards pollution inadvertently found on a site. plan if it does not fulfil the technical standards. Also, according to the amended SCCA which became effective in 2018, any party who modifies the landscape of a certain area may voluntarily investigate any contamination and may submit 5.4 Does a person have a private right of action to seek contribution from a previous owner or occupier of to the regulator (local government) the results of the investiga- contaminated land when that owner caused, in whole or tion to facilitate the process of eliminating contamination, if any, in part, contamination; and to what extent is it possible to avoid a possible future investigation order. Again, this system for a polluter to transfer the risk of contaminated land does not impose any obligation on a private person to investigate. liability to a purchaser?

7.2 When and under what circumstances does a person A land owner may have the right to seek compensation for have an affirmative obligation to investigate land for damages caused by contamination by the previous land owner or contamination? occupier. For example, under the SCCA, if the current owner is ordered to take measures to remove contamination or to pay the The SCCA requires owners and occupiers of land to investigate costs of removal, the current owner may be able to claim such

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using certain designated investigation institutes and report 8.2 Is it possible to shelter environmental liabilities off on soil contamination in the following cases: (i) when certain balance sheet, and can a company be dissolved in order hazardous factories have ceased operations on the land; (ii) to escape environmental liabilities? when the local governor considers that there is a possibility that the site could be hazardous to human health due to contami- In order to shelter environmental liabilities, it may be possible to nation; and (iii) when the local governor considers that there is transfer polluted assets to a subsidiary and, thereafter, dissolve the a possibility that the site could be hazardous to human health subsidiary. However, in most cases, it is difficult for the parent when the owners give notification of a change of the shape or company to completely escape liability arising from polluted assets. quality of land that is 3,000 m or more in area. 2 For example, assuming that the parent company is the original The amended SCCA, which came into force in 2018, requires polluter, it will continue to be liable as the original polluter and parties having operated hazardous factories to make efforts to could be subject to tort claims. In addition, if the environmental cooperate with the investigative body in the type of investi- liabilities have actually accrued before transferring polluted assets gation stated in (i) above by providing relevant data regarding to the subsidiary, regardless of whether those liabilities are actu- hazardous materials and other designated information regarding ally claimed or not, it is legally impossible to be released from those the factories or the sites. liabilities by transferring them to the subsidiary without obtaining consent from the counterparties having actual or potential claims 7.3 To what extent is it necessary to disclose against the parent company. environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover transactions? 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 In a private sale, a purchaser may cancel the sale or request a company be sued in its national court for pollution decrease in price when contamination is discovered by the caused by a foreign subsidiary/affiliate? purchaser after the sale. There are some court precedents which required sellers to disclose known contamination or any history In general, a parent company does not owe any legal obliga- or manner of use that may potentially result in contamination. tion in connection with a subsidiary’s environmental liability. Also, if the seller intentionally conceals the fact of material However, there are exceptional cases where (i) the corporate contamination of the sold assets upon the sale, depending on veil may be pierced because of deceptive incorporation without the situation, the seller may be deemed to have committed a substance and/or wilful intent to evade liability, or (ii) the parent criminal offence (i.e. fraud). company has a fully-controlled subsidiary in connection with Further, professional brokers of land are obligated, under the the relevant breaches and/or pollution such that the parent regulations applicable to them, to disclose to the purchaser (i) any company can be deemed a joint tortfeasor with the subsidiary. items that may have a material adverse effect on the purchaser This applies whether or not the subsidiary is overseas. including possible soil contamination; and (ii) the fact that the land is designated as contaminated land under the SCCA. 8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters? 82 General The Whistle-blowers Protection Act designates certain statutes 8.1 Is it possible to use an environmental indemnity including environmental laws (e.g. CSCL, WPPA) and protects to limit exposure for actual or potential environment- whistle-blowers who report the breach of such designated statutes related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. from punishment or unfavourable treatment in retaliation for whis- remediation) discharge the indemnifier’s potential tle-blowing. This Act, however, requires the whistle-blowing to be liability for that matter? made in relation to certain specified criminal offences, and certain other requirements must be met in order for whistle-blowers to gain Indemnity and limitation of liability are commonly used in protection under this Act. New laws are added to those covered contracts, though it is also common to impose unlimited liability under this Act every year; e.g. in 2018, six new laws were added. if damages are caused through a party’s wilful misconduct or gross negligence. 8.5 Are group or “class” actions available for pursuing In general, liability under statutory regulations, including environmental claims, and are penal or exemplary administrative sanctions or criminal charges, cannot be elimi- damages available? nated or mitigated by an indemnity payment; however, the fact that the indemnifier has taken remedial measures (including the Japan does not have a general class action scheme and punitive indemnity payment to the victim) may influence the degree of damages are not available. the criminal offence and the necessity of taking severe adminis- Recently, a new law was enacted to introduce a kind of class action trative measures. For example, if damages are compensated to scheme, but this law only covers monetary claims accrued in connec- the victims themselves, regulators and prosecutors may consider tion with consumer-related contracts, and does not include compen- such arrangements a sign of possible improvement in the future, sation for death or personal injury or claims arising from pollution. and possibly mitigate the punishment. Also, in civil cases, the When a lawsuit involves a large number of complainants, the amount of damages ordered by the court will be decreased by complainants often unite in filing the lawsuit, but the complain- the amount voluntarily paid to the claimants. ants are in theory only a de facto unity of individual parties and actually must still each establish the damages that they have individually suffered.

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8.6 Do individuals or public interest groups benefit 102 Asbestos from any exemption from liability to pay costs when pursuing environmental litigation? 10.1 What is the experience of asbestos litigation in your jurisdiction? There is no system for exemption from such liability. Asbestos litigation has been filed against both the government 92 Emissions Trading and Climate Change and companies that used or manufactured asbestos. Compensation claims to the government for damages due to 9.1 What emissions trading schemes are in operation health hazards or death have been filed by former workers who in your jurisdiction and how is the emissions trading were engaged in jobs where they directly dealt with asbestos in market developing there? asbestos production plants or in the construction industries, and also by people living near the plants as well as their bereaved. Currently, there is an emissions trading scheme at the national They have claimed that the government did not properly exer- level called the J-Credit Scheme, whereby the government certi- cise certain regulatory powers, such as the requirement to wear fies the amount of greenhouse gas (“GHG”) emissions reduced dust respirators or the requirement to install local exhaust venti- or removed through efforts by project participants who intro- lation systems. duce energy-saving devices and/or manage forests as “credits”. In an action appealed by former workers and people living near “Credits” are freely sold between project participants and users asbestos production plants in the Konan area in southern Osaka of “credits”. The government does not intervene in transactions Prefecture and their bereaved, the Supreme Court affirmed in and the price of “credits” is not fixed. 2014 the illegality of the inaction of the government to use its Purchased “credits” can be utilised, for example, to adjust regulatory power to require the installation of local exhaust venti- emission amounts under the GHG emissions reporting lation systems in relation to former workers and their bereaved. system based on the Act on Promotion of Global Warming Plaintiffs have also claimed compensation from employers Countermeasures (“APGWC”). based on a failure to maintain employee safety and from compa- The J-Credit Scheme was created in 2013 by integrating the nies that produced or sold asbestos-containing building mate- Domestic Clean Development Mechanism and the Offset Credit rials based on tort liability. There have been judgments that (J-VER; Japan’s verified emissions reduction) Scheme, and was affirm such employers’ liability. designed to integrate the strengths of both schemes. In Tokyo, mandatory reductions of the amount of GHG emis- 10.2 What are the duties of owners/occupiers of sions from large-scale business places and an emissions trading premises in relation to asbestos on-site? 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 Owners and occupiers have the duty to meet the regulatory is about 20% of the total amount of GHG emissions in Tokyo. standards for asbestos levels in the atmosphere and to prevent In Saitama, “targeted” reductions of the amount of GHG emis- exposure to asbestos, including dispersal of asbestos into the sions from large-scale business places, and an emissions trading environment. scheme to be utilised for large-scale business places to achieve In the Air Pollution Control Act (“APCA”), asbestos is such target, were introduced in 2011. specially regulated as “Specified Particulates”, as distinguished from “Ordinary Particulates”. The facilities of nine types of machines over a certain scale 9.2 Aside from the emissions trading schemes mentioned are defined as “Facilities That Generate Specified Particulates” in question 9.1 above, is there any other requirement to and the standard of production to be complied with (regulations monitor and report greenhouse gas emissions? of concentration) is prescribed in the ordinance. Specifically, the regulatory standard is 10 fibres of asbestos In the APGWC, there is a requirement for the calculation and per litre in the atmosphere at the site boundaries of a factory or reporting of GHG emissions, whereby business operators who workplace. emit large amounts of GHG must calculate the amount of GHG However, asbestos is sometimes emitted or used other than emissions every fiscal year and report to the government. in Facilities That Generate Specified Particulates. A typical example is a building that contains asbestos-containing mate- 9.3 What is the overall policy approach to climate rial. When such buildings are demolished, unless this demo- change regulation in your jurisdiction? lition 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 The APGWC has a reporting requirement as described in became a serious problem. question 9.2. The reports from the business operators can be Therefore, under the APCA, building materials that contain disclosed to the public. The purpose is to achieve a reduction asbestos are designated as “Specified Building Material”, and in the emission of GHG, especially from business operators activities involving the demolition, alteration, or repair of build- who emit a great deal of GHG, by making such business opera- ings or factories that use them are defined as “Activities That tors (and also citizens) realise the importance of efforts toward Emit, etc. Specified Particulates”. Furthermore, a person who a reduction in the emission of GHG and also encouraging them wishes to undertake construction work associated with such to take reduction measurements themselves. activities must submit a notification to the prefectural governor Moreover, the APGWC was revised in 2016 with the aim of and show compliance with the standards of activity. The prefec- promoting the achievement of certain goals based on the Paris tural governor has the power to make supervisory dispositions Agreement. to the persons undertaking such construction work.

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Moreover, the Ministry of Health, Labour and Welfare estab- 11.2 What is the environmental insurance claims lished the Ordinance on Prevention of Health Impairment due experience in your jurisdiction? to Asbestos in 2005. It prescribes prevention measures against exposure to asbestos in activities involving the demolition of The number of environmental insurance claims seems to be such a building. The Ministry of Health, Labour and Welfare small. However, information about these claims is kept confi- has continued to review the regulations to enhance prevention dential by insurance companies and is rarely publicly available. measures against exposure to asbestos. In 2018, the Ministry of Environment formed a committee to discuss prevention measures against dissemination of asbestos 122 Updates and launched a new committee which will review measures to restrict dissemination of asbestos. The above-mentioned regu- 12.1 Please provide, in no more than 300 words, a latory structure may be reformed again within a few years after summary of any new cases, trends and developments in discussion by the committee. environment law in your jurisdiction.

112 Environmental Insurance Liabilities The Act on Rational Use and Proper Management Fluorocarbons was amended in 2019 (effective as of April 1, 2020). The Act requires responsible parties (e.g. business users of relevant 11.1 What types of environmental insurance are products) to deliver the designated products (such as refriger- available in the market, and how big a role does environmental risks insurance play in your jurisdiction? ators) to recycling operators when they dispose of such products. However, the recycling rate has remained low. The amended law will make violations immediately punishable, obli- The types of environmental insurance available are: (i) environ- gate the parties to confirm the proper procedure of recycling, mental contamination liability insurance; (ii) soil contamination and strengthen the authority of local governments to investi- purification costs insurance; (iii) medical waste producer liability gate possible violations. The Japanese government hopes that insurance; and (iv) industrial waste producer liability insurance: the amendment contributes to achieving the goals of the Plan of (i) insurance for environmental contamination liability Global Warming Prevention, which is a 50% recycling rate for protects against liability for damages arising from environ- fluorocarbons by the end of 2020. mental contamination produced by the facilities owned, A relatively minor change, but a notable step towards reduc- used or managed by policyholders; tion of waste, is the Japanese government’s introduction of an (ii) insurance for soil contamination purification costs obligation to charge fees for plastic bags at retail shops, which protects against costs where policyholders pay such costs will be fully enforced in July 2020. under indemnification clauses in land sale contracts; Another important topic in environmental law in Japan is (iii) medical waste producer liability insurance protects against nuclear power. After the Fukushima nuclear power plant acci- liability for health hazards caused by dumped waste and dent in March 2011 (“2011 Fukushima Accident”), all nuclear the costs for removal of waste or for purification of power plants in Japan temporarily stopped operations. Many contaminated soil where waste from a medical institution injunction cases (including preliminary injunctions) have been is illegally dumped and the medical institution is ordered filed to prevent the plants from restarting. However, the to take measures or pay removal costs in accordance with judgments of the courts have differed. the Waste Management and Cleaning Act (“WMCA”) and Regarding the damages caused by the 2011 Fukushima related regulations; and Accident, there are many cases in response to a kind of “class (iv) industrial waste producer liability insurance protects action” initiated by a group of people who were forced to evac- against the liability for health hazards caused by dumped uate their home towns, and several district courts and high waste and the costs for removal of waste or for purifica- courts ordered the Japanese government and Tokyo Electric tion of contaminated soil where waste from producers Power Company Holdings, Incorporated to compensate for is illegally dumped, despite efforts made by producers damages. Several Supreme Court cases partly affirmed compen- to prevent illegal dumping, and where they are further sation for damages. ordered to take measures or pay removal costs in accordance with the WMCA and related regulations. These types of insurance are not yet widespread, and it is hard Acknowledgment to say if they play a significant role in Japan. The authors would like to acknowledge the assistance of their colleague Andrew Hughes in the preparation of this chapter. Andrew is a Foreign Attorney at Kanagawa International Law Office. Tel: +81 3 6206 6815 / Email: [email protected]

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Hajime Kanagawa is the Founding Partner of 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: University of Tokyo (LL.B., 1995); University of Southern California (LL.M., 2004). Bar Admissions: Japan and New York.

Kanagawa International Law Office Tel: +81 3 6206 6651 7F, Urban Toranomon Bldg. Email: [email protected] 1-16-4 Toranomon Minato-ku URL: www.k-ilo.com Tokyo, 105-0001 Japan

Yoshiko Nakayama is a Counsel at Kanagawa International Law Office. She has broad experience in regulatory practice and in-depth knowledge of environmental regulations.

Kanagawa International Law Office Tel: +81 3 6206 6458 7F, Urban Toranomon Bldg. Email: [email protected] 1-16-4 Toranomon Minato-ku URL: www.k-ilo.com Tokyo, 105-0001 Japan

Kanagawa International Law Office is a globally minded law firm offering specialised knowledge and experience in international legal matters, headed by Mr. Hajime Kanagawa. www.k-ilo.com

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Kenya Kenya

Kieti Advocates LLP Clarice Wambua

12 Environmental Policy and its orders as well as environmental restorative orders. NEMA coordinates the environmental management activities of other Enforcement government agencies responsible for the management of natural resources and physical planning, and often works in tandem with 1.1 What is the basis of environmental policy in your these agencies and county governments in enforcement activities. jurisdiction and which agencies/bodies administer and Further to this, enforcement is aided by Kenya’s Constitution enforce environmental law? promulgated in 2010, which improved the approach to litigation on environmental matters in Kenya by firstly, expanding the Environmental policy is founded on the Constitution which scope of persons capable of instituting suits to enforce the Bill of guarantees every person in Kenya the right to a clean and Rights (including environmental rights) to include third parties healthy environment. The Constitution also recognises the and public interest litigants. Secondly, constitutionally there is fundamental principles of environmental law such as sustain- no requirement to demonstrate actual harm or personal loss. The able development and equity and places an obligation on the threat of harm is sufficient to warrant intervention by the courts state to, among others, ensure the protection of indigenous and the courts have been proactive in enforcing these principles. knowledge and genetic resources and sustainable exploitation of the environment and natural resources. The Constitution 1.3 To what extent are public authorities required to further places a duty on all persons to co-operate with state provide environment-related information to interested organs and other persons to protect and conserve the envi- persons (including members of the public)? ronment. The Environmental Management and Coordination Act, 1999 (EMCA), which is the primary Act governing matters The Constitution recognises the right of access to information relating to the environment, is underpinned by principles such held by the state and by private parties necessary for the protec- as: international co-operation in the management of environ- tion of rights. The Access to Information Act, 2016 (AtIA) mental resources shared with other states; inter-generational provides the mechanics to actualise this right by requiring public and intra-generational equity; the polluter-pays principle; and bodies, subject to the payment of reasonable fees, to disclose the precautionary principle. and make information available upon request to citizens. This The National Government, through the Cabinet Secretary right may be limited on account of, among other considerations, responsible for environmental matters, is responsible for setting national security and defence matters and the need to protect environmental policy. County governments play a role in the legal proceedings and commercially sensitive information. implementation of policy and can enact county legislation on Under EMCA, there is a right of access to information held by environmental protection. In the event of a conflict between NEMA and other public bodies, relating to the implementation national and county legislation, the former will prevail. The of EMCA, and more broadly any information held by NEMA. National Environment Management Agency (NEMA) is the Further, certain information, such as Environmental Impact primary implementing and enforcement agency for environ- Assessment (EIA) study reports, Environment Action Plans and mental law and policy. The National Environment Tribunal, registers of licensees and experts, is to be published and made which has original jurisdiction in respect of certain disputes, available for inspection automatically without the need to make including decisions of NEMA, plays a key role alongside civil an access to information request. (including a designated Environmental and Land Court of similar stature as the High Court) and criminal courts in setting, interpreting and enforcing environmental law. 22 Environmental Permits

2.1 When is an environmental permit required, and may 1.2 What approach do such agencies/bodies take to environmental permits be transferred from one person to the enforcement of environmental law? another?

Compliance monitoring and enforcement is undertaken Environmental permits are required for most activities and are primarily by NEMA which can issue administrative sanctions to be taken out before the commencement of the activity. For and institute criminal proceedings against offenders. In addi- example, different permits are required for effluent discharge, tion to undertaking inspections, NEMA has the power to air emissions, waste management, manufacture, importation and suspend or revoke licences, to issue closure and/or improvement export of controlled substances and access permits for access

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to genetic resources. The statute, under which the licence or 32 Waste permit is issued, makes provisions for whether or not the licence or permit is transferable. For example, an EIA licence is required before the financing, 3.1 How is waste defined and do certain categories of commencement, execution or carrying out of the projects set waste involve additional duties or controls? out in Schedule 2 of EMCA. These include urban development projects, mining, processing and manufacturing, changes EMCA defines waste as including any matter whether liquid, in land use and agricultural projects. In this case, the statute solid, gaseous or radioactive, which is discharged, emitted or provides that EIA licences may be transferred by the holder to deposited in the environment in such volume, composition or another person only in respect of the project in relation to which manner likely to cause an alteration of the environment and such licence was issued. Where an EIA licence is transferred, any matter prescribed to be waste. The Waste Management the person to whom it is transferred and the person transferring Regulations of 2006 break down this definition by further segre- are to jointly notify the Director-General of NEMA in writing gating waste into biodegradable, domestic, industrial and radio- of the transfer, not later than 30 days after the transfer. active waste. The person whose activities result in the production of waste, or who is in possession or control of the waste, bears the obligation to dispose of the waste in accordance with 2.2 What rights are there to appeal against the the provisions of law. Additional controls are imposed of the decision of an environmental regulator not to grant an environmental permit or in respect of the conditions treatment of hazardous and biomedical waste. contained in an environmental permit? 3.2 To what extent is a producer of waste allowed Any person aggrieved by a decision or a refusal to grant a permit to store and/or dispose of it on the site where it was or licence may lodge an appeal with the National Environment produced? Tribunal within 60 days of the decision. Appeals from decisions of the Tribunal lie with the Environment and Land Court. As a general principle, the production of waste is to be mini- Aggrieved parties can also institute judicial review proceed- mised by the adoption of cleaner production methods, treat- ings under the Fair Administration Act, 2015; however, this is ment, reclamation and recycling. Producers of industrial waste subject to the exhaustion of other appeal or review mechanisms. are required to treat waste in a waste treatment facility prior to disposal. Generators of hazardous and biomedical waste are also required to treat hazardous or biomedical waste in accord- 2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly ance with prescribed standards before disposal. The storage of polluting industries or other installations/projects? biomedical waste above temperatures of 0° for more than seven days requires authorisation. A permit would be required for the operation of a waste disposal facility or site. EIAs are required for projects listed in Schedule 2 of EMCA. The assessment process depends on the project risk categorisation. Low and medium risk projects are subject to a two-stage process 3.3 Do producers of waste retain any residual liability in which a summary project report is first submitted to NEMA in respect of the waste where they have transferred it for review. If the project is deemed not to have significant adverse to another person for disposal/treatment off-site (e.g. environmental impact, an approval to proceed with the project is if the transferee/ultimate disposer goes bankrupt/ disappears)? issued. If approval is not issued, a further comprehensive project report is to be prepared. If the comprehensive project report is approved, an EIA Licence is issued. If not approved, an EIA It is possible for waste generators to outsource waste disposal study is to be undertaken. For all projects categorised as high risk, to third party waste disposal facilities. In such instances, the EIA studies are a prerequisite to the issuance of an EIA Licence. obligation to comply with environmental standards lies with the Projects are required to undertake regular environmental operators of waste disposal sites. audits. The first audit is to be done within 12 months after the commencement of operations and in not more than 24 months 3.4 To what extent do waste producers have after completion of the project by an environmental auditor. obligations regarding the take-back and recovery of their In addition to this, project proponents are required to conduct waste? self-audits at regular intervals. NEMA is also authorised to carry out control audits whenever the Authority deems it neces- There is currently no law in place governing the mandatory take- sary to check compliance with the environmental parameters set back and recovery of waste by producers. The draft Sustainable for the project or to verify self-auditing reports. Waste Management Bill 2019 introduces take back obligations in respect of products and packaging which would have nega- 2.4 What enforcement powers do environmental tive impacts on the environment. The Bill proposes the making regulators have in connection with the violation of of regulations by the CS to define the affected products and permits? packaging and to operationalise the scheme. The Bill is yet to be enacted. In practice, however, following the ban on plastic NEMA has the power to suspend, revoke or cancel a licence bags effected in Kenya in 2017, manufacturers and importers for a violation of its conditions. It can also issue restorative of primary industrial packaging and garbage bin liners which orders requiring violators to take or cease certain actions, or were exempted from the ban are required to apply for clear- to restore an area or pay compensation for damage. Under ance certificates from NEMA to continue operating. Prior to most environmental statutes, violations of the conditions of a receiving a clearance certificate, the applicants need to confirm permit or licence are criminal offences attracting either custo- that they have put measures in place for take back schemes/ dial sentences or fines or a combination of both. extended producer responsibility schemes.

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42 Liabilities 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? 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? The buyer in a share sale generally acquires the liabilities of the seller in the target company. In an asset sale, the general rule is that the buyer will acquire only the assets of the target Breaches of environmental laws and/or permits can attract both company without the liabilities. However, where the buyer is criminal and civil sanctions. Criminal sanctions take the form also acquiring the business of the target company, the liabili- of custodial sentences or fines or a combination of both. The ties of the target company may be deemed to have also been length of the sentence and the size of the fine vary for different transferred to the buyer pursuant to the Transfer of Business breaches. Indicatively, the fine for pollution is a minimum of Act notwithstanding any agreement to the contrary between the KShs 2 million and a maximum of KShs 5 million. Equipment parties. It is possible to limit the acquisition of such liability and other plant and machinery used in the commission of the by publication of a notice prescribed by that Act. In certain offence may also be forfeited to the state. instances, the regulations made under EMCA provide that the In a civil suit, the range of possible orders that can be made buyer and the seller remain liable for all liabilities in respect of include orders for compensation to affected parties as well as a transferred licence, but the seller is not liable for future liabili- the payment of the cost of the loss of beneficial use to affected ties after the licence transfer is approved. parties. The court can also issue orders requiring restoration of the affected area. Claims for breaches of constitutional rights and under tort law can give rise to additional awards of damages. 4.5 To what extent may lenders be liable for Courts will typically apply common law principles including environmental wrongdoing and/or remediation costs? those on nuisance in determining tortious claims. The rule in Rylands v Fletcher establishing strict liability for damage caused by Lenders are not liable for their debtor’s environmental wrong- the escape of a substance into another party’s land is well estab- doing, though there may be instances where this arises, for lished in Kenyan jurisprudence. example where lenders exercise their step-in rights and take on Possible defences include force majeure or contributing actions the project personally. of the affected party. The Supreme Court in Kenya Wildlife Service v Rift Valley Agricultural Contractors Limited [2018] eKLR found the 52 Contaminated Land lack of insurance to cover damage by wildlife to be contributory negligence apportioned to the complainant and reducing the loss recoverable for the damage to crops. The Supreme Court further 5.1 What is the approach to liability for contamination (including historic contamination) of soil or groundwater? made recommendation that the legislature considers the need for parties, likely to be similarly affected, to take out insurance. The overarching principle on liability is the polluter-pays principle. EMCA, and the various regulations issued under it, prescribe 4.2 Can an operator be liable for environmental mandatory reporting obligations for defined polluting discharges damage notwithstanding that the polluting activity is and emissions such as oil and water mixtures and air pollutants. operated within permit limits? There is an overarching obligation not to pollute the environment and to mitigate the impacts of activities that could result in pollution. EMCA specifically provides that an EIA licence is no defence The owners and operators of undertakings likely to have to civil and criminal action arising from the execution, manage- adverse environmental effects when environmental laws are ment or operation of a project. breached, may be required to deposit bonds with NEMA as security for compliance. Non-compliance could result in the 4.3 Can directors and officers of corporations attract confiscation of such bonds. The Environment Management personal liabilities for environmental wrongdoing, and and Co-Ordination Draft (Deposit Bonds) Regulations, 2014 to what extent may they get insurance or rely on other intended to operationalise these provisions and have yet to be indemnity protection in respect of such liabilities? effected. Notably, the draft regulations contain a provision proposing to limit the liabilities of a transferor of a facility to Directors and officers can be found criminally liable for acts matters occurring before the transfer. of the corporation where it is shown that they had knowledge of the commission of the offence and did not exercise due dili- 5.2 How is liability allocated where more than one gence, efficiency and economy to ensure compliance with provi- person is responsible for the contamination? sions of law. Employers and principals can also be held criminally liable for the acts of their employees unless the employer or Liability rests with the polluter. Common law principles on principal proves that the offence was committed against express actions in tort with multiple tortfeasors are applied in respect or standing directions. of liability. Apportionment of liability would be subject to the Subject to Sections 194, 195 and 196 of the Companies discretion of the adjudicating body. Act 2015, directors’ and officers’ insurance can be procured. However, the Companies Act deems void any third party indemnities that purport to cover: (i) fines imposed in crim- 5.3 If a programme of environmental remediation inal proceedings; (ii) penalties for non-compliance with regu- is “agreed” with an environmental regulator, can the latory requirements; and (iii) liabilities incurred in defending regulator come back and require additional works or can criminal proceedings in which the director is convicted or in a third party challenge the agreement? civil proceedings brought by the company in which judgment is entered against the director. An environmental restoration order continues to apply to the

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activity in respect of which it was served notwithstanding that improvement orders which may include orders to cease defined it has been complied with. Thus, NEMA can require further activities and to undertake remedial action. A warrant would works provided they concern the activity upon which the order be required for the arrest of any person suspected of commit- was served. ting an offence. Inspectors are to be assisted by police officers As the constitutional right to a clean and healthy environment to undertake arrests. can be enforced by third parties, irrespective of whether the harm is actual or threatened, it is possible that third parties could 72 Reporting / Disclosure Obligations institute a petition to challenge a restoration order by NEMA or to seek the issue of restoration orders by the Environment and 7.1 If pollution is found on a site, or discovered Land Court. to be migrating off-site, must it be disclosed to an environmental regulator or potentially affected third 5.4 Does a person have a private right of action to parties? seek contribution from a previous owner or occupier of contaminated land when that owner caused, in whole or EMCA, as well as the regulations issued under it, requires the in part, contamination; and to what extent is it possible reporting of prescribed pollution events which include the for a polluter to transfer the risk of contaminated land liability to a purchaser? discharge of hazardous substances, chemicals, oils or mixtures containing oil and excess emissions into the air. Further, conditions of licences may impose obligations to report any pollution As observed above, a private party can apply to court for the incidents or accidents. Such reporting is to the regulator and it issuance of restoration orders against a polluter and, in this is prudent to also notify adjoining land owners or occupiers if sense, a purchaser could seek restitution from the previous there are health risks or a risk of property damage. owner. Notably, as a general principal of Kenyan land law, a buyer is deemed to have notice of patent defects in a property and the vendor is required to deliver the property as described 7.2 When and under what circumstances does a person in the contract for sale. A purchaser can, however, recover have an affirmative obligation to investigate land for contamination? damages for misrepresentation or mis-description which would provide an additional avenue for the purchaser to seek restitution for contaminated land. Project owners/operators are required to undertake regular environmental audits, with the first audit to be done within 12 months after the commencement of operations and not more 5.5 Does the government have authority to obtain from than 24 months of completion of the project by an environ- a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers? mental auditor. Prior to this, investigations are also required to be done while preparing comprehensive project reports and when undertaking environmental impact assessment studies. In NEMA can, under a restoration order, require the payment of addition, the criminalisation of pollution can be seen as creating compensation for the restoration of polluted land which may an obligation to monitor the impact of any activities for their include the replanting of trees and other flora and fauna, and likelihood to result in pollution on an ongoing basis. restoration of geological, archaeological or historical features. Penalties may be imposed for a failure to comply. Further, NEMA may confiscate a deposit bond where a depositor 7.3 To what extent is it necessary to disclose breaches environmental law. environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover transactions? 62 Powers of Regulators While there is no express statutory requirement for such disclo- 6.1 What powers do environmental regulators have to sure, a seller’s failure to notify a purchaser of environmental require production of documents, take samples, conduct problems that they are aware of could be deemed as a misrep- site inspections, interview employees, etc.? resentation. Typically, in share or asset sales, extensive warranties, representations and indemnities will be required by the NEMA has broad powers to obtain information both in the purchasers. The sellers would make disclosures to limit the licensing process and in enforcement activities. Environmental possible liability under such warranties and representations. inspectors have the power, without a warrant to: (i) enter any premises and make examinations and enquiries; (ii) require the 82 General production of, inspect, examine and copy licences, registers, records and other documents; (iii) carry out periodic inspections of all establishments and undertakings engaged in activ- 8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment- ities that are likely to have significant impact on the environ- related liabilities, and does making a payment to another ment; (iv) seize plant and equipment believed to have been used person under an indemnity in respect of a matter (e.g. in the commission of an offence; and (v) install any equipment remediation) discharge the indemnifier’s potential for purposes of monitoring compliance. With the authorisa- liability for that matter? tion of the NEMA Director General, inspectors may also: (i) issue orders requiring the closure of any manufacturing plant Parties can, through contractual arrangements, use indemni- or other establishment or undertaking, which pollutes, or is ties to limit liability in respect of environment related liabili- likely to pollute, the environment and requiring the owner or ties, but this does not insulate a party from regulatory or crim- operator to undertake specified remedial action; and (ii) issue inal liability.

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8.2 Is it possible to shelter environmental liabilities off However, the Constitution of Kenya (Protection of Rights and balance sheet, and can a company be dissolved in order Fundamental Freedoms) Practice and Procedure Rules, 2013 to escape environmental liabilities? require the court in exercising its discretion to take measures to protect access to courts. In public interest cases, the courts will A company will be expected to comply with generally accepted often not award costs. accounting principles and to disclose environmental liabilities or contingencies in its financial statements or related notes. The 92 Emissions Trading and Climate Change dissolution of a company may not necessarily eliminate environmental liability because criminal or other administrative proceed- 9.1 What emissions trading schemes are in operation ings could be taken against a person who had charge, management in your jurisdiction and how is the emissions trading or control of the company, including its directors and officers. market developing there?

8.3 Can a person who holds shares in a company There are no emission trading schemes set up in Kenya. be held liable for breaches of environmental law and/ However, as a party to the United Nations Framework or pollution caused by the company, and can a parent Convention on Climate Change, the Kyoto Protocol and the company be sued in its national court for pollution Paris Agreement, the country has been actively involved in the caused by a foreign subsidiary/affiliate? development of carbon credits for both mandatory and voluntary international schemes. Kenya’s National Climate Change A shareholder is generally not liable for the breaches of environ- Action Plan (NCCAP) (2018–2022) aims to enhance Kenya’s mental law by the company. The court can pierce the corporate participation in the international carbon markets, the generation veil in exceptional circumstances such as in cases of fraud or of carbon units and access to carbon finance, whilst the Climate where corporate structures were used as a sham. Finance Policy, encourages the generation and sale of carbon credits, putting a price on carbon, and establishing an emissions trading system. However, the policy clarifies that a domestic 8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters? cap and trade system is not likely in the foreseeable future.

The Access to Information Act, 2016 (AtIA) protects individ- 9.2 Aside from the emissions trading schemes uals who make disclosures in the public interest from penalties, mentioned in question 9.1 above, is there any other requirement to monitor and report greenhouse gas reprisals, discrimination or other adverse treatment in relation emissions? to their employment, profession or membership of any organisation. A disclosure made to a law enforcement agency or an appropriate public entity such as NEMA is deemed to be in the The Environmental Management and Co-ordination (Air Quality) public interest. Disclosures envisaged under AtIA include infor- Regulations, 2014 require the owners or operators of plants to mation on violations of law and dangers to public health, safety install air pollution control technologies to mitigate greenhouse and the environment. A witness protection programme run gases (GHG) and to also monitor emissions. Further, NEMA is under the Witness Protection Act provides additional protec- mandated under the Climate Change Act, 2016 to monitor, regu- tion for witnesses in criminal proceedings in or outside Kenya. late and enforce compliance on levels of GHG emissions as set by the Climate Change Council. Regulations under the Climate Change Act clarifying the exact responsibilities of private entities 8.5 Are group or “class” actions available for pursuing with regards to greenhouse gases as envisioned under the Climate environmental claims, and are penal or exemplary Change Act are, however, not yet developed. damages available?

Constitutionally, a wide range of persons can institute suits to 9.3 What is the overall policy approach to climate change regulation in your jurisdiction? protect their right to a clean and healthy environment including persons acting as a member of, or in the interest of, a group or class of persons. The scope of redress available for breaches The overall approach to climate change regulation in Kenya of constitutional rights has been interpreted by the courts quite is based on the goal of pursuing low carbon climate resilient broadly with some considerations being the appropriateness development. In the discharge of their obligations as concerns of the remedy and the pursuit of justice. Exemplary damages climate change regulation, public authorities are also bound by are available as a remedy. The award of exemplary damages is national values and principles set out in the Constitution, such discretionary and may be made: (i) in cases of oppressive, arbi- as equity, equality and public participation. trary or unconstitutional action by the servants of the govern- The low carbon climate resilient approach is expounded upon ment; (ii) where the defendant’s conduct has been calculated to in Kenya’s nationally determined contribution (NDC) which make a profit for himself which may well exceed the compensa- aims to reduce greenhouse gas emissions by 30% by 2030 relation payable to the plaintiff; and (iii) where exemplary damages tive to the BAU scenario of 143 MtCO2eq, and the country is are expressly authorised by statute. currently in the process of carrying out the first review of the NDC. The NDC, however, clarifies that adaptation is Kenya’s priority. The NCCAP is emphatic that while reducing GHG 8.6 Do individuals or public interest groups benefit emissions is critical, mitigation actions that have adaptation from any exemption from liability to pay costs when pursuing environmental litigation? and sustainable development benefits are the ones to prioritise. Kenya also operates a climate change mainstreaming approach where climate change is mainstreamed in all sectors and at all Costs are awarded at the discretion of the courts. The general levels of government. rule is that costs are awarded to the successful litigant.

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

10.1 What is the experience of asbestos litigation in your jurisdiction? Environmental insurance claims would be settled in accordance with the terms of the policies. As a general principle, the court will not re-write the terms of a contract but may repudiate The Environmental Management and Co-ordination, (Waste unconscionable bargains. Data in the Insurance Regulatory Management Regulations), 2006 designate waste containing Authority’s Annual Insurance Industry Report 2018 suggests asbestos in the form of dust or fibres to be hazardous waste. Such that environmental impairment insurance accounts for a limited waste is thus subject to the handling and disposal regime set out in market segment. the Regulations. NEMA also published the National Guidelines on Safe Management and Disposal of Asbestos which provides additional guidance on practices to be adopted in the handling, 122 Updates transportation and disposal of asbestos. There are some suits in respect of asbestos pollution that have been filed and determined 12.1 Please provide, in no more than 300 words, a in Kenya, however, litigation in this area has not been high profile. summary of any new cases, trends and developments in environment law in your jurisdiction.

10.2 What are the duties of owners/occupiers of Following the ban on plastic bags in Kenya in 2017, plastic waste premises in relation to asbestos on-site? management has been evolving rapidly in Kenya. Private sector initiatives have been launched to encourage voluntary extended The use of asbestos is not banned in Kenya and roofing materials producer responsibility through take-back schemes, with the often contain asbestos. Disputes relating to asbestos pollution launch of PETCO Kenya as a producer responsibility organisa- would be adjudicated similarly to other environmental pollution tion for PET bottles and products. Progress has also been made disputes. As waste containing asbestos dust or fibres are designated in the law-making process with steps taken towards the finalisa- as hazardous waste, under the Waste Management Regulations, the tion of a National Sustainable Waste Management Policy and the handling and disposal of any such waste would be subject to the draft Sustainable Waste Management Bill 2019. It is anticipated Regulations as well as the NEMA Guidelines on Safe Management that the draft bill will begin the process to enactment soon. and Disposal of Asbestos. Obligations under the Regulations Further, in 2019, a ban on plastic bottles, straws and related include a requirement that the generators of hazardous waste label products within the protected areas in Kenya’s national parks, the containers for storing or packaging such waste with warning national reserves, conservation areas and any other wildlife and caution statements in both English and Kiswahili. NEMA protected areas was declared, effective from 4th June 2020. may also require the generators of hazardous waste to procure Fiscal incentives such as a reduced corporate tax of 15% for the insurance policies to cover the risks caused by the waste. first five years and VAT exemption for the supply of machinery and equipment used in constructing plastic recycling plants as 112 Environmental Insurance Liabilities well as services offered to these plants, have also been introduced to incentivise the recycling of plastics. 11.1 What types of environmental insurance are Notably also, the Environment and Land Court and the available in the market, and how big a role does National Environment Tribunal have been signalling a need for environmental risks insurance play in your jurisdiction? greater care in complying with the procedural and substantive requirements in licensing procedures and in undertaking envi- Environmental insurance policies are more commonly seen in agri- ronmental impact assessment studies. In 2019, The National culture where there are a number of state and privately-run insur- Environment Tribunal in Save Lamu & 5 others v National ance programmes and policies aimed at providing buffers to farmers Environmental Management Authority (NEMA) & another [2019] from changing climatic conditions and environmental damage. eKLR revoked an EIA Licence for what was to be Kenya’s first These include the Kenya Agricultural Insurance Program (KAIP) coal plant for, among other reasons, a failure to undertake effec- for crops and the Kenya Livestock Insurance Program (KLIP). All tive public participation as required by law. risk insurance policies often cover natural hazards. Some private insurance companies also offer environmental impairment policies covering third party harm and environmental damage as well as the clean-up costs for pollution. Further, NEMA may require the generators and exporters of hazardous waste to procure insurance to cover the risks caused by such waste.

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Clarice Wambua is a partner at Kieti Advocates LLP and leads the firm’s work on Environment and Climate Change. She has expertise in a broad range of areas in environmental law and a keen interest in research and regulatory compliance. She has recently been involved in a study on carbon pricing in Sub-Saharan Africa, advising on best practices for extended producer responsibility schemes to manage post-consumer plastic packaging waste in Kenya, and the development of a toolkit on gender integration in climate change projects, plans and policies within pastoral communities in Kenya’s arid and semi-arid regions. Clarice is a Commonwealth, Lord Hope, John Fitzsimmons and Strathclyde International Scholar. She holds an LL.M. (Distinction) in Climate Change Law and Policy from the University of Strathclyde, an MSc (Distinction) in Africa and International Development from the University of Edinburgh, and an LL.B. (Honours) from the University of Nairobi.

Kieti Advocates LLP Tel: +254 710 560 114 / +254 204 409 918 CVS Plaza Email: [email protected] Lenana Road URL: www.kieti.co.ke P.O. Box 22602-00505 Nairobi Kenya

Kieti Advocates is a leading boutique law firm in Nairobi, Kenya with a dedicated environment and climate change practice. We provide the specialised and personalised legal services of a lean and agile team at the highest quality, and have advised both public and private sector entities on environmental law. Our environment and climate change department provides advice to diverse clients on a wide-range of subjects in the field of environment and climate change, and supports the firm’s corporate and commercial department. www.kieti.co.ke

Environment & Climate Change Law 2020 142 Chapter 20 Mexico Mexico

LAER Abogados, S.C. Luis Alberto Esparza Romero

12 Environmental Policy and its 1.2 What approach do such agencies/bodies take to the enforcement of environmental law? Enforcement

At the Federal level, PROFEPA is authorised to conduct admin- 1.1 What is the basis of environmental policy in your jurisdiction and which agencies/bodies administer and istrative acts identified as Inspection and Surveillance Visits, enforce environmental law? which are implemented through an inspection proceeding with the aim of determining the extent to which a person complies with the applicable environmental legislation. Mexican environmental law is based on a separation-of-powers Authorities are bound to comply with the principle of due system, whose legal foundation is foreseen at the constitu- process to be followed by authorities to avoid acts of distur- tional level and by the General Law of Ecological Balance and bance. PROFEPA is bound to serve a written order indicating Environmental Protection (“LGEEPA”, its acronym in Spanish) that an inspection act will take place at the corresponding and by the legislation of the States as well as their corresponding facility; the order must provide, in an accurate and non-generic Regulations. The normative framework is complemented by way, the visit’s purposes, areas and the environmental vectors International Treaties, the case law of the Inter-American Court which are the object of inspection. If an irregularity is detected, of Human Rights, Regimes and Mexican Official Standards. PROFEPA is entitled to initiate an Administrative Procedure The legal foundation for environmental protection is fore- that may conclude with the imposition of administrative sanc- seen in article 4 of the Mexican Constitution, which imposes on tions, which can be challenged either by an appeal for review or the Mexican State the obligation to guarantee to all persons a before an Administrative Justice Court and, at the final stage, healthy environment for their development and well-being. The through an Amparo Action before Federal Courts. constitution also foresees the international environmental prin- Another faculty vested in PROFEPA is the ability to impose ciple, establishing that damage and environmental degradation administrative penalties derived from a procedure known as will incur responsibility for those who provoke it in terms of the Popular Complaint, by the terms of which any interested party applicable Law. may file an indictment requesting the intervention of said The Mexican environmental protection system arises from the authority to protect the environment. In these cases, PROFEPA distribution of powers. Environmental protection is considered must comply with the Precautionary Principle. a concurrent power that must be exercised by the Federation, Additionally, this entity has been empowered to initiate States and Municipalities. Articles 5 and 8 of LGEEPA estab- actions claiming responsibility for environmental damage, or to lish exclusive jurisdiction vested in each level of government. initiate class actions. There are offices in charge of environmental protection at each level of government. In the Federal sphere, the design of the environmental policy and its instruments lie in the Ministry 1.3 To what extent are public authorities required to of Environment and Natural Resources (“SEMARNAT”, its provide environment-related information to interested acronym in Spanish). An agency in charge of monitoring and persons (including members of the public)? sanctioning compliance with environmental legislation and acts issued by SEMARNAT has been endowed with the rank The authorities of the three levels of government are required, of Federal Attorney Office for Protection of Environment by the Transparency and Access to Public Information Federal (“PROFEPA”, its acronym in Spanish). At the State level, this Act, to provide all the information generated, obtained or in scheme is duplicated. possession of said authorities; however, it is essential to note Within the framework of the 2014 Energy Reform, an agency that certain information will remain classified or reserved, under SEMARNAT’s scope (the Agency for Energy and so it cannot be disclosed to interested parties, due to it being Environmental Security) has exclusive competence in oil and either confidential information, intellectual property, a matter gas activities and is entitled to issue and create environmental of public interest or national security. A National Online policy instruments within its jurisdiction, including inspection, Transparency Platform has been created, through which any surveillance and penalties. person can request public information.

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22 Environmental Permits 2.4 What enforcement powers do environmental regulators have in connection with the violation of permits? 2.1 When is an environmental permit required, and may environmental permits be transferred from one person to another? PROFEPA is entitled to impose control measures to contain damages which stem from an activity contrary to the permits, as well as to impose penalties provided by law, such as: an Mexican environmental policy contains mechanisms which economic fine; total or partial closure; administrative arrest establish the obligation to obtain authorisations, concessions or for up to 36 hours; confiscation of instruments, products or permits. In most cases, the processing of policy is driven by subprojects; and/or the suspension or revocation of authorisa- the governing law, by which a private individual is entitled to tions. Sanctions will result from the inspection, monitoring and perform or exercise a regulated activity. penalty procedures. Prior to the issuance of the authorisation, concession or permit, compliance with various requirements established by the Law, Regulation, Standard or Agreement that governs it will be required. 32 Waste In most cases, the Law that governs authorisations, concessions or permits allows the transmission of the rights associated 3.1 How is waste defined and do certain categories of to these administrative acts, through a transfer-of-rights proce- waste involve additional duties or controls? dure. There are few cases in which the Law has established the impossibility of making the corresponding transfer to other Waste is defined as a material or product discarded by its owner persons. Transmission procedures are relatively simple, and, in or possessor, and that is found in a solid or semi-solid state, or is specific scenarios, a mere notice to the responsible entity will be a liquid or gas contained in containers or tanks, and that can be required to consider the transmission as performed; however, susceptible to appraisal, or is required to be subjected to treat- the general rule is that, prior to the transfer-of-rights authorisa- ment or final disposal in accordance with LGPGIR. tion, it is necessary to verify the technical and legal capacity of Waste is classified into three categories: hazardous; special the transferees in order to credit the legal transmission of rights. handling; and solid urban. The first is under the jurisdiction of the Federation, while the second and third are the responsi- 2.2 What rights are there to appeal against the bility of the States and Municipalities, respectively. Taking into decision of an environmental regulator not to grant an consideration both the yearly generated volume and the type of environmental permit or in respect of the conditions waste, the generator is bound to specific obligations, including: contained in an environmental permit? registry as a generator; monitoring the generation; specific considerations for identification and storage; and, in specific In all cases, people are empowered to challenge (partially or cases, the need to prepare and submit a Management Plan. totally) the resolution issued by environmental authorities. It should be noted that, unlike many countries, in Mexico, the Notwithstanding, the Case-Law issued by Federal Courts had criterion of shared responsibility is in contrast to the extended ruled on matters associated to legitimate legal concern, regarding responsibility related to the generation and management of those specific conditions to be satisfied in order to determine special handling waste and solid urban waste. whether or not a person is entitled to initiate administrative or jurisdictional remedy. Firstly, an appeal for a Review must 3.2 To what extent is a producer of waste allowed be filed before the issuing authority; the Law also foresees the to store and/or dispose of it on the site where it was faculty to challenge before a Federal Court of Administrative produced? Justice. The Amparo Action is the last stage to obtain remedy. As regards hazardous waste, LGPGIR establishes that it may be 2.3 Is it necessary to conduct environmental audits stored in the generation site for a period of up to six months. or environmental impact assessments for particularly The regulation of this Law states that an extension of up to six polluting industries or other installations/projects? months may be requested. State legislation and municipal regulations may establish specific guidelines for the storage of waste. Legally speaking, there is no need to determine the existence of pollution in a property by a phase I or phase II assessment; 3.3 Do producers of waste retain any residual liability nevertheless, it is becoming common practice. As it is estab- in respect of the waste where they have transferred it lished by the General Law for Prevention and Integral Handling to another person for disposal/treatment off-site (e.g. of Waste (“LGPGIR”, its acronym in Spanish), prior to the if the transferee/ultimate disposer goes bankrupt/ sale of a property, the owner must either notify the buyer of disappears)? the existence of pollution within the public deed or obtain an authorisation from SEMARNAT to undertake the transmission The hazardous waste generator is responsible from the cradle of the property. Either way will determine who will be respon- to the grave, as referred to in LGPGIR. The generator can hire sible for remediation. companies to provide services of management and final disposal The assumption of obtaining the authorisation from of hazardous waste, who from the moment of its delivery, will be SEMARNAT stems from a land polluted with hazardous waste, responsible for their operations, which remain independent of while the inclusion of the aforementioned notification of the that which the generator preserves. If the hired companies are pollution (in the public deed) will result from the presence of not authorised by SEMARNAT for said activities, generators hazardous materials. The presence of pollution in a property will be responsible for the damages caused by their management. incurs the liability to have the site approved, for which an initial According to LGPGIR, those interested in providing services sampling and the obtainment of authorisation to remediate are of transportation, storage, reuse, recycling, treatment and final necessary. disposal of waste must offer a guarantee that covers the damages

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that may be caused during the provision of the authorised established. Due to this responsibility, the damage repair will service, and at the end of it. By injunction of law, the responsi- always be sought, and when this is impossible, the payment of an bility of the service providers will be extended for 20 years after economic sanction; this type of procedure is taken in the form the closing of their operations. of a trial before Federal civil courts. In sum, although it is true that the generator is respon- These responsibilities are not mutually exclusive; however, in sible from the cradle to the grave (due to the existence of an the case that they result from the Liability for Environmental objective liability), the subjects authorised to provide manage- Damage, the infliction of the others may attenuate or lower the ment services must have insurance to support their activities, amount or type of sanction. extending the same for a period up to 20 years. Additionally, under the concept of environmental liability 4.2 Can an operator be liable for environmental foreseen by the Federal Law of said matter, the persons who damage notwithstanding that the polluting activity is avail themselves of a third party authorised for the confinement operated within permit limits? or final disposal activities will not be jointly responsible for the damages generated by these, if those are the result of a chance We cannot speak of the existence of environmental damage, event or force majeure. when acting within the boundaries established in the Official Standards or any other element that ascertains up to which levels 3.4 To what extent do waste producers have an activity can be supported by the environmental system where obligations regarding the take-back and recovery of their it is located and develops. In the same vein, it is established waste? that environmental damage will not legally exist, even when there are damages, modifications or deterioration, if it is verified that Regarding this point, we are in the presence of solid urban and the permissible limits provided by environmental laws have not special management waste. As defined above, in Mexico there been exceeded. is a shared and not extended responsibility scheme in these matters. There is a social co-responsibility that requires the 4.3 Can directors and officers of corporations attract joint, coordinated and differentiated participation of producers, personal liabilities for environmental wrongdoing, and distributors, consumers and users of by-products. to what extent may they get insurance or rely on other From a legal standpoint, generators are not obliged to recover indemnity protection in respect of such liabilities? or collect their waste; however, LGPGIR establishes that one of the objects of the relevant policy is valuation (appraisal, evalua- Any person who, through action or omission, directly or tion) whose objective is to recover the value or the calorific value indirectly causes environmental damage, will be bound to of the materials that make up the waste for its reincorporation repair the damage and, when not possible, to pay an environ- into productive processes. mental redress. Legal entities are responsible for the environ- Valorisation and shared responsibility principles exist through mental damage caused by their representatives, administrators, the Management Plans, whose purpose is to minimise the managers, directors, employees (either by omission or when generation and maximise the valuation. The Mexican Official ordering or consenting to the performance of harmful conduct). Standard NOM-161-SEMARNAT-2013 establishes the elements By the same token, people who use a third party to carry out and procedures for the formulation of these types of instrument, environmental damage will be jointly and severally liable for in which persons that are bound to formulate it must incorpo- the damages generated. In criminal law, the types of activity rate the identification and the potential use or exploitation of the associated with crimes against the environment and environ- waste in other activities such as reduction of waste generation, mental management, are attributable to the people who order including take-back or recovery of the waste. or authorise the commission of the activity constituting a criminal offence. 42 Liabilities Emanating from various environmental laws, there is an obligation to have environmental insurance, depending on the regu- 4.1 What types of liabilities can arise where there is a lated activity; obviously this can be used to respond in case of breach of environmental laws and/or permits, and what environmental damage. Criminal matters are dealt with sepa- defences are typically available? rately, for which the best insurance is the prevention of ordering or authorising activities contrary to environmental legislation. Responsibility can be administrative, civil, criminal and environmental. Administrative responsibility derives from the faculty 4.4 What are the different implications from an that PROFEPA has to impose penalties, which can be sought environmental liability perspective of a share sale on the through the Appeal for Review, the Contentious Administrative one hand and an asset purchase on the other? Judgment and the Amparo Action. Criminal responsibility arises from the commission of the environmental crimes stated within An operation associated with a sale of shares implies the assump- the Federal Penal Code; the defence occurs through an oral tion of past, present and future responsibility for the activity, trial. Civil liability is regulated by LGEEPA and by the Civil while the sale of assets entails an obligation on the acquirer to Federal Code; it is a system that seeks the repair of the damage, obtain the relevant authorisations either through a transfer of returning the thing to the state in which it was before the effect rights or permits, or through the processing of new authorisa- and, in the case of it not being possible, the payment of damages; tions. There may be a transmission of responsibility regarding however, the above could be proven by demonstrating that there the obligation to remediate a polluted property or even the obli- is an effect on the person or his patrimony, derived from envi- gation to carry out said activities, always maintaining the right to ronmental damage. sue in civil procedures for the recovery of remediation expenses With the creation of the Environmental Responsibility from the person who has caused the damage. Federal Law, a scheme that does not seek to repair the property of the affected party, but rather to restore the environment, was

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4.5 To what extent may lenders be liable for 5.4 Does a person have a private right of action to environmental wrongdoing and/or remediation costs? 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 In terms of LGPGIR, the owner and possessor are jointly and for a polluter to transfer the risk of contaminated land severally liable for the remediation of a polluted property, with liability to a purchaser? the right to obtain remuneration for the expenses incurred due to the remediation work. As mentioned before, LGPGIR empowers the person in charge of remediation to seek the recovery of expenses incurred 52 Contaminated Land on restoration activities. Indeed, the authorisation from SEMARNAT to conduct the remediation of polluted proper- 5.1 What is the approach to liability for contamination ties will contain the declaration of the person who will imple- (including historic contamination) of soil or ment the remediation of the property – a situation that should groundwater? be included in the sale’s deed.

When there is pollution of the soil and remediation actions must 5.5 Does the government have authority to obtain from be taken, an authorisation granted by SEMARNAT for a reme- a polluter, monetary damages for aesthetic harms to diation plan must be obtained prior to realising any activity. public assets, e.g. rivers? As defined by Mexican law, pollution can derive from an environmental emergency or an environmental liability (historical contamination). If the aesthetic damages transcend such characterisation to In the case of environmental emergencies, PROFEPA must the point of constituting environmental pollution, PROFEPA be notified immediately and imperative measures to prevent the can initiate a procedure of liability for environmental damage; spread of the pollution must be implemented, to subsequently nevertheless, it cannot request monetary damages, but rather the carry out the remediation procedure of the property. In the case repair of the damage or the payment of economic compensation of historical contamination, a characterisation of the contam- destined to an environmental fund. inants should be made and a proposal must be submitted to SEMARNAT, including technology, schedules and restoration 62 Powers of Regulators parameters, which generally must be associated with a Mexican Official Standard (currently there is only one for hydrocarbons 6.1 What powers do environmental regulators have to and another for heavy metals). In the absence of a specific regu- require production of documents, take samples, conduct lation, a risk assessment study will be needed to determine if site inspections, interview employees, etc.? the pollution represents a risk to the environment and human health, while establishing specific remediation levels. Within the inspection visits, the visitor is compelled to provide Regarding water, the pertinent authority (the National Water all the information related to the purpose of the visit, as well Commission) imposes the obligation to repair or compensate for as gather any type of evidence to establish the existence of a environmental damage caused by wastewaters. The procedure violation of environmental legislation. Within the inspection includes removing contaminants and restoring the water body visits and through authorised personnel or through accredited to its baseline condition. Verification Units, samplings may be held to determine compliance with the pertinent limits to which it is bound. 5.2 How is liability allocated where more than one When samplings are to be held, they should be done in accord- person is responsible for the contamination? ance with the Standard Procedures and clearly establish chain- of-custody mechanisms. The responsibility is joint, meaning that the remediation actions may be required from any person involved. The party that 72 Reporting / Disclosure Obligations has carried out the restoration activities may require the other expenses associated with the remediation. The same assump- 7.1 If pollution is found on a site, or discovered tion applies to the case that the previous owner or owners of to be migrating off-site, must it be disclosed to an the property have been responsible for the pollution; by law, the environmental regulator or potentially affected third parties? current owner or possessor will be responsible, safeguarding the right to obtain compensation for the costs incurred through a civil lawsuit. In cases of property transfer, the parties will Yes, migration of pollution must be notified to the environ- define who will be responsible for the remediation. mental authority within the same programme or remediation plan, and must be notified to the third party in order to carry out the samplings and remediation within its premises. If, as a 5.3 If a programme of environmental remediation result of the migration, the third party suffers a loss or impair- is “agreed” with an environmental regulator, can the regulator come back and require additional works or can ment in their property, the latter may request civil remedies for a third party challenge the agreement? damage to their property or their person.

Under Mexican legislation, authorisation must be obtained for 7.2 When and under what circumstances does a person the remediation proposal, which cannot be modified by the have an affirmative obligation to investigate land for authority in terms of its scope. The party in charge of deploying contamination? the remediation can make modifications to the method or to the time within which the parameters must be reached. A third If an environmental emergency arises, or at the time when an act party cannot request the modification of the remediation. of purchase or lease of the property is intended, the foregoing

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generates a baseline that allows a person to establish the extent In the case of the parent company, there is no possibility of suing of his responsibility with respect to the existing contamination them in the national courts, since the Corporate Law establishes in the property. the creation of an autonomous entity with legal personality and its own assets. 7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective 8.4 Are there any laws to protect “whistle-blowers” who purchaser in the context of merger and/or takeover report environmental violations/matters? transactions? Popular complaints can be filed requesting that anonymity be The only specific case foreseen by the Law and its Regulation is that maintained for the person who is presenting the information of transmission of ownership of the property, and should always be that reveals the environmental violation. In this event, there is made known to the purchaser or in the purchaser’s prospectus. no way to determine if a whistle-blower exists. 82 General 8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary 8.1 Is it possible to use an environmental indemnity damages available? 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. Yes, currently there are three types of class actions: “diffuse”; remediation) discharge the indemnifier’s potential “in strict sense”; or “individual homogeneous”. By these, the liability for that matter? respondent is sought to repair the damage, as well as compensation on an individual basis to the members that make up the Currently, the insurance market in Mexico offers coverage for group and, in some cases, a judicial claim for the forced fulfil- historical or current damages; the contract of sale in which the ment of a contract or its rescission, respectively. transfer is agreed may include a payment for environmental Currently there are theories that support the imposition of liability or a reduction in the transaction price due to the impair- exemplary sanctions in order to create dissuasive behaviour ment caused by the existence of pollution on the premises, so (excessive fines, closures or arrest); some decisions issued by the the person receiving the compensation will be the one that faces Supreme Court have resulted in punitive damages. environmental responsibility. 8.6 Do individuals or public interest groups benefit from any exemption from liability to pay costs when 8.2 Is it possible to shelter environmental liabilities off pursuing environmental litigation? balance sheet, and can a company be dissolved in order to escape environmental liabilities? Each party assumes the expenses or costs derived from its In the financial audits of the companies, the Financial actions, as well as the fees of its representatives. In the case of Information Standards must be contemplated. Depending on class actions, the fees are calculated based on a maximum levy; the degree of impact, it will be determined if it is necessary to in the case that an agreement is reached between the parties, make a note in the financial statements, make a reservation to before the issuance of the judgment, the expenses and costs cover the expenses derived from the effect, or carry out the should be included in the negotiations. disclosure of the contingency to partners and shareholders of the company. The principle of the Financial Regulations is to 92 Emissions Trading and Climate Change disclose any type of information that could put at risk the continuity of the company. 9.1 What emissions trading schemes are in operation The obligation to obtain insurance to carry out certain activi- in your jurisdiction and how is the emissions trading ties, and the Law’s provisions that mandate it to remain in force market developing there? for a certain period, as well as its obligations to maintain information, may limit the liquidation of the company to meet its obli- Stemming from the General Law on Climate Change, gations. In some cases, a PROFEPA report is required to deter- SEMARNAT has announced that the carbon market will mine the existence of environmental matters, pending closure. start with a pilot phase on 1 January 2020, which will last for three years. The market will be operated by the Mexican Stock 8.3 Can a person who holds shares in a company Exchange through a voluntary carbon market. be held liable for breaches of environmental law and/ or pollution caused by the company, and can a parent 9.2 Aside from the emissions trading schemes company be sued in its national court for pollution mentioned in question 9.1 above, is there any other caused by a foreign subsidiary/affiliate? requirement to monitor and report greenhouse gas emissions? “Piercing the corporate veil” is not an institution established by Mexican law; however, case law has determined the possibility Yes, the Annual Emissions Inventory requires the annual to use said concept when it is proven that a corporation was reporting of tons of CO2 equivalent. constituted or used with the sole purpose of not complying with its legal obligations; in that case, the responsibility could reach the shareholders.

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9.3 What is the overall policy approach to climate well as insurance for generators of hazardous waste and companies change regulation in your jurisdiction? that perform highly risky activities. Similarly, there is insurance to cover the responsibility derived from the transport of waste. In recent times, it has been taken out more frequently; Mexico has been a participant in the reduction of CO emissions. 2 however, bonds for compliance with the terms and conditions There are 12 regulations that contemplate climate change, with of the authorisations in terms of environmental impact are the an indicative commitment or aspirational goal of reducing CO 2 most relevant. emissions by 22% by 2030 with respect to the baseline.

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

10.1 What is the experience of asbestos litigation in your jurisdiction? The advantage of buying insurance is that it has been used as an element to deal with environmental emergencies quickly; in this Asbestos is managed as Hazardous Materials or Waste; in Mexico context, bonds to ensure compliance with environmental obli- there has been no public health crisis associated with its use. gations have a greater acceptance, since these are issued in the name of the Federal Treasury, with the possibility that they may be demanded by PROFEPA. 10.2 What are the duties of owners/occupiers of premises in relation to asbestos on-site? 122 Updates

Owners/occupiers must comply with Mexican Official Standards 12.1 Please provide, in no more than 300 words, a NOM-125-SSA1-2016 and NOM-010-STPS-2014 which set out summary of any new cases, trends and developments in the sanitary requirements for the process and use of asbestos. environment law in your jurisdiction. Mexico has not ratified Convention 162 of the International Labour Organization on the management of asbestos. Human rights and environmental cases have brought connota- tions of a supralegal protection of life, health and an adequate 112 Environmental Insurance Liabilities environment. The environmental case law in particular stands out, with a special category of protection regarding acts that 11.1 What types of environmental insurance are may occur and from which the responsibility of the person to available in the market, and how big a role does have a forecasting scheme derives. There have been some cases environmental risks insurance play in your jurisdiction? of climate litigation. The Escazú Agreement represents a new paradigm in respect of access to justice over environmental There is insurance against pre-existing and generated environ- losses. Mexico City as well as other states will be initiating a new mental liability as a result of carrying out industrial activities, as paradigm in matters of plastic management, including restrictions in its use.

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Luis Alberto Esparza Romero specialises in Environmental Law and Sustainability. After 12 years in Gonzalez Calvillo, S.C., he has initiated a private practice dedicated to Environmental, Administrative and Regulatory Law (LAER Abogados, S.C.). Mr. Esparza has 20 years of experience and is widely recognised in handling legal matters related to Environmental Impact, Water Law, Waste Management, Soil Contamination, Climate Change and Forestry Law. He is skilled in the design and implementation of compliance strategies. He has been involved in several project finance matters covering environmental legal aspects, and attends to the needs of numerous types of industries and activities in the field of International Environmental Law, providing counsel on the implementation and fulfilment of the Equator Principles. He is experienced in guiding clients towards designing and implementing complex strategies, using administrative law as a tool to meet their needs.

LAER Abogados, S.C. Tel: +52 558 880 7646 Carretera Mexico Toluca 5420, Suite 2203 Email: [email protected] Santa Fe URL: www.laerabogados.com 05330 Cuajimalpa de Morelos Mexico City Mexico

LAER Abogados, S.C. was created from the concern to offer an integral and Emissions to the atmosphere and climate change. non-conventional set of legal services in environmental, administrative and International environmental law. regulatory matters. Our main mission is to help our clients in the identifi- Permits. cation of environmental management needs, by establishing schemes that Environmental audits. Environmental aspects of project finance (specialists in the Equator allow the regularisation of their activities or operations, and implementing Principles and the International Finance Corporation’s Performance measures that prevent or limit the emergence of legal liability derived from Standards on Environmental and Social Responsibility). normative non-compliance; or through the strategic implementation of www.laerabogados.com programmes that allow them to obtain the advantage of a sustainable scheme of feasible implementation. Our portfolio includes the design of methodologies that make feasible the determination of environmental and social risks, for the integration or improvement of an environmental management system. Our services include: Environmental impact. Water. Waste. Soil.

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Netherlands Netherlands

Gaastra attorneys at law André H. Gaastra

12 Environmental Policy and its tot handhaving) applies. Case law provides that, in case of a violation of environmental law, the competent authority must Enforcement take (administrative) enforcement measures, apart from some exceptions, including that the situation can be legalised or that 1.1 What is the basis of environmental policy in your enforcement would be disproportionate, taking into account the jurisdiction and which agencies/bodies administer and interests of the party violating the law in relation to the general enforce environmental law? interest that is served with enforcement. This leads to a quite active approach of the enforcement agencies. The performance According to article 21 of the Netherlands Constitution, of industrial, waste handling and other facilities under environ- government care is focused on the habitability of the country mental law are closely monitored. Next to this, environmental and the protection and improvement of the environment. law can lead to prosecution under criminal law. In view of this, The Environmental Management Act (Wet milieubeheer), the the public prosecutor’s office has instituted a department with Environmental Permitting (General Provisions) Act (Wet specialised prosecutors and support staff. algemene bepalingen omgevingsrecht) and the subordinate decrees and regulations form the general regulatory framework for environ- 1.3 To what extent are public authorities required to mental control, permitting and enforcement. provide environment-related information to interested A significant part of the specific environmental rules that apply persons (including members of the public)? in the Netherlands are established by the European Union and laid down in European Regulations or Directives that are imple- The Aarhus Convention on access to (environmental) infor- mented in Netherlands law by means of reference legislation. mation, public participation in decision-making and access to Some fields of interest are dealt with by specific laws, such as justice in environmental matters in the EU is implemented in the Soil Protection Act (Wet bodembescherming), which deals with soil the Government Information (Public Access) Act (Wet openbaar - pollution and remediation, the Water Act (Waterwet), which deals heid van bestuur). Public authorities must provide environmental with water quality and water quantity control and permits discharge, information on request. The requestor does not need to have a and the Noise Abatement Act (Wet geluidhinder), which deals with the specific quality or title, as anyone is entitled to file a request for prevention of noise pollution. A large legislative operation is on its environmental information. The grounds for denial are limited way which should lead to the integration of all environmental laws to quite specific public and private interests. into one, this being the Environment and Planning Act (Omgevingswet), which is supposed to enter into force in 2021. The subordinate Environment and Planning Regulation (Omgevingsregeling) was 22 Environmental Permits published in the State Gazette on 22 November 2019. Since 2017, environmental law has been administered on 2.1 When is an environmental permit required, and may a national level by the Minister of Infrastructure and Water environmental permits be transferred from one person Management (ministerie van Infrastructuur en Waterstaat) and the to another? Minister of Economical Affairs and Climate (ministerie van Economische Zaken en Klimaat). Most of the permitting and envi- In the past decade, the legislator has transferred some notable ronmental enforcement is the competence of the provincial and permit requirements into the general notification requirements municipal executives. Given that the extent and complexity of under an environmental decree. Specific permitting require- environmental law has increased in the past few decades, most ments remain for, amongst others, activities requiring a permit of the local governments have taken part in regional execu- in the sense of the European Industrial Emissions Directive tion bodies (Regionale Uitvoeringsdiensten). These bodies employ (integrated pollution prevention and control). In such cases, the staff of the provincial or municipal executive, who prepare a permit is granted under the fulfilment of certain conditions the decisions based on environmental law and conduct environ- and is required for the erection, modification and operation of mental inspections on the basis of a mandate. a facility. General rules apply to specific permitted and non-permitted activities, specifying, for instance, the maximum load of emis- 1.2 What approach do such agencies/bodies take to the enforcement of environmental law? sions into the ambient air, how the facility should limit and deal with their waste and other aspects of environmental control, including the prevention of noise pollution, soil pollution, In the Netherlands, the principle of the duty to enforce (beginselplicht

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external risk and energy reduction. In some cases, exemptions likely to have significant effects on the environment are made or tailor-made permit conditions may be granted. subject to an environmental assessment, prior to their approval Environmental permits (other than permits under the Nuclear or authorisation. Consultation with the public is a key feature of Energy Act) are subject to droit de suite, meaning that these are environmental assessment procedures. attached to the activities for which the permit is granted, rather than to the permit holder. When a facility (inrichting) is trans- 2.4 What enforcement powers do environmental ferred to another operator, the environmental permit is auto- regulators have in connection with the violation of matically transferred on the basis of the operation of law. permits? However, the Environmental Permitting (General Provisions) Act provides that the permit holder should notify the transfer to Environmental administrative enforcement powers are provided the competent authority at least one month before the transfer. to the competent administrative body (the Municipal or Provincial Executive in relation to facilities or activities and the 2.2 What rights are there to appeal against the Minister of Infrastructure and Water Management with respect decision of an environmental regulator not to grant an to non-facility-related activities such as the transboundary environmental permit or in respect of the conditions movement of waste). The competent authority can issue orders contained in an environmental permit? under the threat of a penalty (last onder dwangsom) or orders under the threat of administrative force (last onder bestuursdwang). In Appeals against permitting decisions can be filed with the some cases, administrative punitive sanctions are possible. In regional courts within six weeks. Both an appeal of the appli- its most extensive form, this sanction could be the withdrawal of cant against denial of the permit or against the permit condi- the permit or the denial of future permits, based on the Act on tions if granted, and appeals of interested parties against the the Integrity Control by Public Authorities (Wet bevordering integ- granting of a permit, are possible. These appeals will all be riteitsbeoordelingen door het openbaar bestuur). dealt with in the same case. However, the right to appeal is Next to this, the violation of environmental law is a criminal restricted to interested third parties who have first filed their offence, leading to the possibility of prosecution by the public opinion during the public inspection period which is part of the prosecutor. permitting procedure. If they have not filed an opinion and are not able to demonstrate that this could not reasonably be 32 Waste held against them, then their appeal is not admissible. Appeals can also be brought by interested parties against a change of the 3.1 How is waste defined and do certain categories of permitting decision after the public inspection period, in case waste involve additional duties or controls? they would have grounds for an appeal against an amendment of the decision. Other than the applicant, the person or entity filing an appeal The Netherlands definition of waste is entirely based on and must have a particular interest in order for his appeal to be in accordance with the European Waste Framework Directive admissible. Environmental groups’ appeals are only admis- (2008/98/EC) which sets the basic concepts and definitions sible if the ground of appeal relates to a subject that is covered related to waste management. This Directive provides, amongst in their articles of association and provided that the environ- others, definitions of waste (any substance or object which the mental group actually is involved in activities serving the goals holder discards or intends or is required to discard), recycling and that are detailed in its articles of association, meaning that the recovery. By-products are not waste if certain conditions are met. environmental groups’ appeal will not be admissible if the envi- The handling of waste on the national level is regulated by ronmental group was just created for the purpose of litigation the Environmental Management Act. The national government in court. has adopted a national policy on waste (the National Waste Plan) After a verdict of the court, parties may appeal to the holding the national policy on waste prevention, waste manage- Administrative Court of the Council of State (the highest court ment, recycling and best available techniques. This plan must be for administrative matters in the Netherlands). applied in the preparation of any government decision on waste, including permitting and enforcement.

2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly 3.2 To what extent is a producer of waste allowed to store polluting industries or other installations/projects? and/or dispose of it on the site where it was produced?

Netherlands law does not contain a general requirement to Disposal within a facility can only be allowed when permitted. conduct environmental audits. However, related conditions may The current national policy, however, is against the development be attached to environmental permits. These conditions may of new landfills. Temporary storage before removal is allowed. contain the obligation to forward a copy of the audit reports to It can only be regarded as a recovery operation if the storage the competent authority. is limited to a period of one year. Permits to store for longer Some applications for an environmental permit are subject to storage periods are bound by stringent requirements. the requirement of an Environmental Impact Assessment (EIA). This would be a separate part of the permitting procedure that 3.3 Do producers of waste retain any residual liability precedes the actual permit application. EIA requirements follow in respect of the waste where they have transferred it to from the European Directive on the Environmental Impact another person for disposal/treatment off-site (e.g. if the Assessments (2011/92/EU) for individual projects, such as an transferee/ultimate disposer goes bankrupt/disappears)? integrated industrial installation, a dam, motorway or airport or on the basis of the Directive on Strategic Environmental Producers may retain residual liability for their waste streams. Assessments (2001/42/EC). The common principle of both This liability may be limited if and after they have transferred Directives is to ensure that plans, programmes and projects

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their waste to a licensed waste management company. Such 4.3 Can directors and officers of corporations attract liability may be based on the duty of care and other obliga- personal liabilities for environmental wrongdoing, and tions with respect to waste handling under the Environmental to what extent may they get insurance or rely on other Management Act. Producers of waste who have handed over indemnity protection in respect of such liabilities? their waste to a permitted and lawful landfill can disculpate themselves from liability for damage that was caused by the Yes. Directors and officers may attract personal liabilities for substances present in the landfill on the basis of civil law. environmental wrongdoing. They may, apart from the company, If the transferee goes bankrupt, the obligation to comply with be held personally liable depending on their particular involve- the relevant environmental and waste laws is transferred to the ment in the case. This is a possibility under administrative, civil trustee. After termination of the insolvency period, this will in and criminal law, albeit that the criteria for liability under these fact become the obligation of the competent authority taking legislative schemes differ to some extent. control over the landfill. After all, at that moment in time, Financial damage on the basis of directors’ or officers’ the landfill will most probably be closed. The Environmental liability can generally be insured. However, this will not Control Act holds aftercare obligations for the provincial avoid the competent authority, a public prosecutor or a third authorities that apply after the closure, the purpose of which party incurring damages from pursuing the director or officer. is perpetual control in order to protect the surrounding envi- Furthermore, there is no insurance against the effects of govern- ronment. These obligations are financed by waste levies that ment orders or imprisonment other than financial damage. should be collected by the landfill company during the operational phase of the landfill. 4.4 What are the different implications from an environmental liability perspective of a share sale on the 3.4 To what extent do waste producers have one hand and an asset purchase on the other? obligations regarding the take-back and recovery of their waste? A share sale implies that the share capital in a company is transferred from one shareholder to another. This would mean that European environmental law contains various take-back obli- the new shareholder would acquire the company with its envi- gations such as for waste electric and electronic equipment ronmental liabilities. If the company or any person or entity for (WEEE), batteries, car wrecks and packaging materials. These which the company can be held liable has polluted the soil, then obligations are implemented in the Netherlands by specific rules this liability remains with the company and would be attached and regulations under the Environmental Management Act. to the shares acquired. If only the assets of the company were transferred, then historical liabilities would be left behind, 42 Liabilities unless this were to cause damage to the assets that were transferred. In case of soil pollution, certain measures could be taken 4.1 What types of liabilities can arise where there is a in view of the avoidance of future liabilities vis-à-vis the compe- breach of environmental laws and/or permits, and what tent authorities. The type of transaction may also have implica- defences are typically available? tions for the level of detail in the due diligence and the information and disclosure requirements. A breach of environmental law could lead to administrative sanctions as described above, to criminal prosecution (also as 4.5 To what extent may lenders be liable for described above), or could in some cases lead to civil actions environmental wrongdoing and/or remediation costs? based on tort or breach of contract. Typical defences may be related to: the subject rule not being applicable to the alleged action; that the violation was not deter- Netherlands law does not provide a direct liability for lenders. mined in the right manner (for instance, lack of proof in the However, there may be relevant contractual obligations or sense that there are alternative causes or that measurements responsibilities of lenders and collaterals may be affected by were not done in accordance with the applicable standards); that environmental pollution. the violation cannot be attributed to the suspect; or that there was no harm done to the environment. Civil actions are gener- 52 Contaminated Land ally prone to the lack of proof on a causal connection between an alleged unlawful act or omission or breach of contract. 5.1 What is the approach to liability for contamination (including historic contamination) of soil or groundwater? 4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is operated within permit limits? The provisions of the Soil Protection Act imply responsibilities and liabilities for the party who has caused soil or groundwater pollution, the entity using polluted property and the owner or Yes. EU Directive 2004/35/CE on environmental liability long lease holder of a polluted property. Next to this, the (extent with regard to the prevention and remedying of environmental of the) liability may depend on whether it is to be qualified as a damage, which applies in the Netherlands, establishes a frame- historic or non-historic case of soil pollution (i.e. caused before, work of environmental liability based on the ‘polluter pays’ prin- in or after 1987). Apart from this, liability may be based on ciple. This would mean that an operator could be liable for envi- (general) provisions in, or attached to, lease agreements or duties ronmental damage even when the polluting activity is operated of care. within permit limits. On the basis of Netherlands civil law, (environmental) claims may also be based on tort outside of the permit requirements.

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5.2 How is liability allocated where more than one does not, however, seem to be an obvious sole basis for a claim person is responsible for the contamination? under Netherlands environmental or property damage law.

The allocation of liability will largely depend on the merits of 62 Powers of Regulators the case. Contract clauses may also have an effect on the distribution of liability. Joint and several liability can in general not 6.1 What powers do environmental regulators have to be excluded. require production of documents, take samples, conduct The question on who should remediate on the basis of the site inspections, interview employees, etc.? Soil Protection Act is answered by the enforcing competent authority and not just depending on the responsible entity that The operator of an industrial facility usually has some general can be held accountable for the soil pollution. The competent or specific reporting requirements, depending on the nature of authority may turn to the owner of the polluted property as well. its activities and the conditions that are attached to the environmental permit granted for the facility. In case of an unusual 5.3 If a programme of environmental remediation incident (ongewoon voorval), the operator of the facility must is “agreed” with an environmental regulator, can the notify the competent authority as soon as possible, providing regulator come back and require additional works or can specific information as required by law. In some cases, the a third party challenge the agreement? permit conditions include the requirement to take samples, to have the samples analysed and to report on permit violations A remediation programme involving the excavation or treat- (e.g. where it concerns emissions into the ambient air or waste ment of polluted soil or groundwater needs to be approved by water discharge). the competent authority before it can be executed. Interested Inspection agencies also have the right to take samples, to parties can file objections and appeal against these decisions. conduct site inspections and to interview employees. In case of The decision on the objection must be based on the latest knowl- administrative enforcement, there is an obligation to cooperate. edge of the facts and the developments in law. This could cause This may be different in case of criminal investigations. the final decision to be different than the draft decision. Later changes should be based on a change of circumstances and 72 Reporting / Disclosure Obligations cannot be excluded. 7.1 If pollution is found on a site, or discovered 5.4 Does a person have a private right of action to to be migrating off-site, must it be disclosed to an seek contribution from a previous owner or occupier of environmental regulator or potentially affected third contaminated land when that owner caused, in whole or parties? in part, contamination; and to what extent is it possible for a polluter to transfer the risk of contaminated land The Soil Protection Act provides that pollution found in rela- liability to a purchaser? tion to certain activities must be reported to the competent authority. The duty of care requires the operator to take imme- If a seller of polluted property does not inform his successor diate reasonable measures to control, mitigate or remove the in ownership of material known soil or groundwater pollu- pollution. The competent authority may require the operator to tion, he may violate his obligation to disclose and be liable. further investigate a case of soil or ground water pollution. This This could lead to, amongst others, the right of the purchaser would entail an investigation into the front of the plume. That to seek a contribution from the seller. If the seller provided will reveal whether the pollution has migrated off-site. If such the buyer with all the relevant details of the known pollution, is found to be the case, then this must be notified to the compe- the purchaser may have no basis for a claim. It is customary to tent authority. Affected parties must be notified in view of any agree on an indemnity for known pollution and/or a warranty measures that need to be taken on their property. These parties for unknown pollution in the sale and purchase agreement. must allow these actions to be taken.

5.5 Does the government have authority to obtain from 7.2 When and under what circumstances does a person a polluter, monetary damages for aesthetic harms to have an affirmative obligation to investigate land for public assets, e.g. rivers? contamination?

Both the Environmental Management Act and the chapter Applications for permits to build or environmental permits in the General Administrative Law Act (Algemene wet bestuurs- for certain environmentally hazardous activities must include recht) relating to administrative enforcement provide a basis for a recent soil investigation report. A zero soil report can be the competent authority to claim financial damages from the required on the basis of an environmental permit condition and polluter, in case the competent authority had to take measures to these permit conditions may also require soil investigations to be control or remediate the situation. The competent authority has, carried out after termination of the permitted activities and to however, no title if no actions were taken, or in case the actions provide a copy of the subject report to the competent authority. taken were not needed in view of (the prevention of) harm to the The law does not require the soil to be investigated in case of environment. Purely aesthetic harms to public assets would not a transfer of ownership. There is no legal obligation to perform form a basis for such a claim. soil investigations prior to entering into a lease as well. However, The owner of the public assets (for instance, a municipality, such may be wise in view of the prevention of future liability province or water board) may have a claim in the sense of depending on the type of lease agreement and the general terms whether or not the environmental pollution would also cause that would apply. public property to drop in value because of disfiguration. This

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7.3 To what extent is it necessary to disclose Whistleblowers (Wet Huis voor klokkenluiders) protects any person environmental problems, e.g. by a seller to a prospective who is or was an employee or has or had an alike position in rela- purchaser in the context of merger and/or takeover tion to the company. Organisations with 50 or more employees transactions? must have adopted a whistle-blowers policy according to minimum standards. The violation of environmental law and The seller has a general obligation to disclose known environ- risks for the environment are specifically mentioned as report- mental problems to a prospective purchaser of polluted real estate. able matters under the Act on the House for Whistleblowers. This would not be different if the sale and purchase concerns the transfer of shares in a company owning polluted property. 8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary 82 General damages available?

8.1 Is it possible to use an environmental indemnity The Netherlands Civil Code provides that foundations or asso- to limit exposure for actual or potential environment- ciations with full legal capacity may initiate legal proceedings on related liabilities, and does making a payment to another behalf of certain classes of parties who have suffered damages. person under an indemnity in respect of a matter (e.g. remediation) discharge the indemnifier’s potential liability for that matter? 8.6 Do individuals or public interest groups benefit from any exemption from liability to pay costs when In general, environmental liabilities may be subject to an indemnity pursuing environmental litigation? providing a basis for a claim in case of financial damage suffered. It will not, however, limit the exposure of the new owner to govern- There is a legal reduction in liability to pay costs for individuals ment enforcement actions in case of pollution found to be present with lower incomes. Public interest groups do not benefit from in the real estate after the transfer. The new owner of polluted this exemption. industrial real estate can be forced to remediate or to take control However, in administrative and civil proceedings, the costs measures regardless of the existence of an indemnity. Payment payable to the counterparty in case of a negative verdict are set at to another person under an indemnity would not discharge the lump-sum rates that hardly represent the real legal costs involved. indemnifier given that he may also be forced to remediate or to take control measures if he were the polluter. This may be different 92 Emissions Trading and Climate Change in case of large-scale complex ground water pollution, where the competent authority has decided to adopt a regional approach. 9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading 8.2 Is it possible to shelter environmental liabilities off market developing there? balance sheet, and can a company be dissolved in order to escape environmental liabilities? The Netherlands, as a Member State, participates in the

European Emission Trading Scheme for CO2 emissions as of Some environmental liabilities may be sheltered off balance 2005 (EU ETS), at first setting national targets in national allo- sheet by means of a sale and lease back transaction. Causing a cation plans. Currently the targets are based on the European company to go bankrupt in view of the limitation or avoidance limits on emissions that apply for the year 2020. A similar of environmental liabilities may not prevent administrative, civil system was set up for nitrogen emissions (NOx). However, that or criminal enforcement actions against the persons that were system was abandoned in 2014, given the lack of results. involved in harming the environment, including, but not limited The facilities that have joined the EU ETS on a mandatory to, officers and directors. basis do produce a major part of the emissions in the Netherlands, specifically those in the energy and chemical sectors. The Netherlands market for emission allowances does not 8.3 Can a person who holds shares in a company seem to work optimally but has contributed major emission be held liable for breaches of environmental law and/ or pollution caused by the company, and can a parent reduction investments, given the relatively low market price. company be sued in its national court for pollution The EU decision on backloading and the market stability reserve caused by a foreign subsidiary/affiliate? may improve the market.

Shareholders as such are not liable for actions of the company, 9.2 Aside from the emissions trading schemes unless they have undertaken actions of control. This also applies mentioned in question 9.1 above, is there any other to parent companies. However, administrative case law seems requirement to monitor and report greenhouse gas to have broadened the possibility of taking administrative envi- emissions? ronmental enforcement actions against parent companies. This does not seem to be limited to national parent companies. The Netherlands is a party to, amongst others, the United Nations Convention on Climate Change and the Kyoto Protocol, which provide the requirement of issuing an annual 8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters? national inventory report. The emitting industries have the legal obligation to provide input for these national reports. In view of these requirements, New legislation on the protection of the position of whistle-blowers they must monitor and report their greenhouse gas emissions. was enacted in July 2016. The Act on the House for

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9.3 What is the overall policy approach to climate change regulation in your jurisdiction? 112 Environmental Insurance Liabilities

11.1 What types of environmental insurance are The overall national policy on climate change is focusing on available in the market, and how big a role does various sources of sustainable energy, amongst which are solar environmental risks insurance play in your jurisdiction? power, near-shore and onshore windfarms, bio-energy and geothermal energy; as well as on closing down a number of coal- fired power plants and the realisation of carbon capture and Environmental insurance has increasingly become customary in storage (CCS). The first Netherlands offshore CCS project is on the Netherlands in the past couple of years, in particular in rela- its way but not in operation yet. tion to mergers and acquisitions, as it may in certain cases be an This should lead to 14% sustainable energy in 2020 and adequate instrument that can be used to cap the environmental 16% sustainable energy in 2023. The national energy agenda liabilities of the seller under the environmental warranties. provides that nearly all sources of energy should be sustainable in 2050, resulting in a reduction in the emission of greenhouse 11.2 What is the environmental insurance claims gases as opposed to the 80–95% levels in 1990. experience in your jurisdiction? In the so-called Urgenda case, the State was convicted in a civil action based on tort to take the necessary measures in view of Legal proceedings in insurance claims are dealt with by the achieving a reduction in greenhouse gas emissions in 2020 of regional courts and the courts of appeal. These may include at least 25% lower than 1990 levels. In 2018, this verdict was environmental insurance claims. In some cases, the insurance sustained on appeal. company is actively involved in settlement negotiations, especially where it concerns larger claims. 102 Asbestos 122 Updates 10.1 What is the experience of asbestos litigation in your jurisdiction? 12.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in There is a total ban on the use of asbestos-containing materials environment law in your jurisdiction. (ACM) in products, buildings and constructions, effective since 1993. In the past few years, the focus of the environmental authori- Asbestos litigation occurs in many aspects, like (i) claims ties has been on the safe storage of highly hazardous chemicals in from former employees who were exposed to ACM in the past above-ground cylindrical storage tanks, the handling and trans- and developed an asbestos-related disease (mesothelioma), boundary shipment of waste and external safety. These continue (ii) administrative and criminal enforcement actions against to be areas of focus. Alongside this, we have seen an increasing employers alleging the violation of the Health and Safety Act interest of the environmental enforcement authorities in matters of (Arbeidsomstandighedenwet) in relation to sound asbestos inventor- food safety and substances rules and regulations. isations and the prevention of asbestos exposure, and (iii) civil The National Waste Control Plan (2017–2029) must be applied claims of parties who were confronted with asbestos in build- in permitting procedures and is aimed at facilitating the transi- ings and constructions and facing extra costs. tion into a circular economy. It contains new quantitative targets In civil cases concerning the exposure of employees to for recycling and waste reduction. Furthermore, it aims to facil- ACM, the statute of limitations is extended to 30 years after the itate innovations in view of the circular economy by simplifying claimant was exposed and may be extended to an even longer the erection of test facilities. Furthermore, it contains criteria for period of time in specific cases. distinguishing between products, by-products and waste and for the disposal of waste. 10.2 What are the duties of owners/occupiers of The remediation and control of soil pollution with substances of premises in relation to asbestos on-site? very high concern, such as persistent organic pollutants, is a growing concern. New policies, technologies and legislative measures are needed for contaminations relating to PFAS or PFAS components. An asbestos inventory must be drafted by a certified company The national government has adopted an intermediary policy in prior to any works involving the possible exposure to asbestos 2019. in the Netherlands. Asbestos removal must be done by special- In 2019, the Administrative Court of the Cousel of State has ised certified asbestos removal companies. nullified a plan that was based on the National Approach for The Health and Safety Act requires the prevention of expo- Nitrogen Deposition (Programmatische Aanpak Stikstof; PAS), after sure of employees to asbestos. the verdict of the European Court of Justice on its pre-judicial questions. In short, this approach can no longer be applied, as a result of which a number of large infrastructure projects were delayed. The national government has announced a series of measures that should mitigate the effects of these verdicts for current and future projects.

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André H. Gaastra leads Gaastra attorneys at law, a Netherlands law firm specialised in environmental, health and safety law, regulated markets and energy law. In addition to graduating in law, he has a background in marine engineering and completed the Grotius specialisation training in general administrative law. He has over 20 years of experience as an attorney at law and six years’ experience in various environmental, health and safety leadership positions with General Electric before he was admitted to the Bar. Clients view his broad experience as a definite advantage in the handling of complex environmental matters. In the past 20 years, Mr. Gaastra has dealt with all aspects of environmental law. He has counselled corporations and branch associations on matters pertaining to permits and compliance, soil pollution, air emissions, waste water, waste handling and recycling, and occupational health and safety. His primary focus is on industry. Top-tier M&A firms team up with him for transactions that require the involvement of an environmental law specialist. From time to time he also advises government institutions. Mr. Gaastra specialises in the tactics of environmental litigation and negotiations. He has a track record in finding solutions in environmental civil law, administrative law and criminal cases. Mr. Gaastra was also treasurer of the supervisory committee of the National Bar in the District of Noord Holland and is a member of the general committee of the Entrepreneurs Association, Region of Amsterdam (ORAM) focusing on zoning and planning matters. He is a speaker on study days and symposiums on aspects of environmental law, and an author of articles published in the Journal for Environment & Law, the Waste Products Journal and others.

Gaastra attorneys at law Tel: +31 20 654 96 44 World Trade Center Email: [email protected] Schiphol Boulevard 345 URL: www.gaastra-attorneys.com 1118 BJ Schiphol Netherlands

Gaastra attorneys at law is specialised in Environment, Regulatory and Energy. The firm has a small team of highly skilled and responsive lawyers. André H. Gaastra is recognised as one of the leading environmental law specialists in the Netherlands by Who’s Who Legal – Environment. He studied marine engineering prior to law school, is skilled in understanding complex matters of both a technical and legal nature and has over 20 years of experience in law. Mr. Gaastra founded the firm in 2006 after working for a number of years in the chemical industry (General Electric) and working as a lawyer at the international law firm Loyens & Loeff. Clients who have worked with Gaastra attorneys at law more often gain the benefit of a lawyer who knows the business, the government and judicial authorities from the inside. The firm has excellent lawyers with a variety of backgrounds. The focus of the firm is directed at providing high-quality legal services. www.gaastra-attorneys.com

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Marián Bošanský

URBAN STEINECKER GAŠPEREC BOŠANSKÝ Ondrej Urban

12 Environmental Policy and its In administrative proceedings, public authorities may take various measures such as issuing warnings, imposing fines as Enforcement well as ordering the shutdown of wrongful activities. In criminal proceedings, the offender may be sentenced to 1.1 What is the basis of environmental policy in your imprisonment and/or a monetary fine. The most serious crimes jurisdiction and which agencies/bodies administer and against the environment are subject to imprisonment of up to 20 enforce environmental law? years and the fines may be as high as EUR 1.6 million for legal persons and up to EUR 331,930 for natural persons. The cornerstone of the Slovak environmental policy is the Constitution of the Slovak Republic (the “Constitution”), 1.3 To what extent are public authorities required to pursuant to which everyone shall be entitled to a favourable provide environment-related information to interested environment and is obliged to protect and enhance the envi- persons (including members of the public)? ronment. Slovakia has not adopted a uniform environmental code, but each specific area of the Slovak environmental policy The Constitution provides that everyone shall be entitled to is governed by special laws and regulations. timely and complete information about the state of the environ- EU directives and regulations strongly shape our national ment and about the causes and consequences thereof. Despite environmental policy and are transposed into national legislation the fact that these rights are fundamental, public authorities (e.g., the new Waste Act No. 79/2015 Coll., as amended, adopted often act in direct conflict with them. in 2015, transposed 10 EU directives). The general source of information about the environment The Ministry of the Environment of the Slovak Republic (the is the Report on the State of the Environment, prepared by “Ministry”) is the supreme body which administers our envi- the Ministry in cooperation with other state administration ronmental policy and legislation. The Ministry has various authorities. The Report is published annually by the Ministry. administrative, regulatory and compliance competences at Apart from the Constitution, the obligation to provide the national level. There are other state authorities, which admin- public with environment-related information derives from the ister, execute and enforce the Slovak environmental policy and Act on Collection, Storage and Broadening of Environmental legislation; in particular, district offices 72 in total, and the Slovak Information No. 205/2004 Coll., as amended. The Act is based Environmental Inspectorate (in Slovak: Slovenská inšpekcia život- on EU legislation, in particular on the Regulation concerning ného prostredia). In case of violation of the environmental laws and the establishment of the European Pollutant Release and regulations, both the district offices and the Inspectorate may Transfer Register (the “E-PRTR Regulation”). impose fines in order to protect the interests safeguarded by law. The National Pollution Register, which was established by The system of public authorities is effectively completed by the above-mentioned Act, is a database created on the basis of municipalities and special agencies created in order to protect mandatory periodic reports containing data about the release of the individual environmental domains. For instance, the Fishing pollutants from operators whose activities are listed in Annex 1 Guard was established under the Fishing Act No. 216/2018 of the E-PRTR Regulation. Coll., as amended, to protect the performance of fishing rights In order to fully harmonise national legislation regarding in fishing grounds. Also, a special department for the detec- environmental impact assessment with the EU legislation of dangerous materials and environmental crime was set tion, Slovakia has adopted the Act on Environmental Impact up at the Criminal Police Office for the purpose of effective Assessment No. 24/2006 Coll., as amended, which intro- prevention and detection of environmental criminality. duced a comprehensive information system for environmental and strategic impact assessment (the “EIA/SEA Information 1.2 What approach do such agencies/bodies take to System”). the enforcement of environmental law? The EIA/SEA Information System gathers data about all relevant procedures in assessing the impact of strategic docu- Aiming to effectively protect the environment, compliance with ments and proposed activities on the environment, including legislation is enforced by means of administrative, civil and their changes, and is accessible to the public and other partici- criminal laws. pants in the environmental impact assessment process.

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22 Environmental Permits In addition, for example, the Act on the Prevention of Major Industrial Accidents No. 128/2015 Coll., as amended, sets out rules for the prevention of serious industrial accidents on 2.1 When is an environmental permit required, and may sites containing the presence of dangerous substances and for environmental permits be transferred from one person to limiting their consequences on human health, the environment another? and property. For this purpose, an undertaking which operates with dangerous substances must carry out a risk assessment Pursuant to Slovak environmental laws and regulations, a broad and subsequently develop a prevention programme in order to range of activities require a specific environmental permit. The control the hazards which can lead to major industrial accidents. permit is always granted exclusively for the action regulated by a specific statute. For instance, various types of authorisation are granted under the Water Act No. 364/2004 Coll., as amended 2.4 What enforcement powers do environmental regulators have in connection with the violation of (e.g., a permit for special use of water; a permit to extract sand, permits? gravel or mud; a permit to construct water buildings), the Waste Act, the Act on Environmental Impact Assessment, the Act on Air Protection, etc. Compliance with environmental permits is safeguarded by As a general rule, transferring the rights and obliga- means of both administrative and criminal law. The violation tions resulting from a granted permit is possible only if it is of permits can lead to the following punitive measures: expressly allowed by the respective statute governing the issu- ■ Administrative – a monetary fine or other measures (e.g., ance of such a permit. For example, the Water Act allows the restitution to the original state, order for temporary or transfer of a permit for special use of water to third parties. permanent suspension of the activity that caused or may Notwithstanding the aforementioned, the majority of authori- cause damage). sations are non-transferable. ■ Criminal – imprisonment of up to 20 years and a monetary fine for serious crimes of up to EUR 1.6 million for legal persons and up to EUR 331,930 for natural persons. 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 32 Waste contained in an environmental permit? 3.1 How is waste defined and do certain categories of Pursuant to the Act on Administrative Procedure, as the general waste involve additional duties or controls? statute governing administrative proceedings in Slovakia, an applicant whose application was denied or not granted as The definition of waste under the Waste Act is fully in line with requested, shall be entitled to file an administrative appeal the general definition of waste under the EU Waste Framework (except for certain exceptions where two-instance administrative Directive No. 2008/98/EC. proceedings are excluded by law). In the event that the first-in- Pursuant to the Waste Act, waste is a movable property or stance administrative decision is upheld by an appellate adminis- a substance that the holder discards, intends to discard or is trative body, the applicant shall be entitled to submit it for judicial required to discard under the Waste Act or under special laws review before the Slovak courts. A first-instance court decision and regulations. may be reviewed by the Supreme Court of the Slovak Republic. However, the Waste Act does not apply to certain categories Slovak legislation, however, contains some exceptions from of waste such as waste from precious metals, radioactive waste, the above-mentioned general rule (e.g., the Waste Act), when the soil (in situ) including unexcavated contaminated soil, etc. The administrative appeal is excluded and the applicant must directly disposal of these kinds of waste, the specific control mecha- file for judicial review. Moreover, certain specific laws (e.g., the nisms and the duties relating thereto are set out in special laws Act on the Protection of Species of Wild Fauna and Wild Flora and regulations. No. 15/2005 Coll., as amended) contain their own procedural Moreover, pursuant to the Waste Act, producers of pack- rules applicable to proceedings under such laws, which take aging and non-packaged products, batteries and accumulators, precedence over the general rules on administrative proceed- electric devices, tyres and vehicles have a so-called extended ings under the Act on Administrative Procedure. producer responsibility (“EPR”), involving specific additional duties, regarding produced products in order to prevent waste or enhance re-use, recycling or other recovery systems for waste. 2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly polluting industries or other installations/projects? 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? Yes. Slovak legislation includes EU directives concerning environmental impact assessment (“EIA”) and strategic envi- Pursuant to the Waste Act, waste storage is defined as the ronmental assessment (“SEA”). The Act on Environmental temporary storage of waste prior to any of the waste recovery Impact Assessment governs the process of expert assessment of or disposal operations at the site where the waste is to be recov- expected impacts of strategic documents such as zoning plans, ered or disposed of. as well as the assessment of the impacts of buildings, projects Besides waste storage, the Waste Act also defines the gath- and other activities on the environment prior to their approval ering of waste, which is the preliminary storage of waste by a or permission. waste holder (waste producer) prior to further management The EIA/SEA procedures are aimed at ensuring a high thereof, as long as it is not waste storage. standard of environmental protection and integrating environ- Waste may be stored or gathered only by an authorised person. mental aspects in preparing and approving strategic documents A waste holder can store or gather waste for a maximum of one and contemplated activities or projects. year prior to its disposal or for a maximum of three years prior to

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its recovery, unless a longer period for the waste gathering is granted Criminal liability is triggered in the event of a serious viola- to a waste producer by a competent waste management authority. tion of environmental laws. The offender may be sentenced to imprisonment and/or a monetary fine. The most serious crimes against the environment are subject to imprisonment of up to 20 3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it to years and the fines may be as high as EUR 1.6 million for the another person for disposal/treatment off-site (e.g. if the legal persons and up to EUR 331,930 for the natural persons. transferee/ultimate disposer goes bankrupt/disappears)? 4.2 Can an operator be liable for environmental No. Waste producers (waste holders) are not liable once the damage notwithstanding that the polluting activity is waste is transferred to another person, provided that this person operated within permit limits? becomes a waste holder. If the transfer of the waste does not meet the criteria under which the transferee becomes a waste As a general rule, compliance with the terms and conditions of an holder, the transferor, as the original waste holder, remains environmental permit should relieve the operator from liability liable for such waste. In a nutshell, the current waste holder is for environmental damage, as long as the activity is within the liable for the waste that is in his possession. permit limits. Nevertheless, the operator must also abide by the general prevention duty, requiring that everyone shall be obliged 3.4 To what extent do waste producers have obligations to act in such a manner that no damage to health, property, nature regarding the take-back and recovery of their waste? and the environment occurs. In the event that the general prevention duty is breached, the operator could be held liable, regardless of operating the polluting activity within the permit limits. Waste producers, as long as they qualify as waste holders, are not required to take back the waste that they produce. However, such waste producers (waste holders) must ensure 4.3 Can directors and officers of corporations attract that the waste treatment follows the waste management system personal liabilities for environmental wrongdoing, and hierarchy: to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities? (i) preparing the waste for re-use within the scope of their activities and offering unused waste for preparation for re-use by a third party; Directors and officers may be held personally liable under civil (ii) recycling the waste within the scope of their activities, or criminal law. In case of a criminal liability, an environmental if preparing it for re-use is impossible or improper, and offence is punishable by a monetary fine or even by impris- offering unused waste for recycling by a third party; onment. In case of a civil liability, directors and officers are (iii) recovering the waste within the scope of their activities, if responsible for damage caused by the violation of their obliga- recycling is impossible or improper, and offering unused tion to act with due and professional care. waste for recovery by a third party; and There are several insurance companies which offer special (iv) disposing of the waste, if recycling or recovering it is insurance policies covering personal liability of directors and impossible or improper. offices, but it is not a mass product yet. Waste producers (waste holders) are also required to hand over the waste only to a person authorised to carry out waste 4.4 What are the different implications from an management. environmental liability perspective of a share sale on the Furthermore, with respect to certain products (e.g., electric one hand and an asset purchase on the other? and electronic equipment) to which the EPR applies, the respective producers are required to take back or recover the waste In a share sale, the buyer purchases shares or an ownership from their products. interest in a company, but not the asset itself. Therefore, the company retains its assets and liabilities. As a consequence, all 42 Liabilities liabilities, including the environmental ones, remain with the company in which the shares were purchased. On the other 4.1 What types of liabilities can arise where there is a hand, in an asset purchase, the environmental liability remains breach of environmental laws and/or permits, and what with the seller and its shareholder. defences are typically available?

4.5 To what extent may lenders be liable for There are three types of liabilities that may arise due to viola- environmental wrongdoing and/or remediation costs? tion of environmental laws, comprising civil, administrative, and criminal liability. In case of civil liability, third parties who have suffered According to Slovak legislation, in principle the lenders are not damage caused by a permit holder may claim damages under liable for environmental wrongdoing and/or remediation costs. civil law. A perpetrator may challenge the alleged breach of law, The parent company may be held liable instead of its affiliate the amount of damages, culpability (i.e., that the perpetrator was when it is proven that the mother company carries out a direct not even negligent), and the lack of causality between the alleged or commanding influence on the affiliate. breach of law and damage suffered by third parties. Administrative liability arises where (i) specific environmental 52 Contaminated Land laws and regulations, or (ii) terms and conditions of environmental permits are breached. A wrongdoer could base his/her 5.1 What is the approach to liability for contamination defence on (i) proving that the environment was not degraded (including historic contamination) of soil or groundwater? by their activity, or (ii) arguing similarly as in civil defence. The Act on the Environment No. 17/1992 Coll., as amended,

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addresses the general principle that a polluter who has caused envi- “polluter pays” principle. Under the Act on the Prevention and ronmental damage by harming the environment or by other unlawful Recovery of Environmental Damage, the liability for environ- behaviour shall be required to restore the natural functions of the mental damage is always linked to a specific business activity. disrupted ecosystem. If it is impossible or ineffective, the polluter Moreover, the operator’s liability for environmental damage shall provide monetary compensation and/or another form of substi- shall be transferred to its legal successor. tute performance, as ordered by a competent state authority. As a general rule, any subsequent acquirer of land shall be Similarly, under the Water Act, anyone who causes damage entitled to compensation from a previous owner or an occupier to surface water or to groundwater or to the environment adja- of land who caused the contamination, in accordance with the cent thereto shall be obliged to remedy such damage or to reim- general provisions on damages under the Civil Code. The claim burse the costs incurred therewith. If a person responsible for can also be based on a contractual basis by specifying the indem- causing damage is unknown or unable to remedy such damage, nity terms and conditions belonging to the acquirer (against the and if there is a risk of deterioration in the state of the water previous owner). or of the environment, a competent state authority (state water Furthermore, under the Act on Certain Measures Regarding authority) shall take appropriate measures at the expense of a Environmental Burdens, if a person responsible for environ- person responsible for the damage, if possible; otherwise, the mental damage or its legal successor (subject to certain condi- expenses shall be borne by the state. tions specified in the above-mentioned Act) is the owner of the burdened land, such a person may transfer the land to another person only after an affirmative geological survey related to this 5.2 How is liability allocated where more than one person is responsible for the contamination? land is presented. Any such transfers must be notified in writing to a competent state authority and the contracting parties must submit a sale contract concerning the transfer of the land. The Act on the Prevention and Recovery of Environmental Damage No. 359/2007 Coll., as amended sets out that if the environmental damage has been caused by more than one operator, each of them 5.5 Does the government have authority to obtain from shall be liable for damage only to the extent of their involvement in a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers? causing the damage. If there is any doubt regarding the extent of the liability of each operator, a competent state authority shall decide which of them is responsible and to what extent. If the extent of In the event of environmental damage or an imminent threat liability of each operator cannot be determined clearly or without of environmental damage, the competent state authorities may undue cost, the operators shall be liable jointly and severally. seek the recovery of costs incurred in relation to the prevention The Act on Certain Measures Regarding Environmental or remedy of environmental damage caused by a polluter. Burdens No. 409/2011 Coll., as amended, applies to any person responsible for causing an environmental burden, not only to 62 Powers of Regulators businesses. If there are more persons responsible for causing an environmental burden, each of them shall be liable to the extent 6.1 What powers do environmental regulators have to that they have contributed to causing it. If it is impossible to require production of documents, take samples, conduct determine their individual liability, all of them shall be jointly site inspections, interview employees, etc.? and severally liable. The Environmental Inspectorate (in Slovak: Slovenská inšpekcia 5.3 If a programme of environmental remediation životného prostredia) and other competent state authorities have a is “agreed” with an environmental regulator, can the wide range of powers to safeguard compliance with environ- regulator come back and require additional works or can mental laws. They are, in particular, entitled to enter premises a third party challenge the agreement? and to conduct site inspections, to examine records and other documents, to carry out necessary investigations, including the The Act on the Prevention and Recovery of Environmental collection of samples, to take photos and to make videos, and to Damage lays down that the remediation plan may be carried request the submission of necessary data and explanations. out in three different ways, i.e., by primary remedies, additional In addition, a special department for the detection of remedies, and compensatory remedies. dangerous materials and environmental crime has been estab- Primary remedies are remedial measures to restore the damaged lished at the Criminal Police Office. natural resources or their functions to the original state. Additional remedies are remedial actions to be taken if the 72 Reporting / Disclosure Obligations recovery of the damaged natural resources or their functions has not been achieved by the primary remedial measures. 7.1 If pollution is found on a site, or discovered to be Compensatory remedies are remedial actions to compen- migrating off-site, must it be disclosed to an environmental sate temporary losses of natural resources or their functions. regulator or potentially affected third parties? Indeed, a state authority may require additional works. The majority of the Slovak environmental laws and regulations 5.4 Does a person have a private right of action to require that the occurrence of environmental damage or an seek contribution from a previous owner or occupier of imminent threat of such damage is reported to competent state contaminated land when that owner caused, in whole or authorities. At the same time, necessary measures to avert the in part, contamination; and to what extent is it possible damage or to mitigate the consequences thereof must be taken, for a polluter to transfer the risk of contaminated land unless such intervention would endanger human life or health. liability to a purchaser? Moreover, anyone who caused a serious threat or damage to the environment (e.g., as a result of an accident, fire, etc.) must The responsibility for environmental damage is based on the inform the public without undue delay.

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7.2 When and under what circumstances does a person 8.3 Can a person who holds shares in a company have an affirmative obligation to investigate land for be held liable for breaches of environmental law and/ contamination? or pollution caused by the company, and can a parent company be sued in its national court for pollution caused by a foreign subsidiary/affiliate? According to the Act on the integrated prevention and control of environmental pollution No. 39/2013 Coll. as amended, which derives from Directive 2010/75/EU of the European Unless a shareholder manages or de facto runs a company, such Parliament and of the Council on industrial emissions (inte- a shareholder cannot be held liable for breaches of environ- grated pollution prevention and control), the operator (i.e. the mental law caused by the company. The same principle applies person who wholly or partially operates or manages an opera- to a parent company, which cannot be held liable instead of its tion, combustion plant, waste incineration plant or waste co-in- subsidiaries or affiliates. cineration plant) is obliged to regularly monitor soil and groundwater status. Moreover, after the termination of its business 8.4 Are there any laws to protect “whistle-blowers” who activities, the operator shall assess the state of contamination of report environmental violations/matters? soil and groundwater by hazardous substances that the undertaking used, produced or discharged in the production process Although there are no special laws regarding whistle-blowing under the permit. In the event of significant soil or ground- in environmental matters, whistle-blowers are protected under water pollution, the operator must take the necessary measures general whistle-blowing legislation against their employers for to remove the pollution and restore the site to its original state. filing a complaint, a lawsuit, a motion to initiate criminal prosecution, or other notifications of anti-social activity. 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 8.5 Are group or “class” actions available for pursuing transactions? environmental claims, and are penal or exemplary damages available?

There is no statutory requirement to disclose environmental Yes. A public “class” action concerning environmental issues is problems by a seller to a prospective purchaser in a merger or a in specific cases available through an entity called “The Public takeover transaction. The information must be disclosed only if Concerned” (including non-profit organisations or civic associ- agreed by the contracting parties and to the extent stipulated in ations set up for the purpose of environmental protection). For the transaction documentation. example, pursuant to the Act on Environmental Impact Assessment, However, if a seller is aware of environmental issues which can the non-profit organisation established for environmental protec- significantly impact the functioning of a target company and fails tion may lodge an appeal against the decision issued by the state to disclose them, a purchaser may bring claims against the seller. authority in the administrative proceedings. Furthermore, such non-profit organisation may bring the “class” action to the court in 82 General relation to the protected environmental interests in accordance with Administrative Court Code No. 162/2015 Coll., as amended. Penal 8.1 Is it possible to use an environmental indemnity to or exemplary damages are not available. 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) 8.6 Do individuals or public interest groups benefit discharge the indemnifier’s potential liability for that matter? from any exemption from liability to pay costs when pursuing environmental litigation? Parties to a contract may agree to indemnify one another in the event that one of them suffers damage as a result of a third- Individuals do not enjoy any benefits when involved in envi- party environmental claim or is handed a monetary fine for ronmental litigation, whereas ecological organisations acting to breaching environmental laws and regulations. Such agreement, protect public interest are exempt from paying a court fee to however, shall be binding upon the contractual parties only and initiate such lawsuits. the wrongdoing party cannot be relieved from its administrative or criminal liability. 92 Emissions Trading and Climate Change

8.2 Is it possible to shelter environmental liabilities off 9.1 What emissions trading schemes are in operation balance sheet, and can a company be dissolved in order in your jurisdiction and how is the emissions trading to escape environmental liabilities? market developing there?

As long as the accounts are kept in line with applicable laws The EU Emission Trading Scheme (the “EU ETS”) has been and regulations, sheltering environmental liabilities off balance transposed into Slovakia’s legislation through the Emissions sheets should not be feasible. From our experience, however, Trading Act No. 414/2012 Coll., as amended. The national environmental liabilities are sometimes withheld from balance emission trading scheme will continue to be a key pillar for sheets, causing distortions in the accounts. cost-effective greenhouse gas emission reductions in industry, Dissolving a company by liquidation in order to escape envi- energy and air transport. The scheme aims to reduce greenhouse ronmental liabilities would be unlawful. However, it can be very gas emissions by 43% by 2030 compared to 2005. According difficult to prove that the liquidation was aimed at escaping envi- to information contained in the Strategy of the Environmental ronmental liabilities. Therefore, dissolution has certainly been used Policy of the Slovak Republic until 2030, Slovakia has an option on several occasions to escape environmental liabilities in the past. to sell about 55% of its annual emission ceiling under the EU ETS

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scheme, and also if the surplus in non-ETS sectors is reached, to Annex 1 of the Ordinance of the Ministry of the Environment it can sell the annual allocated allowances to cover emissions establishing the Waste Catalogue, all construction materials produced in these sectors. The proceeds from the sale of all emis- containing asbestos are classified as hazardous waste. In the case sion allowances shall be used for the fulfilment of environmental that asbestos is found on-site, its removal is not mandatory, but if targets in the area of climate change, and to ensure the reduc- the owner decides to do so, it must be removed by an authorised tion of greenhouse gas emissions of the national economy, or to person. Otherwise, the natural persons are subject to a fine of up to support climate projects and measures in developing countries. EUR 2,500, and legal persons may be charged up to EUR 120,000.

9.2 Aside from the emissions trading schemes mentioned 112 Environmental Insurance Liabilities in question 9.1 above, is there any other requirement to monitor and report greenhouse gas emissions? 11.1 What types of environmental insurance are available in the market, and how big a role does In some industries, any operator that intends to emit greenhouse environmental risks insurance play in your jurisdiction? gases from its facility must hold a valid permit, which may be granted only if the applicant complies with the requirements for Certain operators (enterprises of B category) pursuant to the monitoring greenhouse gas emissions as well as with reporting Act on the Prevention and Recovery of Environmental Damage standards in accordance with Commission Regulation (EU) No. are required to hold a mandatory insurance policy to cover their 601/2012 on the monitoring and reporting of greenhouse gas liability for environmental damage. emissions, which is effective until 31 December 2020 and after- Besides that, it is common for enterprises which operate their wards repealed by Commission implementing Regulation (EU) business in sectors where environmental damage is likely to No. 2018/2066 on the monitoring and reporting of greenhouse occur, to take out commercial insurance policies to cover their gas emissions pursuant to Directive 2003/87/EC of the European liability for such damage. Parliament and of the Council and amending Commission Regulation (EU) No. 601/2012. In addition, Slovakia is bound 11.2 What is the environmental insurance claims to annually report the amount of produced greenhouse gas emis- experience in your jurisdiction? sions, pursuant to the United Nations Framework Convention on Climate Change (the “UNFCCC”) and the Kyoto Protocol. There is no particular experience concerning environmental insurance claims in the Slovak jurisdiction. 9.3 What is the overall policy approach to climate change regulation in your jurisdiction? 122 Updates

A solution that would ultimately prevent or at least minimise 12.1 Please provide, in no more than 300 words, a the risks and negative impacts of climate change is a combina- summary of any new cases, trends and developments in tion of: direct measures aimed at reducing greenhouse gas emis- environment law in your jurisdiction. sions; and indirect measures by reducing the negative impacts of energy, agriculture and other economic activities. In February 2019, the Ministry adopted the national waste preven- In order to protect the environment, the Air Act No. 137/2010 tion programme valid for six years, with effect from 2019 to 2025 Coll., as amended, establishes national emission reduction commit- (“the Programme”). The Programme introduces, among others, the ments valid for 2020 and subsequent years. Emissions from selected following measures to protect the environment: (i) to foster packag- pollutants are expected to decrease by up to 57% from 2020 to ing-free shops; (ii) to build a network of fountains with potable water; 2029. The Air Act has also established a national programme to and (iii) to place a ban on the use of disposable plastics in public events control air pollution with the aim of limiting the anthropogenic and permanent establishments (which shall be replaced by reusable emissions of greenhouse gases. The Ministry, in accordance with packaging). For this purpose, the Public Health Authority of the the Air Act, submitted the draft of the national programme to the Slovak Republic in cooperation with the Ministry prepared a meth- EU Commission at the end of 2018. The final national programme odological guide to support the establishment of the packaging-free shall pass the standard legislative process and after its approval by shops, the distribution of its goods and the use of reusable packaging. the Government of the Slovak Republic will be submitted to the The guide contains, for instance, the basic requirements for pack- European Commission by 31 December 2019. aging, which the customers shall bring by themselves (i.e. the packaging must be suitable for packaging their specific foods). In addition 102 Asbestos to the above-mentioned, the Ministry plans to promote the packaging-free sales through a new website portal named “Zero Waste” data- 10.1 What is the experience of asbestos litigation in base. It should include the list and information on packaging-free your jurisdiction? “bricks and mortar” shops and online stores offering the sale of food and other products. As the greatest challenge, the Programme iden- Case law related to asbestos is not common in Slovakia and there tifies the biodegradable waste. Despite the mandatory collection of are only a few minor cases, which are not of national relevance. bio-waste, the process of its collection is very slow and does not reach the required level. Therefore, by 2025, the Ministry aims to carry out an analysis of effective biodegradable waste management. 10.2 What are the duties of owners/occupiers of premises in relation to asbestos on-site?

Although the production of asbestos has already been cancelled, public health is still endangered due to its widespread use. Pursuant

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Marián Bošanský is one of the founding partners of URBAN STEINECKER GAŠPEREC BOŠANSKÝ, who is responsible for the practice area of environment law, in particular waste management law. On a daily basis, Marián also focuses on providing legal advice to companies and other forms of business, including setting up corporate structures, relationships and rules among management, executive and supervisory bodies (corporate governance), cross-border restructurings of holding groups and, last but not least, mergers and acquisitions (M&A). Over many years of practising law, Marián has worked at several major law firms active in Slovakia and the Czech Republic. Education & Qualifications: Pan-European University in Bratislava, Faculty of Law (Master’s Degree). Pan-European University in Bratislava, Faculty of Law (Doctorate).

URBAN STEINECKER GAŠPEREC BOŠANSKÝ Tel: +421 904 539 495 Havlíčkova 16 Email: [email protected] 811 04 Bratislava URL: www.ufgb.sk Slovak Republic

Ondrej Urban is one of the founding partners of URBAN STEINECKER GAŠPEREC BOŠANSKÝ and is responsible for the key practice areas of dispute resolution and cartel litigation. Ondrej specialises in civil and commercial litigation, administrative judiciary litigation, as well as commercial and investment arbitration, where he gained extensive experience in various high-profile and sensitive cases by representing clients in all stages of administrative and judiciary proceedings, including the Supreme Court of the Slovak Republic, the Constitutional Court of the Slovak Republic, the Court of Justice of the European Union, and the European Court of Human Rights. Over the years, Ondrej worked as an attorney at a reputable Czech-Slovak law firm, as an in-house lawyer in multinational companies, and also as a tax specialist at a major consultancy firm. Education & Qualifications: Pavol Jozef Šafárik University in Košice, Faculty of Law, Mgr. (Master’s degree). Pavol Jozef Šafárik University in Košice, Faculty of Law, JUDr. (Doctor’s degree). European School of Management ESCP – EAP, Berlin, MBA (Master of Business Administration).

URBAN STEINECKER GAŠPEREC BOŠANSKÝ Tel: +421 908 137 218 Havlíčkova 16 Email: [email protected] 811 04 Bratislava URL: www.ufgb.sk Slovak Republic

URBAN STEINECKER GAŠPEREC BOŠANSKÝ is a full-service law firm with solid values and a stable position in a strong competitive environment. We have a clear goal of providing our clients with not only standard legal advice but also exceptional service. Our clients in particular appreciate that at a single point they can get highly qualified and professional advice in all areas of both their work and private life. We combine a wide range of practice areas with precision, persistence and commitment to do the job properly. Environmental law along with waste management are key practice areas of UFGB. Our lawyers have gained substantial knowledge and experience throughout many years of practising law. www.ufgb.sk

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Slovenia Slovenia

Vesna Ložak Polanec

Law Firm Neffat Domen Neffat

12 Environmental Policy and its participate in the procedures of adopting regulations, policies, strategies, programmes, plans and plans relating to environ- Enforcement mental protection in accordance with the EPA. The public also has the right to participate in the procedures of issuing specific 1.1 What is the basis of environmental policy in your legal acts relating to environmental interventions. jurisdiction and which agencies/bodies administer and Access to data and the work of ARSO is also guaranteed by enforce environmental law? the public information access regulations.

Slovenia’s environmental policy is based on principles of sustain- 22 Environmental Permits able development, precaution principles and the ‘polluter pays’ principle set forth in the Environmental Protection Act (Zakon o 2.1 When is an environmental permit required, and may varstvu okolja); hereinafter referred to as: EPA. environmental permits be transferred from one person to The most important role regarding the Environmental law in another? Slovenia is carried out by the Slovenian Environment Agency, (Agencija Republike Slovenije za okolje), hereinafter referred to as Slovenian legislation provides a wide range of permits, certif- ‘ARSO’, a body of the Ministry of the Environment and Spatial icates and approvals. The process for obtaining a permit, Planning which performs expert, analytical, regulatory and and knowing which one to obtain depends on the type of administrative tasks related to the environment at the national intended waste management procedure and/or environmental level. Environmental law is also enforced by the Inspectorate encroachment. for the Environment and Spatial Planning, a body within the The requirement for an environmental permit usually Ministry of the Environment and Spatial Planning. depends on the sector, size of the plant or installation and type of industry. The operator must, for example, obtain an environ- 1.2 What approach do such agencies/bodies take to mental permit for the operation of the installation in which an the enforcement of environmental law? activity likely to cause pollution of a large-scale environment is to be carried out (‘IED permits’). Obtaining an environmental Enforcement is governed by a wide range of instruments, such permit can also be mandatory for the operation of other instal- as the Environmental Impact Assessment procedure, mandatory lations or activities, which are defined by special regulations (for obtainment of environmental protection consents and permits example, plants and installations that cause significant air emis- for specific activities, mandatory monitoring and notification sion or noise impact). requirements and mandatory reports. Most environmental permits can be transferred from one The Inspectorate of the Republic of Slovenia for the operator to another; however, a special administrative proce- Environment and Spatial Planning supervises the implemen- dure and approval of ARSO as the competent authority needs to tation of regulations in the field of environmental protection be carried out for the transfer. and nature conservation, water management, industrial pollution and performs administrative and expert tasks in the field 2.2 What rights are there to appeal against the of cross-border shipment of waste through routine, non-rou- decision of an environmental regulator not to grant an tine and control inspections, coordinated inspection campaigns, environmental permit or in respect of the conditions minor offence proceedings, and enforcement. contained in an environmental permit?

1.3 To what extent are public authorities required to The decision of ARSO as an environmental regulator (‘first provide environment-related information to interested instance decision’) can be challenged by filing an appeal before persons (including members of the public)? the Ministry of the Environment and Spatial Planning (as the authority that is hierarchically superior to ARSO) within 15 days Access to environmental information is guaranteed for the from obtaining the decision. participants of the administrative proceedings and also the If the appeal is not successful, a claim can be filed before the public. Based on the EPA, the environmental information is Administrative Court of the Republic of Slovenia within 30 days public and everyone has the right to access environmental infor- from obtaining the decision regarding the appeal against the mation in accordance with the law. The public has the right to first instance decision.

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Appeal and/or action in court can be filed by the operator, must have an environmental permit in accordance with the applying for the permit, and certain other persons, if they EPA. The legal or natural person who collects, transports or participated in the environmental permit issue process (such as trades with waste must have a decision by ARSO to fulfil the NGOs). conditions for collection, transportation or trade of waste, or needs to be entered in a special register. The Decree on waste describes all these duties and controls in detail. 2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly However, in some cases it is not clear whether a certain mate- polluting industries or other installations/projects? rial is really a waste or not (the right definition can have great consequences for the material’s holder); therefore, the definition can be heavily debated (before the competent authorities or even Specific requirements regarding cases, when an environmental courts). impact assessment (presoja vplivov na okolje) needs to be carried out, are specified in the Decree on categories of activities for which an environmental impact assessment is mandatory (Uredba 3.2 To what extent is a producer of waste allowed o posegih v okolje, za katere je treba izvesti presojo vplivov na okolje). to store and/or dispose of it on the site where it was Some projects are subject to a preliminary check to assess produced? whether the environmental impact assessment is necessary, for others the environmental impact assessment is always manda- A producer of waste must comply with all the conditions set tory (these activities include spatial activities that are either forth in the EPA and Decree on waste regarding storage and/or causing major pollution or are representing greater risks to the disposal of waste produced on the site. The producer must have environment). a waste management plan in place to implement waste prevention and reduction measures and to manage waste. A specific permit is required for storage and disposal on the 2.4 What enforcement powers do environmental regulators have in connection with the violation of site where it was produced. There are usually time and quan- permits? titative limits for waste storage and strict conditions for waste disposal. Compliance with the environmental permit is controlled by the Inspectorate as the competent authority. If permits are violated 3.3 Do producers of waste retain any residual liability or some activities are carried out without a permit even if it in respect of the waste where they have transferred it is mandatory, the Inspectorate can order measures to remedy to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/ irregularities and deficiencies within a certain time limit, carry disappears)? out procedures in accordance with the Minor Offences Act (e.g. impose a fine for the violation), and as well as declaring a criminal offence or file a criminal complaint for an offence pros- A waste producer is obliged to consign the waste to an author- ecuted ex officio, it can propose that the competent authorities ised third party or waste management operator which fulfils adopt further measures (such as a revocation of the permit, certain conditions set forth in the Decree of waste. which can be carried out by ARSO). If liability of the producer of waste remains, after the waste If the inspector establishes that the environmental permit was was transferred to another person for disposal/treatment violated, it has a right and duty to: off-site, is not clearly defined. ■ order that the irregularities shall be eliminated within a time period; 3.4 To what extent do waste producers have ■ order the implementation of measures to eliminate the obligations regarding the take-back and recovery of their sources of excessive burden within the time limit specified; waste? ■ order the limitation or adjustment of the operation of the device to the prescribed limit values or rules of conduct; The producers have an obligation regarding the take back and ■ propose to the competent ministry the revocation of the recovery of their waste in cases of illegal cross-border shipments. environmental permit; and For some products, an (‘EPR’) scheme has been introduced. ■ prohibit the operation or operation of the installation or An update of this system is foreseen for the next legislative plant if it operates without an environmental permit or change of the EPA. certificate or permit for greenhouse gas emissions, where required. 42 Liabilities 32 Waste 4.1 What types of liabilities can arise where there is a breach of environmental laws and/or permits, and what 3.1 How is waste defined and do certain categories of defences are typically available? waste involve additional duties or controls? There are different types of liabilities: According to the EPA, waste is any substance or object that the ■ civil liability (risk of being held liable for damages to holder discards, plans to discard, or must discard. The frame- persons or property under the law of torts) – defence work or basic regulation governing waste is stated in the EPA: depends on the tort law rules; The polluter must comply with all waste management rules ■ special environmental liability for environmental damage necessary to prevent waste and to ensure that waste is recov- is based on EU Directive 2004/35 known as the environ- ered or disposed of if recovery is not possible. A legal or natural mental liability directive (‘ELD’). It is a strict liability and person who processes or disposes of their waste or waste of the damage can include harm to species and natural habi- other producers in accordance with the prescribed procedures tats, water damage or land damage;

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■ administrative liability. In connection with the perfor- 52 Contaminated Land mance of its activity, the operator is responsible for preventing the imminent danger of environmental damage and for preventing or remedying environmental damage 5.1 What is the approach to liability for contamination regardless of fault (under the EPA); defence is available (including historic contamination) of soil or groundwater? through a special procedure before ARSO; ■ administrative offences liability – defence is available through court procedure; and The basic principle is ‘the polluter pays’, so the responsibility ■ criminal liability; defence is available through the criminal for the remediation lies with the subject responsible for the procedure. contamination. In connection with the performance of its activity, the polluter is responsible for the prevention of an imminent threat 4.2 Can an operator be liable for environmental of environmental damage and for the prevention or repair of damage notwithstanding that the polluting activity is environmental damage, regardless of fault. This includes envi- operated within permit limits? ronmental damages to soil or groundwater. In these cases, the polluter must cover all costs of preventive or remedial meas- Certain operators are responsible for environmental damage regard- ures for environmental damage, which are stated in the EPA and less of fault (there is a strict liability imposed on certain operators). Decree on types of measures for remediation of environmental The EPA does not give the operator the possibility of a ‘permit damage (Uredba o vrstah ukrepov za sanacijo okoljske škode). defence’, so an operator would not be held liable if it can demon- Liability for contamination of soil or groundwater is regulated strate that it is not responsible for negligent or wilful conduct or in the abovementioned EPA and Decree. that the environmental damage was caused by an emission or event expressly envisaged in the permit. There is no case law or court judgments regarding this question yet (if the operator can be liable 5.2 How is liability allocated where more than one even if the polluting activity is operated within the permit limits). person is responsible for the contamination? Slovenian Civil Code regulates that damage resulting from a generally beneficial activity under a permit issued by the competent The EPA contains a specific rule regarding the allocation of authority shall be recovered by its maker (operator). Only damage liability in situations in which the contamination was caused by in excess of normal limits is illegal. Under this provision, the more than one contributing factor: If more than one person is operator could be held liable for the polluting activity operated responsible for the contamination and it is not possible to deter- within permit limits. mine the responsibility of an individual person, they are jointly and severally liable. Therefore, the authority has full discretion to go after the person who is best placed to carry out the meas- 4.3 Can directors and officers of corporations attract ures and cover the costs on its own. This person is then left with personal liabilities for environmental wrongdoing, and to what extent may they get insurance or rely on other a claim against the other responsible parties. indemnity protection in respect of such liabilities? 5.3 If a programme of environmental remediation Directors and officers of corporations may attract personal liability is “agreed” with an environmental regulator, can the for environmental wrongdoing committed in the corporation’s regulator come back and require additional works or can interests. Environmental functions may be delegated to other a third party challenge the agreement? people (employees) within a corporation, so they are liable for the environmental wrongdoing committed in the corporation’s inter- Environmental remediation is determined in a formal admin- ests. Even if there is an internal organisation, where the delegation istrative procedure which is divided into different stages. The of competences takes place, the overall responsibility remains if a procedure ends with a formal decision issued by ARSO, which decision affects the corporation as a whole. Insurance is available is a binding administrative act. This decision can be challenged under directors and officers (‘D&O’) insurance policies. before the Administrative Court of the Republic of Slovenia within 30 days. When the decision is final, subsequent changes or orders are not possible (or are possible in a very restricted way by 4.4 What are the different implications from an a new procedure and decision). Once the remediation has been environmental liability perspective of a share sale on the one hand and an asset purchase on the other? conducted there is no legal basis for such a subsequent claim. A third party can challenge the legitimacy of the decision only if they were included in the administrative proceeding in the In a share sale, the purchaser buys the company with all its liabil- first place, however, there are specific limitations and deadlines ities. In an asset purchase, where the operator remains the same for this (if it infringes their individual rights and if they have a entity, the past liabilities remain, in principle, with the previous special interest in taking action). operator. However, in practice it is difficult to distinguish between the previous and the new operator, if the previous activities are not discontinued. 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 4.5 To what extent may lenders be liable for in part, contamination; and to what extent is it possible environmental wrongdoing and/or remediation costs? for a polluter to transfer the risk of contaminated land liability to a purchaser? A lender liability (that the lender would be held liable for environmental wrongdoing or remediation costs) is not recognised in There are no cogent rules that would restrict the transfer of Slovenia. liability to a purchaser, but any agreement reached by the

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previous owner and the purchaser regarding liability will only information to the ARSO including a proposal for remedial affect them as the parties of such agreement, and cannot influ- action for approval. If this is not done by the polluter himself, ence any obligations under public law. According to the EPA, ARSO additionally informs him of this obligation and requests all of the clean-up costs are to be borne by the polluter (who the disclosure of all necessary information within a specified caused the contamination), who is also strictly liable for any time period. Failure to give notification may be subject to an damages arising from this pollution. This also means that a administrative offence liability. person does have a private right of action to seek contribution There is no legal obligation for disclosure of the pollution to from a previous owner based on provisions of civil law (tort law the third parties. rules) regardless of a transfer of the risk to the purchaser. If the risk was transferred to the purchaser and if a person wants to 7.2 When and under what circumstances does a person seek contribution from a previous owner or occupier of contam- have an affirmative obligation to investigate land for inated land, the previous owner could later claim contribution contamination? from the purchaser based on the terms of the contract between the owner and purchaser. When it is clear that environmental damage occurred, the polluter must prepare a proposal for remedial measures, which 5.5 Does the government have authority to obtain from shall include ex ante evaluation of the feasibility and feasibility a polluter, monetary damages for aesthetic harms to of remedial measures, and the definition of environmental public assets, e.g. rivers? damage. This could also mean he needs to investigate what the scope of contamination is. Aesthetic harms to public assets cannot be subject to monetary However, there is no general affirmative obligation to inves- damages and are not a special category of damage regulated by tigate land for contamination for subjects, who are not respon- a specific legislation. sible for the contamination (‘polluters’). However, damages to the natural habitats and biodiversity can be covered by liability under the EPA. 7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective 62 Powers of Regulators purchaser in the context of merger and/or takeover transactions? 6.1 What powers do environmental regulators have to require production of documents, take samples, conduct Slovenian environmental legislation does not impose any disclo- site inspections, interview employees, etc.? sure obligations regarding environmental problems for a seller to a prospective purchaser. Environmental regulators have quite a wide range of powers to However, in any merger and/or takeover transaction the obtain documentation, samples, inspect sites and obtain infor- seller is advised to fully disclose all the information that could mation regarding possible environmental offences (such as be important for the purchase, otherwise, he could risk contrac- permit violations, legislation violations). tual or even fraud liability. In carrying out the tasks of inspection, the Inspectorate has the right to: inspect the premises, facilities, plants, installations, 82 General working equipment, other documents; to enter into the plots and lands, take samples and carry out examinations; and to 8.1 Is it possible to use an environmental indemnity photograph or record on another person’s visual medium, prem- to limit exposure for actual or potential environment- ises, objects, installations, seize objects, documents and speci- related liabilities, and does making a payment to another mens to secure evidence, etc. It also has the right to conduct person under an indemnity in respect of a matter (e.g. interviews and obtain information from employees, directors, remediation) discharge the indemnifier’s potential officers and other people. If this is not enabled by the company, liability for that matter? it can be exposed to a misdemeanour fine which forces it to comply with its obligations. It is possible for purchasers to require remaining environmental In other administrative procedures it depends on each proce- liability risks to be covered by the purchase agreement or appro- dure if the authority is required to collect the relevant facts and priately considered with the purchase price (the costs for reme- evidence or the parties need to file it during the procedure on diation can be calculated in the purchase price). their own (otherwise they risk failing with their claim). However, any payments made relate only to the contractual obligations between contractual parties and making a payment 72 Reporting / Disclosure Obligations to another person does not discharge the indemnifier’s potential liability for that matter. Environmental indemnities agreed with 7.1 If pollution is found on a site, or discovered a contract cannot limit the environmental liability regarding the to be migrating off-site, must it be disclosed to an competent authorities. Indemnifiers’ obligations under public environmental regulator or potentially affected third law remain unaffected and cannot be changed with a contract. parties?

8.2 Is it possible to shelter environmental liabilities off Yes, in the case of environmental damage occurrence, the balance sheet, and can a company be dissolved in order polluter must immediately notify ARSO as the environmental to escape environmental liabilities? regulator of all relevant facts, take all necessary measures to limit the environmental damage and send all the necessary There are no specific rules that can prevent a company from being dissolved in order to escape environmental liability,

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however, a company can only be dissolved taking into account 9.2 Aside from the emissions trading schemes mentioned the general rules of company dissolution (any outstanding liabil- in question 9.1 above, is there any other requirement to ities prevent it, which could include environmental liabilities). monitor and report greenhouse gas emissions?

8.3 Can a person who holds shares in a company Yes. Producers, environmental permit holders and other enti- be held liable for breaches of environmental law and/ ties are obliged to monitor and report greenhouse gas emissions. or pollution caused by the company, and can a parent This obligation is usually specified in environmental permits or company be sued in its national court for pollution based on certain other regulations and Decrees. caused by a foreign subsidiary/affiliate?

9.3 What is the overall policy approach to climate Slovenian environmental law does not dictate liability on share- change regulation in your jurisdiction? holders, or a parent company for pollution. Shareholders have limited liability for obligations of the company except for those defined by law. There is a special Division for Environment and Climate Change The parent company could be sued only if it is established that regulation, organised by the Ministry of the environment and it is responsible for the pollution its foreign subsidiary/affiliate spatial planning: the Environment directorate, which takes care directly caused (for example: direct instructions to the subsid- of the preparation and monitoring of basic strategic documents iary, etc.). However, no special rules exist on this responsibility. and strategic orientations in the field of climate change mitigation and adaptation; and the reduction of greenhouse gas emissions and other air pollutants. 8.4 Are there any laws to protect “whistle-blowers” who In addition to the EPA, there is no special climate protection report environmental violations/matters? act. There are, however, multiple other decrees and pieces of legislation specifically designated to decrease greenhouse emissions. Slovenian environmental law does not provide protection for the whistle-blowers who report environmental violations/matters. 102 Asbestos No legislation has been enacted regarding this matter yet. 10.1 What is the experience of asbestos litigation in 8.5 Are group or “class” actions available for pursuing your jurisdiction? environmental claims, and are penal or exemplary damages available? There is an Act Concerning Remedying the Consequences of Work with Asbestos (Zakon o odpravljanju posledic dela z azbestom) The Collective Actions Act (Zakon o kolektivnih tožbah) states that that determines occupational diseases due to exposure to a class action lawsuit may be used for claims regarding liability asbestos dust or powder of materials containing asbestos at for damages, caused by an environmental accident, as defined the time of production, use and disposal of asbestos products, by the EPA. conditions for their identification, assessment and payment of a There are no penal or exemplary damages available under lump sum compensation and entitlement to a disability pension Slovenian environmental law. under more favourable conditions conditions for persons who have been diagnosed with occupational disease due to asbestos 8.6 Do individuals or public interest groups benefit exposure under this Act. from any exemption from liability to pay costs when Asbestos litigation is mostly connected to compensation pursuing environmental litigation? claims filed by victims of exposure to asbestos and their families according to this Act. There is no other extensive environment-related asbestos Slovenian environmental law does not recognise a cost privilege litigation. for individuals or public interest groups.

92 Emissions Trading and Climate Change 10.2 What are the duties of owners/occupiers of premises in relation to asbestos on-site?

9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading According to the Act Concerning Remedying the Consequences market developing there? of Work with Asbestos production, transport and storage and import of asbestos and products containing asbestos is prohib- In order to ensure a reliable and timely recording of the status ited in the territory of the Republic of Slovenia. and monitoring of trading in emission allowances, ARSO Compulsory management of asbestos-containing waste is has established and maintains a register of emission coupons defined in The Decree on management of waste containing (‘REC’). Based on the obtained emission coupon for the instal- asbestos. The Decree states that disposal of asbestos waste shall lation, the installation operator shall be allowed greenhouse gas be carried out on the basis of regulations governing waste manage- emissions. Every year the ministry of the Environment and ment, landfilling of waste or incineration of waste. The Decree Spatial Planning based on the Decree on the environmental tax also lays down other mandatory measures concerning the duties on pollution caused by carbon dioxide emissions publishes the of owners/occupiers of premises in relation to asbestos on-site. average price emission coupons for the previous year. The emission coupons that are not distributed free of charge, are sold on the auction that is organised in accordance with the European Commission Regulation 1031/2010.

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112 Environmental Insurance Liabilities 122 Updates

There is a variety of environmental insurance available on the Some milestone decisions of the Administrative Court are putting market. Insurance can cover different risks, such as third-party more context of Environmental Liability and Environmental claims on the basis of civil liability, and also other liabilities, as Damage into Slovenian practice, specifically what measures stated in question 4.1. are proportionate to damage caused. Questions have arisen However, environmental risks insurance is still new and devel- with regard to specific construction works including an exca- oping so it is hard to say how big a role it will play in Slovenia. vation of tunnels where mineral raw material is acquired and its use afterwards in connection with the definition of waste. The Environmental Authority sees some difficulties with the system 11.2 What is the environmental insurance claims experience in your jurisdiction? of construction products combined with the ‘End of Waste’ regulation and this, aside from the treatment of waste and producer’s extended responsibility, is one of the main issues in the proposed There is currently no comprehensive data regarding environ- changes of the Environmental Protection Act (‘ZVO-1’). mental insurance claims. Since environmental insurance is fairly new, there is no case law regarding this matter. However, insurance companies are showing interest in this particular risk since the ELD was adopted and transposed into Slovene legislation.

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Vesna Ložak Polanec is an Attorney-At-Law with demonstrated experience of working in the law practice industry. She is a strong legal professional skilled in Environmental and Waste Management Law, Employment Law and Litigation. She has a lot of experience in Client Representation before courts in civil procedures and in representation before other entities, especially in administrative procedures. She consults and provides legal support for her clients in the area of Data Protection Law, where she also works as a Data Protection Officer. She is also active as a lecturer and regularly publishes articles on various legal topics from areas of her work.

Law Firm Neffat Tel: +386 1 300 00 70 Miklošičeva cesta 18 Email: [email protected] Ljubljana, SI-1000 URL: www.neffat.si/en Slovenia

Domen Neffat LL.M. is the founder and Managing Partner of Law Firm Neffat. Mr. Neffat focuses his practice on Corporate Law, Real Estate (including construction), Environmental Law, Waste Management Law, Copyright Law and Public-Private Partnerships (PPP). He has an extensive experience in domestic and cross-border business transactions and is one of the leading lawyers in the field of the Environmental and Waste Management Law in Slovenia. Mr. Neffat has the capability to create innovative solutions in a compressed timeframe and is valued for always providing advice that benefits his clients the most. His work also covers transactions designed to support restructurings of group companies by change of ownership. He is very strong in advising on construction projects. Mr. Neffat also has a very broad base of skills in restructuring, crisis management and in corporate governance in general. He regularly holds lectures on topics of Corporate Law, Environmental Law and Real Estate. He is an arbitrator at the Slovene National Football Association and president of the Sport Association of Lawyers (Športno društvo Pravnik).

Law Firm Neffat Tel: +386 1 300 00 70 Miklošičeva cesta 18 Email: [email protected] Ljubljana, SI-1000 URL: www.neffat.si/en Slovenia

Law Firm Neffat has grown rapidly in the Republic of Slovenia. The Firm actively works in the field of Corporate Law, Public Procurement, Waste Management and Environmental Law, Construction and Engineering law, Real Estates, Litigation, Commercial Law, GDPR, White Collar Crime, Copyright law and many others. In an increasingly complex economic world, we believe that it is our role to assist our clients in working out the possible course of action resulting from various situations; obtaining efficient, comprehensive and tailored legal advice in various complex situations; and optimising decision-making in every term possible. In order to achieve this, our team believes that the quality of the relationship that we have with our clients is one of the key factors to the success of the legal work entrusted to us and we must understand the economic, sector-based, financial and managerial culture of our clients. www.neffat.si/en

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Jesús Andrés Sedano Lorenzo

Uría Menéndez Bárbara Fernández Cobo

12 Environmental Policy and its 1.3 To what extent are public authorities required to provide environment-related information to interested Enforcement persons (including members of the public)?

1.1 What is the basis of environmental policy in your Law 27/2006, of 18 July on the Right to have Access to jurisdiction and which agencies/bodies administer and Information, Public Participation and Access to Justice in enforce environmental law? Environmental Matters, is the standard which sets out the rights and obligations related to providing environmental information. Article 45 of the Spanish Constitution establishes the right to In general terms and according to this rule, irrespective of benefit from an appropriate environment as an essential condi- his consideration as an interested party, any person has the right tion for the development of the individual, while establishing to access environmental information held by public authorities. the duty to preserve it. Therefore, those who fail to comply with The exceptions to this rule are listed in Article 13 (e.g. request the obligation to use natural resources rationally and to conserve is too general or irrational, referred to non-concluded materials, nature will be obliged to repair the damage caused, regardless internal communications, etc.). They are subject to restrictive of the administrative or criminal penalties that may also apply. interpretation. In Spain, powers over environmental issues are shared between three authorities: the state; the autonomous regions; 22 Environmental Permits and the municipalities.

In Spain, competence over environmental matters is shared Environmental permits are required to carry out activities between: which entail environmental impact. The type of permit would (i) The state, which enacts basic environmental legislation and vary depending on the level of potential impact on the environ- implements control over certain environmental aspects ment of each activity. affecting more than one autonomous region, such as the In general terms, all environmental permits can be transferred greenhouse gas emission trade scheme or the authorisa- to another titleholder. This transfer may be subject to prior tion or environmental assessment of certain activities with communication to the authorities. That is the case, for instance, interregional impacts. State powers are generally exercised with integrated environmental authorisations according to through the Ministry for Ecological Transition. Royal Legislative Decree 1/2016 of 16 December, approving the (ii) The autonomous regions, which may approve additional consolidated text of the Law on Integrated Pollution Prevention rules for stricter protection and are responsible for their and Control. enforcement. As a result, autonomous regions are usually the authorities responsible for the granting of main environmental permits (e.g. the Integrated Environmental 2.2 What rights are there to appeal against the decision of an environmental regulator not to grant an Authorisation), conducting environmental impact assess- environmental permit or in respect of the conditions ments, inspecting compliance with the applicable regula- contained in an environmental permit? tions or sanctioning any infringement. These powers are exercised through bodies equivalent to state ministries. Any decision of the authorities may be appealed before the (iii) Municipalities, whose powers on environmental issues administration or before the courts. In general terms, if there relate to municipal environmental permits, urban waste is a higher authority to the one that issued the resolution, an and noise limits. These powers must be executed in administrative appeal must be filed before said higher authority. accordance with the regulations issued by the state and the If there is no higher authority, or if such an appeal has already autonomous regions. been dismissed, a jurisdictional appeal must be filed before the courts.

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The legal regime applicable in this respect is contained in 3.3 Do producers of waste retain any residual liability Law 39/2015, of October 1, of the Common Administrative in respect of the waste where they have transferred it Procedure of the Public Administrations, for administrative to another person for disposal/treatment off-site (e.g. appeals, and Law 29/1998, of 13 July, Regulating the Contentious if the transferee/ultimate disposer goes bankrupt/ Jurisdiction, for judicial appeals. disappears)?

2.3 Is it necessary to conduct environmental audits No. If a waste producer delivers the waste to an authorised or environmental impact assessments for particularly waste manager in full compliance with the applicable regula- polluting industries or other installations/projects? tions, its liability ends with such delivery.

Yes. Highly polluting industries are subject both to environ- 3.4 To what extent do waste producers have obligations mental impact assessments before their execution and to peri- regarding the take-back and recovery of their waste? odic monitoring and reporting obligations while in operation. Law 22/2011 establishes the extended producer responsibility 2.4 What enforcement powers do environmental scheme. This regime sets the responsibility of the manufacturer regulators have in connection with the violation of of a product throughout its useful life, including when it becomes permits? waste. It therefore imposes obligations on the producer for the take-back, recycling and final disposal of the waste. Failure to comply with applicable regulations or with the condi- In addition, take-back obligations apply for certain types of tions stipulated in permits may lead to disciplinary proceedings waste. For instance, Royal Decree 110/2015 of 25 February and the imposition of sanctions. Among others, sanctions may on wastes of electric and electronic equipment (WEE), among consist of fines, temporary or permanent closure of premises, other obligations, stipulate the obligation of the distributors to suspension of the activity, publication of the penalty, the suspen- take-back the WEE. sion or withdrawal of authorisations or prohibition to contract with the public sector. In addition, environmental restoration 42 Liabilities obligations may also be imposed. Moreover, in certain cases, the violation of permits may lead 4.1 What types of liabilities can arise where there is a to criminal liability, applicable to natural and legal persons. breach of environmental laws and/or permits, and what defences are typically available? 32 Waste Failure to comply with environmental regulations may give rise 3.1 How is waste defined and do certain categories of to: waste involve additional duties or controls? (i) Administrative liability. In general terms, administrative liability leads to the imposition of sanctions, as described in Article 3. a) of Law 22/2011, of 28 July, on Waste and Polluted question 2.4. Sanctions may only be imposed after discipli- Soils, defines waste as any substance or object that the possessor nary proceedings, in which the alleged offender has the right disposes of or has the intention or obligation to do so. to be heard. The defences vary for each case depending the The Law distinguishes between different types of waste, such circumstances. This notwithstanding, possible defences as hazardous, domestic, commercial, industrial or biowaste. may consist on the exceedance of the limitation period Each of the category is subject to specific duties. For instance, applicable (as a general rule these periods are three years the production of hazardous waste is subject to prior communi- for very serious offences, two years for serious offences cation to the relevant authorities and registration within a Public and six months for minor offences (Law 40/2015)), the lack Registry, and its treatment is subject to specific authorisations or of sufficient evidence supporting the infringement or the the request of financial guarantees. violation of the proportionality principle. On the other hand, there are specific regulations applicable to (ii) Criminal liability. Articles 343 and 345 of the Spanish waste from electrical and electronic equipment, waste batteries, Criminal Code, among others, sanction environmental waste from construction and demolition works, etc. breaches. The defences vary for each case depending the circumstances, but companies may defend themselves evidencing that they have approved and correctly imple- 3.2 To what extent is a producer of waste allowed mented compliance policies. Also, as mentioned above, to store and/or dispose of it on the site where it was another potential defence is the elapse of the limitation produced? period, which for basic environmental crimes is, in most cases, five years. Non-hazardous waste may be stored at the place of production (iii) Environmental liability. When there is damage to the envi- for a maximum of two years when destined for recovery, and up ronment or the risk of such damage, environmental liability to one year when destined for disposal. In the case of hazardous arises. Under Law 26/2007 on Environmental Liability, waste, the maximum storage period is reduced to six months. In operators must restore any environmental damage as well exceptional cases, the regional competent authority may extend as to implement any measure required to avoid or minimise that period. the environmental damage. On the other hand, in general terms, a producer of waste is (iv) Civil liability. This arises when damage is caused to a third obliged to hand the waste to an authorised waste manager. In party as a consequence of an environmental damage (e.g. the case the producer wants to dispose the waste by itself it must be decrease of value of a soil after its pollution). The general specifically authorised to do so. limitation period applicable in this case is five years for personal actions and one year for non-contractual actions.

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4.2 Can an operator be liable for environmental 5.2 How is liability allocated where more than one damage notwithstanding that the polluting activity is person is responsible for the contamination? operated within permit limits? When there are several polluters or when the liability between Yes. Compliance with the requirements, precautions and condi- them cannot be determined, all of them are liable jointly and tions laid down in the Laws or stipulated in the authorisa- severally (Article 26 of Law 22/2011). tions shall not exempt operators from environmental liability, according to Article 9.1 Law 26/2007. 5.3 If a programme of environmental remediation is “agreed” with an environmental regulator, can the 4.3 Can directors and officers of corporations attract regulator come back and require additional works or can personal liabilities for environmental wrongdoing, and a third party challenge the agreement? to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities? Yes. To avoid the declaration of a soil as polluted, a voluntary remediation plan may be filed before the authorities (Article Yes. The directors and officers may be considered respon- 38 of Law 22/2011). However, its approval does not prevent sible when their actions or omissions have been decisive for the the authorities from demanding additional works if the ones wrongdoing or when the company has ceased operations, and approved do not suffice in order to remove the unacceptable there are outstanding duties and obligations caused by them risk identified in the soil. (Article 13 of Law 26/2007 on environmental liability). They Yes, third parties may challenge the agreement provided that may also be held liable in relation to criminal and civil liability. they have a legitimate interest or in the exercise of class action With regard to administrative offences, the general rule is that the (see question 8.5 for class action). This is established by Law party liable is the company within whose authority the offence has 29/1998, in relation to Law 27/2006 on the Right to have Access been committed, and not its directors and officers. Nevertheless, to Information, Public Participation and Access to Justice in there are certain exceptions under which directors may be held Environmental Matters. Law 29/1998 ensures that citizens can administratively liable (e.g. Law on Coasts or the Law on Industry). participate in the process of achieving real and effective envi- Yes, directors and officers may get insurance to protect them- ronmental protection. selves against liability.

5.4 Does a person have a private right of action to 4.4 What are the different implications from an seek contribution from a previous owner or occupier of environmental liability perspective of a share sale on the contaminated land when that owner caused, in whole or one hand and an asset purchase on the other? in part, contamination; and to what extent is it possible for a polluter to transfer the risk of contaminated land liability to a purchaser? The acquisition of shares entails that all environmental liabilities are assumed by the buyer. On the contrary, asset purchases may reduce the liabilities of the buyer as the acquirer would not Yes, the owner or possessor obliged to restore a polluted soil be responsible for the environmental infringements of the seller; may seek compensation from the polluter by means of a civil the assets transfer would require the transfer or obtaining of the action. Private agreements regarding the assignment of liability environmental permits to carry out the activity. and obligations in this respect are valid. However, any agreement reached by the parties in relation to soil pollution liability will only be enforceable between the 4.5 To what extent may lenders be liable for parties. The authorities could impose soil remediation obliga- environmental wrongdoing and/or remediation costs? tions to any party (i.e. polluter, owner or possessor), irrespective of the private agreements reached between them. As a general rule, lenders are not liable for environmental wrongdoing or remediation costs assigned to their borrowers. 5.5 Does the government have authority to obtain from This notwithstanding, there may be exceptions. For instance, a polluter, monetary damages for aesthetic harms to Law 26/2007 may entail a lender severally liable if the powers public assets, e.g. rivers? exercised by the lender are so intense that the lender has a decisive economic power in the technical operation of the activity or may be considered as a de facto administrator. Spanish regulations do not provide a special protection regime for aesthetic harms to public assets. As a result, the general regime on environmental liability applies. Please note that this 52 Contaminated Land general regime is aimed more to achieve environmental restoration than to obtain monetary damages. 5.1 What is the approach to liability for contamination (including historic contamination) of soil or groundwater? 62 Powers of Regulators

6.1 What powers do environmental regulators have to Law 22/2011 and RD 9/2005 contain the legal regime applicable require production of documents, take samples, conduct to soil pollution. According to these regulations, in case of soil site inspections, interview employees, etc.? pollution, the first obliged to repair the damage is the polluter, followed by the owners and the possessors of the soil, in that order. This is a regime of strict liability, in which restoration obli- Operators of any activity that is able to produce environmental gations may be imposed regardless of culpability or even connec- affection is subject to monitoring and control from the authori- tion with the cause of the pollution. ties. In general terms, the authorities have all the powers required

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in order to confirm the compliance with applicable regulations this circumstance in the public deed transferring rights over the and the terms stipulated in the permits obtained. This includes, soil (Article 33 of Law 22/2011). for instance, the obligation to draft periodic reports on the activity (wastewater discharge, waste production, gas emissions, 82 General etc.) or even to conduct site inspections. Hindering the inspections may be considered a serious or very serious infringement. 8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment- 72 Reporting / Disclosure Obligations related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. remediation) discharge the indemnifier’s potential 7.1 If pollution is found on a site, or discovered liability for that matter? to be migrating off-site, must it be disclosed to an environmental regulator or potentially affected third parties? The administrative legal regime applicable in relation to environmental liability cannot be altered by private agreements. Yes. Any environmental damage identified on a site must be Therefore, the authorities will always be able to impose liability disclosed to the authorities. In this respect, Law 26/2007 to the person required by law. obliges operators to inform the authorities immediately as soon However, parties may assign liability among them and agree as they become aware of environmental damage or risk of envi- indemnity clauses. It allows for limitation of the risk exposure ronmental damage. Failure to comply with this obligation may and guarantees the recuperation of any cost imposed by the lead to liability. authorities. On the other hand, there may be an obligation to disclose the existence of pollution to third parties, especially when such 8.2 Is it possible to shelter environmental liabilities off communication is required in order to prevent damage to the balance sheet, and can a company be dissolved in order health of the environment. to escape environmental liabilities?

7.2 When and under what circumstances does a person No. It is not possible to exclude environmental liability from have an affirmative obligation to investigate land for the balance sheet as it must be treated and recorded like any contamination? other contingency. Particularly, Spanish General Accounting Plan obliges to account a provision for future expenditures to Operators of potentially polluting activities of the land, included repair damages to the environment, even if it has not been deter- in Royal Decree 9/2005, of 14 January, have the obligation to draft mined and quantified yet. and file before the authorities a report on the soil status, which In case of liquidation, pending environmental liabilities will must be updated periodically. In addition, this obligation also be transferred to shareholders up to the value of the corre- applies to owners of potentially polluted soils who want to change sponding liquidation quota and other patrimonial earnings the use of the soil or establish a different activity (Article 3). received during the two years prior to the liquidation. Also, in Furthermore, the activities subject to integrated environ- case certain conditions are met, criminal liability for attempting mental authorisation which use, produce or emit hazardous to escape from liability cannot be totally ruled out. substances must submit a “base report” with information on the state of land and groundwater contamination before the 8.3 Can a person who holds shares in a company commencement of its activity (Article 12.f of Royal Legislative be held liable for breaches of environmental law and/ Decree 1/2016). or pollution caused by the company, and can a parent company be sued in its national court for pollution caused by a foreign subsidiary/affiliate? 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 In general terms, shareholders cannot be held liable for pollu- transactions? tion caused by the company. Shareholders’ liability is limited to their participation in the share capital. As mentioned in question 7.1, in general terms environmental However, a shareholder may be held liable if he is a de facto damage must be disclosed to the authorities. Also, financial administrator (see above question 4.5). statements must include and make public a chapter on environ- As a general rule, Spanish Courts are not able to resolve envi- mental information, such as expenditure incurred in environ- ronmental damage caused abroad by foreign companies, even if mental protection, environmental risks assured and pending they are Spanish subsidiaries or affiliates. However, in order to judicial proceedings affecting the company, contingencies or confirm this conclusion is applicable to a specific case, an anal- investment owing to environmental reasons. ysis on the particular circumstances at stake would be needed. In relation to disclosure to prospective purchasers, there is no legal provision detailing the particular disclosure obliga- 8.4 Are there any laws to protect “whistle-blowers” who tions applicable. This notwithstanding, the Spanish Civil Code report environmental violations/matters? imposes the obligation to negotiate in good faith. As a result, if an environmental problem is identified after a transaction, Yes, whistle-blowers are protected as long as certain require- it may be terminated on the basis of the existence of hidden ments are met: (i) evidence of the offence provided by the defects or a defective consent (without prejudice of the liability whistle-blower suffice to confirm it or to initiate sanctioning regime stipulated in the contract). proceedings against the rest of the offenders; (ii) by the time Furthermore, in relation to soil, owners in which potentially of the complaint, the authorities must have enough grounds to polluting activities have been carried out are obliged to declare initiate sanctioning proceedings; and (iii) the damage has to be

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repaired. In such event, Article 62.4 of Law 39/2015 states that 9.2 Aside from the emissions trading schemes the authorities must exempt from administrative sanctions the mentioned in question 9.1 above, is there any other first complainant participating in the commission of an offence. requirement to monitor and report greenhouse gas If the aforementioned requirements are not fully met, the emissions? authorities must reduce the sanctions to be imposed if the whistle-blower provides evidence that implies a significant added Yes. The Fourth Additional Provision of Law 1/2005 exempts value to the evidence that the authorities had. In either case, small-scale installations – those that emit less than 25,000 protected whistle-blowers must cease their participation in the tonnes of equivalent carbon dioxide and combustion plants with offence and must not have destroyed any evidence related to the a rated thermal input below 35 MW – and hospitals from the offence. previous regime. In these cases, an alternative scheme is envis- There is no protection for whistle-blowers in the event of aged in Royal Decree 301/2011 and Royal Decree 371/2019, criminal offences. which define the mitigation measure equivalent to participation in the emission trading scheme. This regime imposes a 8.5 Are group or “class” actions available for pursuing minimum 20% reduction of emissions by 2020 and a 32% addi- environmental claims, and are penal or exemplary tional reduction for 2025, with regard to 2005. damages available? In addition, Royal Decree 18/2019, of 25 January, excludes installations with less than 2,500 tonnes of equivalent carbon Certain environmental associations can file administrative and dioxide from the emissions trading scheme. However, they are judicial appeals against environmental decisions made by the required to monitor and report their GEI emissions. authorities (e.g. the granting of a permit, the conclusions of an environmental impact assessment, etc.), without the need of 9.3 What is the overall policy approach to climate evidencing any particular interest in the matter. Likewise, inter- change regulation in your jurisdiction? ested parties may group together in order to file an appeal. Spain’s legal regime does not allow criminal or exemplary Spain is firmly committed to guarantee a safe environment and damages. Liability has to be imposed only as compensation of prevent its deterioration. In this respect, environmental regu- the damage caused. lations prioritise in several cases environmental remediation by means of a strict liability regime over the classic culpability 8.6 Do individuals or public interest groups benefit regime, which required the existence of wilful intent or negli- from any exemption from liability to pay costs when gence (e.g. soil pollution regime). pursuing environmental litigation? 102 Asbestos Yes. According to Law 1/1996 of 10 January, on Free Legal Aid, certain environmental associations declared of public benefit 10.1 What is the experience of asbestos litigation in may benefit from an exemption from liability to pay costs when your jurisdiction? litigating (they may be exempt from paying the cost of proceedings, court fees or appeal deposits). Regulations demand the removal of any asbestos-containing material (AMC) at the end of its useful life and the prohibition 92 Emissions Trading and Climate Change to use AMC in the future. Civil, criminal or administrative liability may arise due to the 9.1 What emissions trading schemes are in operation presence of AMC. in your jurisdiction and how is the emissions trading This notwithstanding, as of today, litigation has mainly been market developing there? referred to civil liability: contractual; and extra-contractual. In particular, contractual civil liability has been recognised for Spain, as a signatory to the Kyoto Protocol and the Paris workers affected by the inhalation of asbestos particles, on the Agreement, is committed to reduce greenhouse gas emissions assumption that the employer did not take the due diligence (GEI). Also, as an EU Member State, Spain is part of the EU required to avoid potential damage. Also, family members of trade scheme under EU Directive 2003/87/EC, implemented in workers who have been directly affected by asbestos (mainly Spain by means of Law 1/2005. women who cleaned their husbands’ suits) have been recognised In summary, the EU trade scheme implies that every facility as victims of extra-contractual civil liability. under Law 1/2005 must obtain a greenhouse gas emission authorisation granted by the autonomous regions and have to 10.2 What are the duties of owners/occupiers of annually deliver GEI emission allowances per each equivalent premises in relation to asbestos on-site? tonne of carbon dioxide emitted from its facility (or aircraft). Emission allowances are transferrable and registered within an AMC must be removed in compliance with the health and ETS Registry and remain valid during each trading period. The safety measures required by Royal Decree 396/2006 when they current trading period started on January 2013 and will end on reach the end of their useful time as they release asbestos fibres. 31 December 2020. Thereupon, successive eight-year periods Before that, owners or occupiers do not have to remove AMC will follow. Emission allowances may be allocated by means of but only monitor its status to assure that there is no risk for an auction (which is aimed to be the main method of allocation) human health or the environment. or by free allocation (which is especially relevant for facilities These obligations would also apply in case of demolition or exposed to significant risk of carbon leaks). decommissioning of buildings containing AMC.

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112 Environmental Insurance Liabilities 122 Updates

Initially, civil liability insurances were used to insure environ- New Spanish environmental policies are aligned with inter- mental risks. Later, as Law 26/2007 on Environmental Liability national trends (e.g. the UNFCCC and the European Union’s obliges certain activities (those referred to in Annex III) to be provisions). As a result, the main legislative developments to be covered by financial guarantees, such as an insurance, specific implemented in Spain can be summarised as follows: environmental insurances were implemented in the market. (i) A prospective Law on Climate Change and Ecological These insurances require a maximum risk analysis of the activity. Transition aimed to meet the climate change targets set by the As of today, the number and relevance of environmental Paris Agreement and by the European Union and to achieve insurances have increased, both between operators who are total decarbonisation of the economy by 2050. obliged to subscribe for it and those who do so voluntarily. (ii) The transposition of the 2018 package of four EU directives on waste. It is expected that these amendments will improve waste management and a circular economy. The transposition 11.2 What is the environmental insurance claims experience in your jurisdiction? deadline ends on 5 July 2020. (iii) Spanish Strategy on Circular Economy. This strategy is currently being prepared by the Ministry for Ecological Transition and For the time being, we have no news on relevant environmental its goal is to promote technological innovation which allows insurance claims as this type of insurances have been recently to substitute the linear economic model (extracting, manufac- issued and the provisions of Law 26/2007 have been applied on turing, consuming and wasting) with a circular one, where the a limited basis. resources are kept in the productive cycle as much as possible, with the minimum generation of waste. (iv) Air quality. Spanish big cities have adopted several regulations to reduce air pollution levels. For instance, in Madrid and Barcelona, certain vehicles are not allowed to circulate in the city centre.

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Jesús Andrés Sedano Lorenzo is a senior associate in the Madrid office of Uría Menéndez. He joined the firm in September 2006 and is a member of the Public and Environmental Law Practice Areas. He advises public and private entities on all aspects of public and regulatory law (sanctioning procedures, public procurement, energy, public infrastructures, telecommunications, pharmaceutical and health matters, authorisations and permits, public authority liability, subsidies, public property, historical heritage, etc.), and on all specific aspects of environmental law (such as climate change, pollution prevention and control, natural resources, waste, water, mines and coasts). He regularly appears before Spain’s contentious-administrative courts and the Constitutional Court, and also participates regularly in civil proceedings related to regulatory or environmental matters.

Uría Menéndez Tel: +34 915 860 455 42 Suero de Quiñones Street Email: [email protected] Madrid, 28002 URL: www.uria.com Spain

Bárbara Fernández Cobo is a lawyer in the Madrid office of Uría Menéndez. She joined the firm in 2013 and is a member of the public and environmental law practice areas. In 2017, Bárbara worked in the Chilean offices of Latin-American law firm PPU – Philippi, Prietocarrizosa, Ferrero DU & Uría. She advises public and private entities on aspects of public and regulatory law (sanctioning procedures, public procurement, energy, public infrastructures, telecommunications, authorisations and permits, public authority liability, subsidies, public property, historical heritage, etc.), and on all specific aspects of environmental law (such as climate change, pollution prevention and control, natural resources, waste, water, mines and coasts).

Uría Menéndez Tel: +34 915 860 187 42 Suero de Quiñones Street Email: [email protected] Madrid, 28002 URL: www.uria.com Spain

Uría Menéndez is the leading law firm in the Ibero-American market. With 588 lawyers, including 131 partners, the firm advises on Spanish, Portuguese and EU law in relation to all aspects of corporate, public, litigation, tax and labour law. We have 16 offices in 12 countries and over 2,000 clients. Furthermore, the firm participates in the first Latin-American integration between leading local firms (Philippi in Chile, Prietocarrizosa in Colombia and two Peruvian firms, Estudio Ferrero Abogados and Delmar Ugarte), becoming Philippi Prietocarrizosa Ferrero DU &Uría (PPU), the first major Ibero-American firm. Regarding environmental issues, Uría Menéndez lawyers have an extensive experience and comprehensive knowledge of environmental regulations as they are recognised as such by the most prestigious legal rankings. www.uria.com

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Sweden Sweden

Wistrand Law Firm Rudolf Laurin

12 Environmental Policy and its police or public prosecution authorities where there are grounds for suspicion that an offence has been committed. It can further Enforcement be noted that all activities having an impact on the environment are not licensable but can nevertheless be supervised. 1.1 What is the basis of environmental policy in your In environmental permit proceedings, various authorities act jurisdiction and which agencies/bodies administer and as counterparties to the applicant upholding public interests. enforce environmental law?

1.3 To what extent are public authorities required to The main Swedish environmental legislation consists of the provide environment-related information to interested Swedish Environmental Code (SFS 1998:808), which entered persons (including members of the public)? into force on 1 January 1999. The Environmental Code brought together 15 existing central environmental laws. The aim of the The main rule is that the public has access to official documents Environmental Code is to promote sustainable development. submitted to or drawn up by the authorities. In case of environ- The Environmental Code is further elaborated and specified in ment-related information, some parts can be subject to confi- the form of ordinances and regulations issued by public author- dentiality; for instance, information regarding the location of ities and decisions taken in individual cases. As far as envi- sensitive species. ronmental 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 22 Environmental Permits many aspects part of Swedish environmental law. The agencies/bodies enforcing environmental law consist 2.1 When is an environmental permit required, and may of the national environmental agencies, such as the Swedish environmental permits be transferred from one person Environmental Protection Agency and the Swedish Agency for to another? Marine and Water Management as well as regional authorities, such as the Country Administrative Boards and local munic- Environmentally hazardous activities and water operations are ipal authorities. examples of activities that require an environmental permit. In Sweden, the courts handling environmental law matters Even if an activity does not require a permit, the supervisory consist of five Land and Environmental Courts, the Superior authority may order an operator to apply for a permit where the Land and Environmental Court and the Supreme Court. As activity involves the risk of significant pollution or other signif- far as permitting procedure is concerned, most permits are, icant detriment to human health or the environment. There is depending on what kind of operation the permit concerns, also the option for the operator of a non-licensable environmen- issued either by the County Administrative Boards or the Land tally hazardous activity to apply for a voluntary permit. and Environmental Courts. When it comes to supervision, the An environmental permit is decided for an operation at a County Administrative Boards and the municipal authorities are certain location and may be transferred to a new operator. A the main authorities. As far as criminal law is concerned, the new operator needs to notify the supervisory authority about the district courts, the Courts of Appeal and the Supreme Court transfer in order to become the new permit-holder. handle those issues. 2.2 What rights are there to appeal against the 1.2 What approach do such agencies/bodies take to decision of an environmental regulator not to grant an the enforcement of environmental law? environmental permit or in respect of the conditions contained in an environmental permit? The supervisory authorities have a central role in ensuring that environmental permits, decisions and environmental laws are An applicant may appeal a decision by the County Administrative met. They have the mandate to issue orders, prohibitions and, Board to the regional Land and Environmental Court if a permit to some extent, penalties or a fine. The supervisory authori- is denied or if the applicant is not satisfied with the permit ties are obliged to report infringements of the provisions of the conditions. A judgment by the Land and Environmental Court Environmental Code or rules issued in pursuance thereof to the may be appealed to the Superior Environmental Court if a leave

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to appeal is granted. For operations of such significance that 3.2 To what extent is a producer of waste allowed the regional Land and Environmental Court is the first instance to store and/or dispose of it on the site where it was for issuing the permit, a judgment, after being appealed to the produced? Superior Environmental Court, can be appealed to the Supreme Court. Even for such an appeal, a leave to appeal is needed. The provision regarding storage and/or disposal of waste has been redrafted as from 1 January 2017. In general, it has been 2.3 Is it necessary to conduct environmental audits clarified that the storage of waste on the site where it has been or environmental impact assessments for particularly produced only requires a permit in specific situations (storage polluting industries or other installations/projects? of more than 50 tonnes of dangerous waste). The treatment or disposal of waste will normally require a permit or a notification, In order to apply for an environmental permit, an environ- depending on the method, the type and the volume of waste. As mental impact assessment (EIA) is in some cases required. An a general obligation, the producer of waste is always obliged to EIA is required when an activity or operation has a significant ensure that the waste is handled in an acceptable manner for the environmental impact. If that is the case, there are more formal environment and human health. requirements regarding what the EIA shall address. When the activity or operation does not have a significant environmental 3.3 Do producers of waste retain any residual liability impact, it is only necessary to make a smaller environmental in respect of the waste where they have transferred it to impact assessment. another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/disappears)? 2.4 What enforcement powers do environmental regulators have in connection with the violation of Normally, if transferred to a person holding the necessary permits, permits? the producer of waste will not retain a residual liability. Such a liability would be retained in case the producer is considered as A licensing authority may withdraw a permit where a permit the factual operator of the treatment facility. or its conditions have not been met and the discrepancy is not inconsiderable. 3.4 To what extent do waste producers have A supervisory authority may issue any injunctions and prohi- obligations regarding the take-back and recovery of bitions that are necessary in individual cases to ensure compli- their waste? ance with the provisions of the Environmental Code and rules, judgments and other decisions issued in pursuance thereof. The Producer responsibility has been introduced for certain cate- measures taken must not be more intrusive than necessary. gories of waste (packaging, glass, paper, tyres, cars, WEEE, An operator who neglects to comply with conditions of a batteries and pharmaceuticals). The responsibility may be actual permit may also be held liable under criminal law. In addition to or financial depending on the category of waste. Specific provi- personal responsibility, corporate fines, ranging between SEK sions are to be found in the relevant government ordinance. 5,000 and 10 million, may be imposed. As of 1 January 2019, a new Ordinance on Producer Responsibility for Packaging (2018:1462) and a new Ordinance 32 Waste on Producer Responsibility for Waste Paper (2018:1463) entered into force. The new Ordinances sharpen the requirements of the 3.1 How is waste defined and do certain categories of service given by the collection systems and clarifies the require- waste involve additional duties or controls? ments regarding the shape of the packaging. Furthermore, the obligation to report the amount of packaging and newspaper The Swedish legislation concerning waste is largely based on the released on the Swedish market is transferred to the producers EU Waste Framework (2008/98/EC). The directive has been (instead of those who run the collection systems). In addi- implemented in Swedish legislation through the Environmental tion, amendments have been made to the Waste Ordinance, Code and the Waste Ordinance (2011:927). which means that there is an obligation for the municipality to Under the Environmental Code, waste is defined as any object, provide a collection system for food waste. According to the matter or substance belonging to a specific waste category which new Ordinances, the responsibility to collect the packaging and the holder disposes of, or intends or is required to, dispose of. newspapers will be transferred from the municipality to the Appendix 4 of the Waste Ordinance contains the waste cata- producers. From 2025, all households must have been offered logue. Hazardous waste in general is subject to stricter provi- collection near the property. sions regarding collection, transport, storage, etc. Waste from packaging, glass, paper, tyres, cars, WEEE, batteries and phar- 42 Liabilities maceuticals is subject to producer responsibility. As of 1 January 2020, amendments to the Environmental 4.1 What types of liabilities can arise where there is a Code will apply. The new legislation aims to better imple- breach of environmental laws and/or permits, and what ment the EU Waste Framework. Accordingly, the definition defences are typically available? of by-products will be clarified and the definition of disposal of waste will be amended to clarify that disposal of waste also Please see question 2.4 above. In addition to what is mentioned encompasses preparing for such disposal. In addition, the regarding permits, please also note that even other incompli- provision regarding waste management will be specified in the ance with environmental laws may give rise to criminal liability. way that waste shall be managed without endangering human Some infringements can lead to environmental sanction charges health or harming the environment. This will apply to everyone ranging between SEK 1,000 and SEK 1 million and some to who handles waste. sanctions under criminal law.

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Where criminal liability requires intent or negligence, this is The provisions are based on the “polluter pays” principle; the not a requirement for environmental sanction charges. Criminal liability for environmental damages therefore primarily rests on liability requires that an individual person may be held liable or, the person(s) or legal person(s) who pursues or has pursued an in case of corporate fines, that a crime can be shown to have activity that has contributed to the contamination (the operator). been committed. Some offences considered to be minor are not In order to be held liable, the operator’s actual operation needs punishable under criminal law. 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 reme- 4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is diate the contaminated area. With respect to serious environ- operated within permit limits? mental 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 respon- Yes. An environmental permit does not preclude liability for sible. This applies to properties purchased as from 1 January contamination or environmental damage. 1999 where the purchaser had knowledge about the contamination or ought to have discovered it. 4.3 Can directors and officers of corporations attract Recently, the Superior Land and Environmental Court has personal liabilities for environmental wrongdoing, and decided on a case of principle interest regarding liability for to what extent may they get insurance or rely on other contaminated land. The case clarifies that an owner of a prop- indemnity protection in respect of such liabilities? erty who constructs on a previously contaminated property will be considered as operator in relation to the pursued activity. Yes; please also see questions 2.4 and 4.1. Criminal responsibility is personal. In order not to expose the CEO or the board 5.2 How is liability allocated where more than one of a company to liability for issues outside their control, liability person is responsible for the contamination? for environmental issues is often delegated. Insurance, if any, does not preclude criminal responsibility. If several operators have contributed to the contamination, the liability is joint and several (subject to some limitations as spec- 4.4 What are the different implications from an ified in chapter 10 of the Environmental Code). However, the environmental liability perspective of a share sale on the payment made by the liable persons shall be shared between one hand and an asset purchase on the other? them as appears reasonable with regard to the extent to which each of them was responsible for the pollution and other rele- In case of a shares sale regarding a limited liability company, the vant circumstances. Property owners that are secondarily environmental liability follows the corporate identity number. responsible also have joint and several liability. When assets are acquired, the purchaser will take on the liabilities connected with the assets and may, under environmental 5.3 If a programme of environmental remediation law, be regarded as a new operator of the previous polluting is “agreed” with an environmental regulator, can the activities performed by the selling company. regulator come back and require additional works or can There are secondary responsibilities for properties acquired a third party challenge the agreement? after 1 January 1999. See further question 5.1. The form of what is “agreed” will be taken from a decision by 4.5 To what extent may lenders be liable for the authority. It will not gain legal force in the sense that it will environmental wrongdoing and/or remediation costs? preclude all future claims. A third party can challenge such a decision if this party is A lender of money cannot be held liable, merely due to the considered to be individually affected by the decision more than lending of money, for environmental wrongdoings or remedi- marginally. ation costs linked to the borrowing company. In order to be held liable, the lender must act in such a way that the lender can 5.4 Does a person have a private right of action to be deemed to be the operator of the operation performed by the seek contribution from a previous owner or occupier of borrower. contaminated land when that owner caused, in whole or in part, contamination; and to what extent is it possible 52 Contaminated Land for a polluter to transfer the risk of contaminated land liability to a purchaser?

5.1 What is the approach to liability for contamination (including historic contamination) of soil or Liability for contaminated land can be handled and transferred groundwater? in a purchase agreement. Civil agreements, however, only address the situation between the contracting parties and parties As far as criminal law is concerned, contamination in a manner to an agreement cannot hinder an authority to act in a certain which involves risks to human health or detriment to flora and way or to issue orders to a specific party. fauna that are not insignificant is considered to be a criminal A property owner cannot act against an operator when it offence according to the Environmental Code. In case of intent comes to recourse under chapter 10 of the Environmental Code. or negligence, liability can arise. A property owner can, under these rules, only seek recourse from Liability for contaminated areas is regulated in chapter 2 para- another property owner and an operator can only seek recourse graph 8 and chapter 10 of the Swedish Environmental Code. from another operator (if not hindered thereto according to an agreement between the parties).

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in transfer agreements of different kinds. However, provisions 5.5 Does the government have authority to obtain from a polluter, monetary damages for aesthetic harms to on indemnity are only valid between the contracting parties. public assets, e.g. rivers? The indemnity does not limit or bind the authorities.

In case of serious environmental damage, the responsible 8.2 Is it possible to shelter environmental liabilities off polluter is primarily obliged to restore the environment and, if balance sheet, and can a company be dissolved in order this is not possible, to compensate for any loss. to escape environmental liabilities?

62 Powers of Regulators 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 6.1 What powers do environmental regulators have to require production of documents, take samples, conduct principles apply. Recent jurisprudence suggests that dissolution site inspections, interview employees, etc.? of a company does not prevent the authorities from reviving the dissolvent procedure in certain cases. Bankruptcy and subsequent dissolution ends environmental liability. 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 8.3 Can a person who holds shares in a company Code. A supervisory authority may also order an operator to be held liable for breaches of environmental law and/ submit any information and documents to the authority or carry or pollution caused by the company, and can a parent out any investigations of the operations that are necessary for the company be sued in its national court for pollution caused by a foreign subsidiary/affiliate? purposes of supervision.

72 Reporting / Disclosure Obligations 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 7.1 If pollution is found on a site, or discovered to be person is a shareholder. In recent case law, however, a parent migrating off-site, must it be disclosed to an environmental regulator or potentially affected third parties? 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. 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 8.4 Are there any laws to protect “whistle-blowers” or the environment, or if there is a risk that the operations may who report environmental violations/matters? cause serious environmental damage. Failure to notify is a criminal offence. Third parties need not to be notified. There is no protection for “whistle-blowers” under environmental law. 7.2 When and under what circumstances does a person have an affirmative obligation to investigate land for 8.5 Are group or “class” actions available for pursuing contamination? environmental claims, and are penal or exemplary damages available? An operator or land-owner is obliged to investigate if so ordered by the supervisory authority. Such an order must be based on Group actions are available for environmental damage claims substantial grounds. In the case of exploitation of an area which and for requests on prohibition of operations and precautionary may be contaminated, there will be a need to investigate. measures. Penal or exemplary damages are not rewarded under Swedish environmental law. 7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective 8.6 Do individuals or public interest groups benefit purchaser in the context of merger and/or takeover from any exemption from liability to pay costs when transactions? pursuing environmental litigation?

There is no obligation to disclose environmental problems under No person is liable for costs occurring during a permitting proce- Swedish environmental law to a purchaser. However, civil law dure under the Environmental Code, with some exceptions may require disclosure. regarding water operations where liability to pay costs occurs on appeal. Environmental litigation regarding damages is subject to 82 General the general provisions, normally leading to the losing party compen- sating the winning party. 8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment- 92 Emissions Trading and Climate Change related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. 9.1 What emissions trading schemes are in operation remediation) discharge the indemnifier’s potential in your jurisdiction and how is the emissions trading liability for that matter? market developing there?

The agreement on environmental indemnity is commonly used Sweden has implemented the EU Emission Trading Directive

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(2003/87/EC) through the national Emissions Trading Act 112 Environmental Insurance Liabilities (2004:1199), the Emissions Trading Ordinance (2004:1205) and the regulations from the Environmental Protection Agency and the Swedish Energy Agency. 11.1 What types of environmental insurance are The EU Emission Trading System will be revised for the available in the market, and how big a role does environmental risks insurance play in your jurisdiction? period after 2020. The overall number of emissions allowances will decline at an annual rate of 2.2% from 2021 onwards, compared to 1.74% currently. 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 9.2 Aside from the emissions trading schemes are also used, and may cover sudden and unforeseen leakages of mentioned in question 9.1 above, is there any other oil and other liquids. Stand-alone environmental liability insur- requirement to monitor and report greenhouse gas emissions? ances also exist and will cover gradually incurred environmental damage. In recent years, insurance solutions have been used during transactions to a limited extent. 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 11.2 What is the environmental insurance claims therefore obliged to record and estimate the amount of green- experience in your jurisdiction? house gas emissions produced in the country. As described above, there is a market for environmental insurance solutions. To our knowledge, litigations regarding envi- 9.3 What is the overall policy approach to climate change regulation in your jurisdiction? ronmental insurance claims are not particularly common.

One of the goals of Swedish environmental policy is to reduce 122 Updates the impact on the climate. The goal is set up in accordance with the United Nations Framework Convention on Climate Change. 12.1 Please provide, in no more than 300 words, a On 1 January 2018 a new Climate Act entered into force. The summary of any new cases, trends and developments in environment law in your jurisdiction. Climate Act establishes that the Government’s climate policy must be based on the climate goals and specifies how work is to be carried out. The goal is that Sweden will have net zero emis- As of 1 January 2019, new legislation regarding water operations sions of greenhouse gases by the year 2045 and should thereafter entered into force. The new legislation aims to ensure that the achieve negative emissions. requirements according to the EU Water Framework Directive The Government has recently decided on two cases with (2000/60/EC) are met. Accordingly, water operations connected reference to the goal in the Climate Act and climate policy. In to production of hydroelectric power must have “modern envi- the first case, concession regarding a gas line was denied. The ronmental conditions”. Consequently, a large number of envi- gas line was not considered to be suitable due to climate policy ronmental permits will need to be reviewed. This legislation and this outweighed the safety of increasing the supply of gas also requires that a reasonability check, according to the general which the line meant. In the second case the Government considerations rules, may not lead to a permit that is incompatible considered an operation to be of such significance with refer- with the regulation regarding environmental quality standards. ence to the Climate Framework and the goal of zero emissions Regarding liability for environmental damages as operator, three that the Government decided to test the operation, if the oper- new judgments of principal interest have been handed down by ation could be allowed. the Superior Land and Environmental Court. In the first case, the owner of a property was held responsible as operator for a contami- 102 Asbestos nation caused by an activity pursued by others. The Court declared that due to the owner’s failure to act the owner was considered to have accepted the activity on his property and was therefore consid- 10.1 What is the experience of asbestos litigation in ered as operator. The owner had actual and legal opportunities to your jurisdiction? take action, but instead the owner let the activity continue. In the second case, a tenant owners’ association was consid- This is not applicable in Sweden. ered as operator and responsible for the lighting of fires in the apartments of a house. Even though the lighting of fires was 10.2 What are the duties of owners/occupiers of pursued by individual tenant owners, the tenant owners’ associa- premises in relation to asbestos on-site? tion was considered as being the operator and liable for any environmental emission pursued by the lighting. The use of asbestos is prohibited in Sweden. The removal of In the third case, the court clarifies that an owner of a prop- asbestos is not mandatory, but when removed, is subject to strict erty who constructs on a previously contaminated property will rules (Swedish Work Environment Authority’s provisions and be considered as operator in relation to the pursued activity. general recommendations concerning asbestos (AFS 2006:1)). As of 1 August 2019, new legislation regarding unauthorised Asbestos is, when disposed of, considered hazardous waste. waste transport entered into force. Accordingly, law-breaking is completed at an earlier stage and no longer requires the transport to cross a geographical boundary. Criminal liability now also includes organising or carrying out unauthorised transportation of waste.

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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 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 Expert Guides, Chambers, The Legal 500 and Who’s Who Legal.

Wistrand Law Firm Tel: +46 31 771 21 20 Lilla Bommen 1 Email: [email protected] 404 39 Gothenburg URL: www.wistrand.se Sweden

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. www.wistrand.se

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Switzerland Switzerland

Bär & Karrer Ltd. Prof. Dr. Markus Schott

12 Environmental Policy and its According to article 74 para. 3 BV, the cantons are responsible for the implementation of the relevant federal regulations, Enforcement except where the law provides otherwise and determines that the Confederation is competent for implementation. This principle 1.1 What is the basis of environmental policy in your is replicated in article 36 USG. Accordingly, the Confederation jurisdiction and which agencies/bodies administer and supervises the execution of environmental law by the cantons enforce environmental law? and coordinates their activities (article 38 para. 1 and 2 USG). In some areas, the federal government is itself responsible for According to article 73 of the Federal Constitution (“BV”), the enforcement of environmental legislation, such as import and the Confederation and the cantons shall endeavour to achieve export of waste (article 41 USG). In general, the Federal Council a balanced and sustainable relationship between nature and its enacts the implementing provisions (article 39 para. 1 USG). capacity to renew itself, and the demands placed on it by the On the federal level, the Federal Office for the Environment population. Pursuant to article 74 BV, the Confederation is (“BAFU”) is generally responsible for the execution of environ- responsible for the legislation on the protection of the popu- mental law, but there are also some special agencies, which are lation and its natural environment against damage or nuisance competent in specific areas such as the Swiss Federal Nuclear and it shall ensure that such damage or nuisance is avoided. The Safety Inspectorate (“ENSI”). In addition, each canton has its cantons are primarily responsible for the execution of the rele- own authority responsible for the execution of environmental law. vant federal regulations, but they may also enact implementing rules where federal law so provides. The Federal Constitution 1.2 What approach do such agencies/bodies take to contains further provisions regarding the protection of water, the enforcement of environmental law? forests, as well as natural and cultural heritage (articles 76, 77 and 78 BV). There are numerous acts and ordinances implementing the Switzerland has a rather strict approach to enforcing environ- constitutional mandate regarding environmental protection. mental law. Apart from authorisations and inspections, the The following acts are the most important: the Environmental agencies also have the power to impose fines for various viola- Protection Act (“USG”); the Ordinance on Avoidance and tions of environmental law (article 61 USG). Severe violations Disposal of Waste (“VVEA”); the Ordinance on Contaminated may even be punished by a custodial sentence of up to three years Sites (“AltlV”); the Chemicals Act (“ChemG”); the Act on or a monetary penalty (article 60 USG). Other sanctions include Reduction of CO2 (“CO2 Act”); as well as the Nuclear Energy the order to discontinue illegal activities, the re-establishment Act (“KEG”); and the Ordinance on the Environmental Impact of the lawful conditions and the withdrawal of authorisations. Assessment (“UVPV”). The Swiss environmental policies and the implementation of 1.3 To what extent are public authorities required to environmental laws are based on the following main principles: provide environment-related information to interested ■ The “precautionary principle” (Vorsorgeprinzip) states that persons (including members of the public)? early preventive measures must be taken in order to limit effects which could become harmful or a nuisance (article The authorities are obliged to inform the public adequately 1 para. 2 USG). about environmental protection and levels of environmental ■ The “polluter pays principle” (Verursacherprinzip) states pollution (article 10e para. 1 USG). If it is in the public interest, that any person who causes measures to be taken due to the authorities may also inform interested persons about the endangering, polluting or causing damage to the environ- results of inspections and conformity-assessments, after having ment must bear the costs related to avoidance or clean-up consulted the persons concerned. Furthermore, any person has (article 2 USG). the right to inspect environmental information in official docu- ■ The “principle of abatement of pollution at source” (Prinzip ments and information relating to energy regulations that relate der Bekämpfung von Umweltbeeinträchtigungen an der Quelle) that to the environment and to request information from the author- originates from the precautionary principle and states that ities about the content of these documents (article 10g para. 1 environmental impact must be abated at its source. USG).

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22 Environmental Permits The regulator can also confiscate objects or order the discontin- uation of the illegal activities, and the re-establishment of the lawful conditions. As an ultima ratio, the regulators can revoke 2.1 When is an environmental permit required, and may the environmental permits. environmental permits be transferred from one person to another? 32 Waste Environmental permits are common in Swiss law and are required for constructions or the operation of, e.g. landfills or 3.1 How is waste defined and do certain categories of waste involve additional duties or controls? 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 9 ff. ChemG). Waste is defined as “any moveable material disposed of by its Usually, a permit is bound to a person/company and therefore holder or the disposal of which is required in the public interest” not transferable (personenbezogene Bewilligung). However, in some (article 7 para. 6 USG). The disposal of waste includes its cases, permits can be linked to an object (sachbezogene Bewilligung). recovery or deposit in a landfill, as well as the preliminary stages These permits generally remain in place if the ownership of the of collection, transport, storage and treatment (i.e. any physical, object changes. chemical or biological modification of the waste) (article 7 para. 6bis USG). The owner or holder of waste has to comply with a number 2.2 What rights are there to appeal against the of legal obligations. The owner or holder is whoever has actual decision of an environmental regulator not to grant an control over the waste. This person has the duty to dispose of environmental permit or in respect of the conditions contained in an environmental permit? 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). There is a possibility to challenge the refusal or the provisions Waste whose environmentally compatible disposal requires of an environmental permit, usually within a period of 30 days. special measures qualifies as special waste (article 30f USG). Depending on applicable cantonal procedural law, the appeal Additional obligations for the handling of special waste apply, has to be directed either: (i) first at the competent cantonal such as markings as well as licence requirements for import and superior authority or special administrative tribunal and subse- export. quently the administrative court; or (ii) only at the competent cantonal administrative court (in case of cantonal authorities implementing the environmental law) or at the Federal 3.2 To what extent is a producer of waste allowed Administrative Tribunal (if a federal authority implements the to store and/or dispose of it on the site where it was environmental law). It is possible to invoke a false establishment produced? of the facts of the case, a violation of the applicable law, or an inadequacy of the decision (before cantonal authorities pursuant As a principle, the production of waste should be avoided wher- to cantonal procedural law and generally before the Federal ever possible (article 30 para. 1 USG). The Federal Council Administrative Tribunal). After the administrative court or may require manufacturers to avoid producing waste where tribunal has decided, its decision may be appealed before the there is no known environmentally compatible process for its Federal Supreme Court for violation of federal law. 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 2.3 Is it necessary to conduct environmental audits burned other than in incineration plants (exceptions apply to the or environmental impact assessments for particularly polluting industries or other installations/projects? burning of natural forest, field and garden waste). The disposal of waste on a site requires a permit for setting up and operating a landfill (article 30e para. 2 USG). 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 3.3 Do producers of waste retain any residual liability an environmental impact assessment applies to installations that in respect of the waste where they have transferred it could cause substantial pollution to environmental areas, to the to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/ extent that it is probable that compliance with regulations on disappears)? 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 installa- The holder of waste is entitled to instruct third parties to dispose tion that is subject to an environmental impact assessment must of it (article 31c para. 1 USG). In case of such external disposal, submit an environmental impact report. Based on this report the third party qualifies as the holder of waste. If the third party and on its own investigation, the environmental protection violates its obligations, it becomes liable for the recovery meas- agencies order the necessary measures. ures (because it qualifies as an interrupter). As the polluter has to bear the costs for recovery measures (article 2 and 59 USG), not only is the third party, as interrupter, responsible for such 2.4 What enforcement powers do environmental costs, but in some instances also the initial holder. This is the regulators have in connection with the violation of case if the wrongdoing of the appointed third party falls within permits? the responsibility of the initial holder as well.

Regulators can impose a fine, and there are criminal sanctions up to a custodial sentence of three years or a monetary penalty.

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3.4 To what extent do waste producers have There is also a criminal law liability of directors and officers, obligations regarding the take-back and recovery of their which may not be covered by insurance. waste? 4.4 What are the different implications from an The Federal Council may require certain types of waste to be environmental liability perspective of a share sale on the recovered if this is economically feasible and harms the environ- one hand and an asset purchase on the other? ment less than other forms of disposal and the manufacture of new products (article 30d para. 1 USG). Such recovery obliga- If an investor acquires all shares of a company (share deal), the tions exist, inter alia, for disposable packaging consisting of glass, target still remains liable for the recovery of pollution and corre- polyethylene terephthalate (“PET”) and aluminium, as well as sponding costs due to the “polluter pays” principle. The envi- for batteries and electrical devices. ronmental liability is not affected by the change of ownership. If a purchaser acquires the assets (asset deal), the purchaser 42 Liabilities will be liable as the new owner of the land or installation for any forthcoming environmental damage. The liability for previous 4.1 What types of liabilities can arise where there is a pollution remains with the seller due to the “polluter pays” breach of environmental laws and/or permits, and what principle. defences are typically available?

4.5 To what extent may lenders be liable for According to article 59a USG, the operator of an establishment environmental wrongdoing and/or remediation costs? or an installation that represents a special threat to the environment is liable for the loss or damage arising from effects that In Switzerland, there is no concept of lender liability. According occur when this threat materialises. There is no requirement of to the separation principle, the lender cannot be held liable for negligence or intent. However, any person who proves that the environmental wrongdoing and/or remediation costs that the loss or damage was caused by force majeure or by gross negligence company caused. As long as the lender does not cause pollution, on the part of the injured party or of a third party is relieved of liability is excluded. liability (article 59a para. 3 USG). There are also special liability provisions regarding specific activities, such as handling of pathogenic organisms (article 52 Contaminated Land 59abis USG) or of genetically modified organisms (article 30 of the Federal Act on Non-Human Gene Technology, “GTG”). 5.1 What is the approach to liability for contamination (including historic contamination) of soil or groundwater? 4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is operated within permit limits? 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 Yes; as the applicable liability provisions of environmental defined as sites whose pollution originates from waste, and law provide for a strict liability, there is no permit defence. which are restricted areas. They comprise waste disposal sites, Consequently, the liability is not excluded if the establishment industrial sites and accident sites (article 2 para. 1 AltlV). Sites in or installation has been operated or the activity has been carried need of remediation are polluted sites that cause harmful effects out within the limits of the applicable environmental law and or nuisance or where there is a real danger that such effects may the conditions of the permit. arise (article 2 para. 2 AltlV). Contaminated sites are polluted sites in need of remediation (article 2 para. 3 AltlV). 4.3 Can directors and officers of corporations attract Based on a preliminary investigation, the authorities assess personal liabilities for environmental wrongdoing, and whether the polluted site is in need of monitoring or remediation to what extent may they get insurance or rely on other with regard to groundwater protection, protection of surface indemnity protection in respect of such liabilities? waters or prevention of air pollution or pollution of the soil. All other investigated sites are defined as in need of neither moni- According to Swiss company law, which is based on the separa- toring, nor remediation (articles 7 and 8 AltlV). tion principle, directors or officers are not generally subject to For polluted sites in need of monitoring, the authorities civil law liability for environmental wrongdoing of the company require a monitoring plan to be drawn up and suitable meas- itself. Furthermore, the company is liable for all activities of its ures to be taken to detect a real danger of harmful effects or bodies that are in the interest of the company. nuisances before these become evident (article 13 para. 1 AltlV). However, members of the board, as well as all persons engaged The monitoring measures shall be applied until there is no in the business management (i.e. directors and officers), are longer any need for monitoring. liable both to the company and to the individual shareholders For sites that are in need of remediation (contaminated sites), (and to the company’s creditors in case of its bankruptcy) for the authorities require that a detailed investigation be carried any losses or damage arising from any intentional or negli- out within a reasonable period and that the site be monitored gent breach of their duties. Therefore, if an officer breaches until completion of remediation (article 13 para. 2 AltlV). his obligations regarding environmental affairs, he may become The authorities require that for contaminated sites, a reme- personally liable. It is common to have directors’ and officers’ diation project is prepared within a time frame appropriate to liability insurance (“D&O insurance”) covering all damage the urgency of remediation (article 17 AltlV). Persons required claims against insured persons. Normally, intent and internal to carry out remediation measures must notify the authorities damage claims are excluded from the D&O insurance, as well as of the remediation measures carried out and demonstrate that personal injury and damage to property. the remediation objectives have been achieved (article 19 AltlV).

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The investigation, monitoring and remediation measures 5.5 Does the government have authority to obtain from shall be carried out by the holder of the polluted site or, if the a polluter, monetary damages for aesthetic harms to pollution of the site was caused by the action of third parties, the public assets, e.g. rivers? authorities may require these, with the approval of the holder, to prepare the remediation project and perform the remediation In case of damage caused by the handling of genetically modi- measures (article 20 AltlV). fied organisms or pathogenic organisms, the responsible person must also reimburse the costs of necessary and appropriate 5.2 How is liability allocated where more than one measures that are taken to repair destroyed or damaged envi- person is responsible for the contamination? ronmental components, or to replace them with components of equal value. If the destroyed or damaged environmental If the authorities have reason to believe that the pollution of the components are not the object of a right in rem, or if the eligible site was caused by the action of third parties, they may require person does not take the measures that the situation calls for, the them to carry out the preliminary investigation, the monitoring damages are awarded to the responsible community (article 31 bis measures or the detailed investigation, as well as the remedia- Federal Act on Non-Human Gene Technology and article 59a tion measures (article 20 para. 2 and 3 AltlV). Fundamentally, para. 9 USG). the person responsible for the pollution bears the costs of the measures required to investigate, monitor and remediate 62 Powers of Regulators polluted sites (article 32d para. 1 USG). If two or more persons are responsible, they bear the costs according to their shares of 6.1 What powers do environmental regulators have to responsibility (article 32d para. 2 USG). Any of the responsible require production of documents, take samples, conduct persons may request a ruling on the allocation of costs from the site inspections, interview employees, etc.? authority (article 32d para. 4 USG). Everyone is obliged to provide the authorities with the infor- 5.3 If a programme of environmental remediation mation required to enforce environmental law and to conduct is “agreed” with an environmental regulator, can the or tolerate the conduct of enquiries (article 46 para. 1 USG). regulator come back and require additional works or can According to article 61 para. 1 lit. o USG, non-compliance with a third party challenge the agreement? these obligations can be sanctioned with a fine of up to CHF 20,000. The authorities assess the remediation project and, on the basis of this assessment, they issue a ruling defining the final objec- 72 Reporting / Disclosure Obligations tives of the remediation, the remediation measures, as well as the assessment of results and the time frame to be adhered to 7.1 If pollution is found on a site, or discovered and further charges and conditions for the protection of the to be migrating off-site, must it be disclosed to an environment (article 18 AltlV). If the authorities conclude in the environmental regulator or potentially affected third evaluation of results that the remediation measures carried out parties? were not successful, they can require additional works (article 19 AltlV). Operators of installations (i.e. buildings, traffic routes and other Challenges by third parties are possible if: they took part in fixed facilities, as well as modifications of the terrain and appli- the previous proceedings; are particularly affected by the ruling; ances, machines, vehicles, ships and aircraft) that could seriously and have a legitimate interest in its cancellation or alteration. damage people or their natural environment must immediately report any extraordinary event to the competent agency (article 5.4 Does a person have a private right of action to 10 USG). seek contribution from a previous owner or occupier of Based on the Ordinance on Protection against Major Accidents contaminated land when that owner caused, in whole or (“StFV”), operators of certain establishments (e.g. where certain in part, contamination; and to what extent is it possible thresholds for substances, preparations or special waste are for a polluter to transfer the risk of contaminated land exceeded, or where certain activities involving genetically modi- liability to a purchaser? fied or pathogenic microorganisms are carried out) have to notify the cantonal notification body of any extraordinary event In accordance with the “polluter pays” principle, if two or more which has significant impact. persons are responsible for the pollution, they bear the costs according to their share of responsibility (article 32d para. 2 7.2 When and under what circumstances does a person USG). A private person can demand a ruling regarding costs have an affirmative obligation to investigate land for (article 32d para. 4 USG) and can appeal it if he does not agree contamination? with the cost allocation. Usually, the site owner has to bear only 10–30% of the costs, while the rest is allocated to the person Each canton is obliged to have a register of polluted sites, which who caused the pollution. is accessible to the public. Based on a preliminary investiga- For the sale or division of immovable property on which a tion, the authorities assess whether the polluted site is in need of site is located that is listed in the register of polluted sites, an monitoring or remediation with regard to groundwater protec- authorisation by the competent authority is required (article tion, protection of surface water or prevention of air pollution 32dbis USG). Such authorisation is granted, inter alia, if security is or pollution of the soil. All other investigated sites are defined provided for the costs of the expected measures. 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

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the site has to carry out the investigation, monitoring and reme- 8.4 Are there any laws to protect “whistle-blowers” who diation measures. If the land is qualified as a polluted site and if report environmental violations/matters? measures must be taken, the polluter has to pay for the investigation. If the authority determines the land not to be a polluted So far, there is no law which protects “whistle-blowers”. site, the competent community will bear the costs for the necessary investigation (article 32d para. 5 USG). 8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary 7.3 To what extent is it necessary to disclose damages available? environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover transactions? 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. There is no obligation, based on environmental law, to disclose Environmental organisations are entitled to appeal deci- environmental problems to a potential purchaser. However, if sions regarding specific projects (so-called associations’ right the seller fails to inform the purchaser about any existing or of appeal, “Ideelle Verbandsbeschwerde”). For example, national suspected environmental problems, the purchaser may be able environmental organisations can appeal projects which need to to claim for compensation based on the law of sales contracts. It undergo the environmental impact assessment or the placing on is also standard practice to include representation and warranty the market of pathogenic organisms (articles 55 and 55f USG). clauses covering such problems in share or asset purchase Other associations’ rights of appeal relate to decisions based agreements. on the Federal Act on the Protection of Nature and Cultural Heritage (“NHG”), and to authorisations for putting into circu- 82 General lation genetically modified organisms intended for lawful use in the environment based on the Federal Act on Non-Human 8.1 Is it possible to use an environmental indemnity Gene Technology (“GTG”). to limit exposure for actual or potential environment- Also, the Federal Office for the Environment (“BAFU”) has related liabilities, and does making a payment to another a right of appeal under federal and cantonal laws against rulings person under an indemnity in respect of a matter (e.g. by the cantonal authorities regarding environmental matters, remediation) discharge the indemnifier’s potential liability for that matter? 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). It is possible for private parties to agree on an environmental In case of damage caused by the handling of genetically modi- indemnity. However, liability under environmental law cannot fied organisms or pathogenic organisms, the responsible person be modified or excluded by way of such agreement. must also reimburse the costs of necessary and appropriate measures that are taken to repair destroyed or damaged envi- 8.2 Is it possible to shelter environmental liabilities off ronmental components, or to replace them with components balance sheet, and can a company be dissolved in order of equal value. If the destroyed or damaged environmental to escape environmental liabilities? 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 A company may transfer environmental liabilities linked to damages are awarded to the responsible community (article 31 an asset to a subsidiary or other company by transferring the GTG and article 59abis para. 9 USG). respective asset. However, it remains liable as a historic polluter. Dissolution of the company is no solution to escaping environ- 8.6 Do individuals or public interest groups benefit mental liabilities, as either these are shifted to the legal successor, from any exemption from liability to pay costs when or the respective claims have to be fulfilled before dissolution pursuing environmental litigation? can be completed. Swiss law does not provide exemption from costs such as court 8.3 Can a person who holds shares in a company fees and liability for such fees for individuals or public interest be held liable for breaches of environmental law and/ groups with regard to litigation proceedings. The general or pollution caused by the company, and can a parent principle for judicial proceedings is that the losing party must company be sued in its national court for pollution bear the costs relating to the action and the ones incurred by caused by a foreign subsidiary/affiliate? opposing parties. This rule also applies with regard to associations’ right of appeal. According to Swiss company law, which is based on the separation principle, shareholders are not subject to civil law liability 92 Emissions Trading and Climate Change for environmental wrongdoing of the company itself. Under certain circumstances, a so-called “piercing of the corporate 9.1 What emissions trading schemes are in operation veil” (Durchgriffshaftung) is possible if the calling on the separa- in your jurisdiction and how is the emissions trading tion principle is an abuse of rights. market developing there? If a shareholder is engaged in the business’ management, he may be liable both to the company and to the other shareholders The Swiss emissions trading scheme (“ETS”) is designed (and to the company’s creditors in case of its bankruptcy) for according to the “cap-and-trade” principle. The quantity of any losses or damage arising from any intentional or negligent emission allowances available is limited. The total quantity breach of his duties. of emission allowances is determined in advance, representing the maximum quantity available (“cap”). This cap was 5.63

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million tonnes of CO2 for 2013 and has been reduced each year trading, building standards as well as compensation for CO2 by 1.74% of the initial 2010 quantity (i.e. 4.9 million tonnes of emissions and the technology fund. With the technology fund, CO2 for 2020). The emission allowances needed for green- the Confederation promotes innovations that reduce greenhouse gas-efficient operation are allocated free of charge annu- house gas or the consumption of resources, increase the use of ally to ETS companies and are tradable (“trade”). Companies renewable energies, and increase energy efficiency. Due to the that exercise specific activities (as defined in annex 6 of the CO2 Paris Agreement and the linkage of the Swiss ETS with the EU Ordinance) are obliged to participate in the Swiss emissions ETS, the CO2 Act is currently under (partial) revision in order trading scheme. If a company’s total emissions in the previous to implement the new international obligations. The partially three years are below 25,000 tonnes of CO2 in each year, the revised CO2 Act was adopted by the Federal Parliament in company can apply for an exemption from the ETS obligation March 2019 and should enter into force on 1 January 2020. (“opt-out”). Companies with an installed capacity of between In 2011, the Swiss government decided to withdraw from the 10 and 20 MW that are engaged in a specific activity (as defined use of nuclear energy on a step-by-step basis as a reaction to the in annex 7 of the CO2 Ordinance) may voluntarily participate in incident in Fukushima and to strengthen the amount of renew- the ETS (“opt-in”). able energy. The existing five nuclear power plants are to be The ETS is organised to be compatible with the European decommissioned when they reach the end of their safe service emission trade system (“EU-ETS”) so that the two systems life, and they will not be replaced by new ones. In this respect, can be connected. Linking the Swiss and EU CO2 emissions the Federal Council has developed a long-term energy policy markets would be beneficial for both environmental policy (“Energy Strategy 2050”) based on the new energy perspectives. and the economy. The technical negotiations were concluded Essentially, the Federal Council’s new strategy focuses on the and the agreement was signed in November 2017. The treaty is consistent exploitation of the existing energy efficiency poten- subject to ratification by both sides, to which the Swiss Federal tial, and on the balanced use of the potentials of hydropower Council was authorised by the Swiss Parliament in March 2019, and new renewable energy sources. The respective statute was and should enter into force on 1 January 2020. 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. 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 102 Asbestos emissions? 10.1 What is the experience of asbestos litigation in There is the so-called CO2 levy on thermal fuels. The CO2 your jurisdiction? levy is a key instrument to achieve CO2 emission targets. This steering levy on combustible fossil fuels, such as heating oil Switzerland does not have an asbestos litigation industry that is and natural gas, has been levied since 2008. In making fossil in any way comparable to the extent of asbestos litigation taking fuels more expensive, it creates an incentive to use them more place in the US. However, there have been a number of proceed- economically and choose more carbon-neutral or low carbon ings concerning the limitation period of asbestos claims. In energy sources. Energy-intensive companies can be exempted 2010, the Federal Supreme Court decided that the limitation from the CO2 levy if they commit to reducing emissions in period does not start from the occurrence of the loss (e.g. disease) return. Large energy-intensive companies participate in the but from the reference date of the infringement (e.g. violation of emissions trading scheme and, upon their request, are also the employment contract by exposure of the workers to asbestos). exempt from the CO2 levy. According to this case law of the Federal Supreme Court, health The CO2 levy is imposed on all thermal fossil fuels (e.g. heating damages which occur 10 or more years after working in an oil, natural gas, but not motor fuels). The levy is imposed when the asbestos environment cannot be brought before court because thermal fuels are used to produce heat, to generate light, in thermal the claim becomes time-barred 10 years after the (last) breach installations for the production of electricity or for the operation of the employment contract. However, the European Court of of heat-power cogeneration plants. No levy is imposed on wood Human Rights (“ECHR”) decided in March 2014 that the limi- and biomass because these energy sources are CO2-neutral. Since tation period of only 10 years violates article 6 section 1 of the 2018, the levy amounts to CHF 96.00 per tonne of CO2. The European Convention on Human Rights because claims for late Federal Council can increase the rate of the levy if the interim damages may become time-barred before they even come into target for thermal fuels has not been reached. The CO2 levy is existence. The Federal Supreme Court accepted the decision of indicated on invoices for purchases of thermal fuels. the ECHR and adapted its practice. However, in 2019, it decided Around two thirds of the revenue from the CO2 levy is redis- that the decision of the ECHR did not imply that absolute stat- tributed to the public and the business community through utes of limitations are excluded, and rejected an appeal because health insurers and the compensation offices. The annual the claim for damages was made only 37 years after the last expo- revenue is about CHF 1.2 billion. sition to asbestos and was therefore time-barred. The Federal Parliament has passed a revision of the applicable 9.3 What is the overall policy approach to climate statutes of limitation. Accordingly, the limitation period for change regulation in your jurisdiction? claims arising out of asbestos damages is extended to 20 years. The revised provisions enter into force on 1 January 2020. In addition to its participation in worldwide climate programmes (e.g. the Paris Agreement), Switzerland pursues an active policy 10.2 What are the duties of owners/occupiers of on reducing greenhouse gases and contributes to the interna- premises in relation to asbestos on-site? tional goal of limiting global warming to two degrees. The CO2 Act is focused on reducing Switzerland’s domestic emissions. So far, owners of premises are not obliged to remove materials Measures to reduce greenhouse gas are the CO2 levy, emissions containing asbestos from buildings unless the health of people is

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threatened due to released fibres. If this is the case, the owner is Also in December 2017, the Federal Council presented its obliged to renovate, otherwise the owner becomes liable due to report on the total revision of the CO2 Act for the time after the liability of property owners (article 58 of the Swiss Code of 2020. It proposed that until 2030, greenhouse gas emissions Obligations). Also, if a building is renovated or demolished, the shall be reduced by at least 30% compared to 1990. Further, workers have to be protected adequately, which may be costly. in 2030 not more than 20% of greenhouse gas emissions shall be reduced by measures abroad. The Federal Council proposes 112 Environmental Insurance Liabilities to keep the mix of measures (i.e. CO2 levy, technical measures regarding buildings, cars, etc.) and to selectively reinforce them. 11.1 What types of environmental insurance are The draft of the new CO2 Act is currently under discussion in available in the market, and how big a role does the Federal Parliament. environmental risks insurance play in your jurisdiction? 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 Environmental insurance policies are very common in Council is now allowed to designate such biogenic fuels that may Switzerland, particularly for companies in the building industry only be placed on the Swiss market if they meet certain ecolog- or handling chemicals. These policies protect against, for ical or social requirements which are defined by the Federal example, contamination of the soil or water or other environ- Council. mental damage that a third-party claims against the company. On 16 June 2017, the Federal Parliament adopted a revision of the GTG that entered into force on 1 January 2018. In essence, 11.2 What is the environmental insurance claims the revised GTG extends the moratorium to grow genetically experience in your jurisdiction? modified organisms (“GMO”) for agricultural purposes for another four years. However, the Federal Parliament did not To our knowledge, there are no known court cases regarding adopt the Federal Council’s proposal for a legal framework environmental insurance claims in Switzerland. regarding the coexistence of GMO and non-GMO as well as the creation of growing areas for GMO in which the concentrated 122 Updates growing of GMO would be possible. On 21 May 2017, the Swiss people approved the revised Energy Act in a popular referendum. The revised Energy Act marks the 12.1 Please provide, in no more than 300 words, a first step of the implementation of the “Energy Strategy 2050” summary of any new cases, trends and developments in environment law in your jurisdiction. and entered into force on 1 January 2018. On 5 September 2018, the Federal Council released its report regarding Switzerland’s financial contributions to international In December 2017, the Federal Council presented its report environmental funds in order to support the protection of the on the partial revision of the CO2 Act and its report on the global environment. The majority of the total funds amounting Swiss-EU agreement regarding the linkage of both ETS to to CHF 147m are dedicated to the Global Environment Fund the Federal Parliament. The revision of the CO2 Act and the (“GEF”), a central instrument for financing and implementing Swiss-EU Agreement were approved by the Federal Parliament the conventions and protocols in the environmental field. in March 2019. The Swiss-EU Agreement and the partially revised CO2 Act should enter into force on 1 January 2020.

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Prof. Dr. 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, food, banking, finance and insurance, transportation and infrastructure sectors. He also drafts expert opinions in these fields. Markus 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 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.

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Thailand Thailand

Fabrice Mattei

Rouse & Co International (Thailand) Limited Norasak Sinhaseni

12 Environmental Policy and its The Plan encourages all levels of Government agencies to work with the public on environmental matters. Since Thailand has Enforcement many laws which cover different aspects of the environment both directly and indirectly, there exist many Government agen- 1.1 What is the basis of environmental policy in your cies that are responsible for different aspects at different levels jurisdiction and which agencies/bodies administer and (community level, locally, centrally, regionally). Also, the court enforce environmental law? system plays a central role in enforcing the relevant laws. Key Government agencies that are responsible for environ- The basis for environmental policy lies in the 2017 Constitution mental policy, administration and enforcement are: of Thailand B.E. 2560, according to which the State shall take ■ The Ministry of Natural Resources and Environment precautions to minimise the impact on people, community, (“MNRE”) deals with conservation and restoration of environment, and biodiversity, and shall undertake to remedy natural resources and environment. Administers the the grievance or damage for the affected people or community Promotion and Conservation of National Environmental in a fair manner without delay (Article 58). The Government Quality Act. B.E. 2535. attitude toward environmental regulation is to ensure adequate ■ The Ministry of Industry deals with the promotion and supervision and guidance in order to protect and rehabilitate the development of industry and their operators. Administers environment for enhancement of quality of life. This is accom- the Factories Act B.E. 2535, which contains environ- plished, for example, by requiring environmental impact studies, mental requirements and standards for industries. prohibiting logging, encouraging environmental services and ■ The Ministry of Public Health deals with the public reporting and prosecuting offenders. health aspects of the environment and general well-being The National Environment Board supervises the envi- affected by the environment resulting from any type of ronmental policy of the country. The Ministry of Natural activity. Administers the Public Health Act B.E. 2535. Resources and Environment manages environmental matters. The Government established an Environmental Fund in 1992 1.2 What approach do such agencies/bodies take to to provide funds for waste management activities in both the the enforcement of environmental law? public and private sectors. Environmental regulations are issued under various laws There is no single approach adopted by the various agencies in including the Act on the Maintenance of the Cleanliness and implementing and enforcing the environmental legislation and Orderliness of the Country 1992, the Energy Conservation policy. Approaches adopted by various agencies/bodies include Promotion Act 1992, the Enhancement and Conservation of implementing legislation via Ministerial Orders, and Decrees National Environmental Quality Act 1992, the Factory Act within their scope of competencies, e.g. factory permits. 1992, the Hazardous Substance Act 1992, the Industrial Estate Examples of approaches adopted by some Government agen- Authority of Thailand Act 1972, and the Public Health Act cies/bodies include: 1992. They are designed to enable the authorities and parties ■ Civil liability under the Promotion and Conservation of concerned to comply with the laws and to implement environ- National Environmental Quality Act, administered by the mental protection activities. The Thai Government has also Ministry of Natural Resources and Environment: polluters tasked the Natural Resource and Environment Ministry with are required to pay for damages caused, including costs overseeing the implementation of its Plastic Waste Management incurred for remediation of the pollution. Road Map 2018–2030, which phases in bans on many types of ■ Criminal liability under the Public Health Act, mainly for consumer plastic and foam products. acts which endanger public health e.g. causing infectious In 2007, Thailand established the National Committee on or toxic substances to endanger the community, may be Climate Change Policy (“NCCC”). The NCCC is chaired by the subject to fines and/or imprisonment. Prime Minister and is made up of members from the public and ■ Executive powers given to Government officials of the private sectors, and academic institutions. The NCCC has the Ministry of Industry under the Factories Act to enforce mandate to define national climate policies. and suspend permits and operation of factories where a Specific environmental policies, including environment legis- breach of such permits occurs, which includes breaches in lation, are based on The Environment Quality Management environmental requirements under such permits. Plan under Section 35 of the Promotion and Conservation of National Environmental Quality Act (“NEQA”) B.E. 2535.

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1.3 To what extent are public authorities required to 2.3 Is it necessary to conduct environmental audits provide environment-related information to interested or environmental impact assessments for particularly persons (including members of the public)? polluting industries or other installations/projects?

Under Section 58 of the Thai Constitution, a person and Activities that require an EIA are listed by the MNRE’s notifi- community shall have the rights to receive information, an cations, under the Enhancement and Conservation of National explanation and reasons from a State agency prior to the imple- Environmental Quality Act (NEQA B.E. 2535 (1992) and its mentation or granting of permission which may have an impact amendment, 2nd Edition, B.E. 2561 (2018). on the environment. There are 35 types and sizes of projects or activities that refer In addition, Government agencies are required to publicise to the Notification of MNRE: information related to health and the environment in accord- ■ Types and Sizes of Projects or Activities Requiring ance with the Government Information Act B.E. 2540, which Environmental Impact Assessment Report and Rules, deems information relating to public health and environment Procedures, Practices and Guidelines for Preparing to be information which must be accessible to the public. The Environmental Impact Assessment Report, B.E. 2561 (2018). Act only requires that the information be published in the Royal ■ Types and sizes of severe projects or activities refer to the Government Gazette. The Ministry of Natural Resources and Notification of MNRE: Rule, Procedure, Method and Environment, the Ministry of Industry and the Ministry of Guideline for Preparation of the Environmental Impact Public Health are all Government entities within the scope of Assessment Report for Project or Activity which may Seriously the Government Information Act. The Act, however, does not Affect Community with respect to Quality of Environment, specify the details on how such information should be made Natural Resources and Health B.E. 2561 (2018). available to the public. ■ Types and sizes of projects or activities in Protected Furthermore, Section 6 of the Promotion and Conservation Areas which in seven provinces follow the Notification of NEQA states that individuals have the right to information of Environmentally Protected Area, virtue of Section 44 and news from Government agencies on matters relating to the (3) of the Enhancement and Conservation of NEQA, B.E. promotion and conservation of the environment. 2535 (1992).

22 Environmental Permits 2.4 What enforcement powers do environmental regulators have in connection with the violation of permits? 2.1 When is an environmental permit required, and may environmental permits be transferred from one person to If the conditions of the EIA are not met, the construction can another? be halted and will require EIA re-assessment before continuing the activity. Section 58 of the Thai Constitution B.E. 2560 imposes, “In Additionally, violation of environmental law generally will regard to any undertaking by the State or which the State will incur civil and criminal liability and, in many instances, a permit any person to carry out, if such undertaking may severely specific Board may be established to evaluate monetary harm affect the natural resources, environmental quality, health, where punitive damages can be imposed. sanitation, quality of life or any other essential interests of the people or community or environment, the State shall undertake 32 Waste to study and assess the impact on environmental quality and health of the people or communities and shall arrange a public 3.1 How is waste defined and do certain categories of hearing of relevant stakeholders, people and communities in waste involve additional duties or controls? advance in order to take them into consideration for the implementation or granting of permission as provided by the law”. The National Environmental Quality Act (“NEQA”), as The term “waste” is defined under the Promotion and amended in 2018, regulates the scoping of the Environment Conservation of NEQA, as “garbage, discharges, wastewater, Impact Assessment (“EIA”), as well as the reviewing, decision exhaust, pollutants or other dangerous objects that have been making and monitoring within this process. The lists of projects discharged or originating from polluting source, including any and activities which are required to prepare to submit the EIA residues, silts, or residues thereof, whether in the form of solids, and Environmental and Health Impact Assessment (“EHIA”) liquids or gas”. are announced in the Notifications of MNRE. There are 35 A draft legislation on the National Waste Management Act types and sizes of projects or activities within the Notification is currently being considered by the Cabinet. The draft defines of MNRE. See question 2.3 below. “waste” as “community waste, dangerous community wastes, infectious wastes and industrial wastes”. The draft separates waste into four types: 2.2 What rights are there to appeal against the 1. Organic waste. decision of an environmental regulator not to grant an 2. Recyclable waste. environmental permit or in respect of the conditions 3. General waste. contained in an environmental permit? 4. Hazardous waste. Only “Hazardous waste” involves additional duties and If EIA is denied, it can be re-assessed. The Promotion and controls on how to dispose of them. Hazardous waste include, Conservation of NEQA does not limit the number of EIA industrial waste, waste from “dangerous goods” and biohaz- requests and therefore can be reassessed until it is approved. ardous waste, which must be contained by special controlled systems, e.g. stored at below 10 degrees Celsius.

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3.2 To what extent is a producer of waste allowed 4.2 Can an operator be liable for environmental to store and/or dispose of it on the site where it was damage notwithstanding that the polluting activity is produced? operated within permit limits?

The Promotion and Conservation of NEQA authorises the An operator can still be liable for environmental damage even MNRE to define the types of polluting sources that require if the polluting activity is within the scope of the permit he regulation, and the levels of waste that must not exceed those has obtained. The Promotion and Conservation of NEQA do prescribed by the MNRE. The proprietor or person in posses- not offer any exception for operators from liability. Under the sion of the polluting source must install instruments to reduce Act, any violator responsible for the source of pollution, or any or otherwise control the discharged waste to be within the violator who owns the source of pollution, shall be held liable for prescribed limits. compensation or damages under Section 96 of the Promotion Producers of waste from industrial processes/factories are and Conservation of NEQA. responsible for suitably storing the waste for proper disposal. Operators of factories meeting a certain size under the In particular, garbage from dangerous goods must not be trans- Factories Act are required to have a permit. A polluting factory ported out of the site without permission. is liable to remedy the source of the excessive pollution to within the permitted limit. The Ministry of Industry has authority to shut down a factory which fails to remedy the pollution caused, 3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it and to withdraw the factory permit. to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/ 4.3 Can directors and officers of corporations attract disappears)? personal liabilities for environmental wrongdoing, and to what extent may they get insurance or rely on other Producers of waste are liable only for damage caused by waste indemnity protection in respect of such liabilities? within their care. There is no residual liability for producers of waste once it is handled by the party responsible for proper Directors and Officers of corporations are also personally liable if disposal. the damage is caused by their direct orders, direct actions or operations or negligence under the Criminal Liability of Representatives 3.4 To what extent do waste producers have of Juristic Person Amendment Act B.E. 2560. The Promotion and obligations regarding the take-back and recovery of their Conservation of NEQA states that if the corporation’s action is a waste? result of the Director’s order or manager or other person responsible for the actions of the corporation, or inaction of the said persons thereof which results in the corporation’s wrongdoing, he/ There is no special obligation requiring waste producers to take- she is also personally liable for the same criminal offence within back or recover their waste after proper disposal. the Act. The Factory Act also adopts a similar approach. There are no special rules on insurance or indemnity protec- 42 Liabilities tion concerning environmental liability.

4.1 What types of liabilities can arise where there is a 4.4 What are the different implications from an breach of environmental laws and/or permits, and what environmental liability perspective of a share sale on the defences are typically available? one hand and an asset purchase on the other?

There are both criminal and civil liabilities which may arise There is no special implication on environmental liability between for breach of environmental laws under the Promotion and share sales and an asset purchase agreement. General risks and Conservation of NEQA. responsibilities resulting from share purchase and asset purchase Civil liabilities for harm caused by a polluting source include apply as follows: full compensation by the owner of the polluting source for the ■ Share sales/acquisition: the buyer will be held liable to all environmental harm occurred, which includes actual costs for the risks held by the previous owner. This is presumed to Government officials to remedy the harm. include all legal liability and legal risks associated with the Defence available under the Promotion and Conservation of environment. NEQA for civil liability (compensation) due to harm caused by ■ Asset or Business sales/acquisition: the buyer can purchase pollution are e.g. force majeure, wartime, actions done by order of specific assets or business elements and may not neces- the Government or a Government agency, or if the pollution sarily presume liability or risks from the previous owner. was caused by the action or inaction of the injured party. Criminal liability includes fines and/or imprisonment for any acts which result in destruction, loss, harming of natural 4.5 To what extent may lenders be liable for resources or causing pollution which affects the natural envi- environmental wrongdoing and/or remediation costs? ronment or environment within a protected area as defined by the Act. There is no specific liability for lenders for environmental There is no specific defence for violation/liability under envi- wrongdoing by the borrowers. Liability is possible only if the ronmental law, and usual defences under the Civil and Criminal lender is found to be directly involved or implicated in the envi- Procedures Code apply. ronmental wrongdoing. Corporate lenders should be vigilant about the purpose for which the loans are used within the agreed purposes but lenders would not bare the risk of any wrongdoing resulting from the scope of the lender agreement.

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52 Contaminated Land 62 Powers of Regulators

5.1 What is the approach to liability for contamination 6.1 What powers do environmental regulators have to (including historic contamination) of soil or require production of documents, take samples, conduct groundwater? site inspections, interview employees, etc.?

There is no special approach regarding liability for contamination The Promotion and Conservation of NEQA establishes that of soil or groundwater under the Promotion and Conservation the National Environmental Board must oversee regulations of NEQA. Generally, the proprietor or person in possession of and implement environmental strategies nationwide. Section 19 the polluting source is liable to compensate for the harm caused of the said Act authorises the Board to summon Government whether it is done intentionally or through negligence. authorities, State enterprises and other individuals; to submit The Act specifies that for certain particular acts which may documents showing environmental impacts and documentation result in contamination, specific laws covering those acts apply. or information that is related to the project or work plan for consideration. This may also include requesting individuals to submit proposals to mitigate the harm for consideration by the 5.2 How is liability allocated where more than one person is responsible for the contamination? Cabinet if the Board deems the project or work plan may cause severe damage to the environmental quality. General rules on allocation of liability apply as there is no special rule with regards to liability for environmental contami- 72 Reporting / Disclosure Obligations nation. That is, specific intention must be individually adduced in the case of a wilful act for collective infringement. In case 7.1 If pollution is found on a site, or discovered of negligence, there cannot be collective infringement because to be migrating off-site, must it be disclosed to an this requires an intention to collude. Therefore, for contamina- environmental regulator or potentially affected third parties? tion resulting from negligence by multiple parties, allocation of responsibility will be analogous to joint obligator, i.e. that each person is jointly responsible for the whole of the contamination There is no duty for disclosure of such information to an envi- resulting from one’s negligence. ronmental regulator or third party.

5.3 If a programme of environmental remediation 7.2 When and under what circumstances does a person is “agreed” with an environmental regulator, can the have an affirmative obligation to investigate land for regulator come back and require additional works or can contamination? a third party challenge the agreement? There is no obligation for individuals to investigate land for Government agencies are authorised to take necessary action contamination. against violators to cease action which causes environmental harm and may specify additional conditions to agreements in 7.3 To what extent is it necessary to disclose order to mitigate the environmental harm. For example, the environmental problems, e.g. by a seller to a prospective Factory Act authorises officials to instruct factories that are purchaser in the context of merger and/or takeover polluting sources to cease acts which cause damage or nuisance transactions? to others. Any involvement by a third party must be from those considered to be directly affected or a direct stakeholder. There is no obligation for sellers to disclose environmental problems in particular. Generally, in the case of public compa- 5.4 Does a person have a private right of action to nies, full disclosure is required in the annual report, which may seek contribution from a previous owner or occupier of include environmental issues but it is not obligatory. For other contaminated land when that owner caused, in whole or types of companies or entities, no obligation exists. in part, contamination; and to what extent is it possible for a polluter to transfer the risk of contaminated land liability to a purchaser? 82 General

There is no such right in Thailand. The purchaser bears the risk 8.1 Is it possible to use an environmental indemnity and becomes responsible for the harm caused to others resulting to limit exposure for actual or potential environment- related liabilities, and does making a payment to another from the contaminated land. person under an indemnity in respect of a matter (e.g. remediation) discharge the indemnifier’s potential 5.5 Does the government have authority to obtain from liability for that matter? a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers? Environmental indemnification will not limit liabilities under the Promotion and Conservation of NEQA. If the accused is Section 97 of the Promotion and Conservation of NEQA required to pay the penalty fine under the Act, the case is under requires the polluter who destroys, causes loss to, or causes the Criminal Procedural Code only for the act that has been damages to natural resources belonging to the State or public fined. The penalty fine imposed under the Act will not indem- resources to be liable for damages to the State for all costs of nify liability for other environmental harms not covered by the the natural resources destroyed, lost or damaged. There is no penalty fine. Each act which causes environmental harm will be specific mention of aesthetic harm. open to separate counts of liability.

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There is no special provision requiring that shareholders be There is currently no requirement to monitor and report green- held liable for the company’s breach of environmental law and/ house gas emissions. This will likely be included in the Climate or pollution caused by the company. General laws regarding Change Act mentioned in question 9.1 above. limited liability of shareholders apply. There has been no prece- Thailand is in the process of establishing a full Measurement, dence with regards to Thai companies being sued in Thai courts Reporting and Verification (“MRV”) system for national climate for pollution caused overseas by their subsidiary/affiliate but it reporting. The Office of Natural Resources and Environmental is clear that the Promotion and Conservation of NEQA would Policy and Planning, under the MNRE, is leading this task. not apply to pollution caused outside the Kingdom by Thai Thailand aims to have an adequate MRV system which fulfils companies. the United Nations Framework Convention on Climate Change (“UNFCCC”) reporting requirements by the year 2021, as well as the so-called Nationally Determined Contribution (“NDC”), 8.4 Are there any laws to protect “whistle-blowers” who national targets to reduce greenhouse gas (“GHG”) emissions report environmental violations/matters? and increase resilience, of which Thailand has committed to reduce 20–25% of emissions from the energy, transport, waste There are no special laws protecting environmental and industry sectors by 2030 below business as usual. whistle-blowers, although Section 3 of the Promotion and Conservation of NEQA states that there is a duty to report wrongdoers to authorities upon witnessing any act which 9.3 What is the overall policy approach to climate change regulation in your jurisdiction? infringes or violates laws relating to pollution control or conservation of natural resources. The Strategic Plan on Climate Change was approved by the Cabinet in 2008 and provided a framework for national responses 8.5 Are group or “class” actions available for pursuing to climate change, outlining six strategies: (1) build capacity to environmental claims, and are penal or exemplary adapt and reduce vulnerabilities to climate change impacts; (2) damages available? promote GHG mitigation activities based on sustainable development; (3) support research and development to better under- Class action suits are available. The Promotion and Conservation stand climate change, its impacts and adaptation and mitigation of NEQA does not provide for penal or exemplary damages but options; (4) raise awareness and promote public participation; in practice, a criminal action will likely be pursued in parallel to (5) build the capacity of relevant personnel and institutions and a civil lawsuit in cases of obvious, severe or widespread environ- establish a framework of co-ordination and integration; and mental damage. (6) support international co-operation to achieve the common goal of climate change mitigation and sustainable development. 8.6 Do individuals or public interest groups benefit In 2009, the Office of Natural Resources and Environmental from any exemption from liability to pay costs when Policy Planning (“ONEP”) developed a draft policy titled the pursuing environmental litigation? National Master Plan on Climate Change (2010–2019), later replaced by the Climate Change Master Plan (2012–2050). There is no exemption to paying costs when pursuing environ- Thailand has ratified the Doha Amendment to the Kyoto mental litigation. Protocol and the Paris Agreement, indicating a commitment to GHG emissions as a matter of policy.

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

10.1 What is the experience of asbestos litigation in your jurisdiction? There has been no precedence on environmental insurance claims disputes in Thailand. A 2013 study on environment insurance claims shows that many issues are still unclear, for Asbestos is not universally banned in Thailand but the Office of instance, disclosure of damages, ways to evaluate the harm the Consumer Protection Board has been successful in requiring occurred, ongoing harm caused by effects to health or whether products containing asbestos to be labelled with a warning, mutual environmental insurance is possible. As the area of which followed a ruling from the Central Administrative Court insurance is likely to increase, these issues must be considered against petitions from construction material producers who still to reduce the number of claims dispute and allow insurance to widely use asbestos in their products. (Administrative Court truly assist in insuring companies from uncertainty. Red Case No. 1299/2555 (2012).) There have been sporadic attempts from interest groups advocating the ban. 122 Updates

12.1 Please provide, in no more than 300 words, a 10.2 What are the duties of owners/occupiers of summary of any new cases, trends and developments in premises in relation to asbestos on-site? environment law in your jurisdiction.

Asbestos is listed as a “hazardous substance” under the The Office of Natural Resources and Environmental Policy Hazardous Substance Act B.E. 2535. As such, there are various and Planning together with the United Nations Development Government agencies involved in the regulation of asbestos. Programme (“UNDP”), launched a new project on 28 June Relevant agencies include: 2019 to support Thailand in making progress on its commit- 1. The Ministry of Labour, which administers the Labour ments under the Paris Agreement, the so-called Nationally Protection Act B.E. 2541, prohibits employers from Determined Contributions, or NDCs. The newly launched employing any person below the age of 18 to handle “NDC Support Delivering Sustainability through Climate hazardous substances as well as production or transporta- Finance Actions in Thailand” project, will support the develop- tion of any carcinogens. ment of financing frameworks for climate action. 2. The Ministry of Interior, Ministerial Notification On 29 May 2019, the House of Parliament of Thailand passed prohibits employers requiring employees to work in places several pieces of legislation which brought about a significant where the working environment contains asbestos dust step towards the development of biodiversity conservation law. over a proscribed period. The Notification also requires These laws came into effect on 25 November 2019, and the that places where such chemicals may cause harm to implementation of all three will be overseen by the MNRE. users or those nearby, there must be a special site dedicated to the storage of such chemical. If exposure is above Wildlife Preservation and Protection Act B.E. 2562 (2019) the proscribed methods above, employers must provide Replacing the Wildlife Preservation and Protection Act B.E. protective equipment for employees. The Notification 2535 (1992), this act lays out five categories of wildlife – preserved also sets the standard limit of asbestos at not exceeding wildlife, protected wildlife, controlled wildlife, dangerous wild- five strands per 1 cubic metre of air. life, and wildlife carcasses – and adds new species to the list of 3. The Ministry of Natural Resources and Environment preserved wildlife for the first time (Bryde’s whales, Omura’s provides information on the hazards of, and recommen- whales, leatherback turtles, and whale sharks). dations on, storage and disposal of asbestos, although law has been passed directly with regards to asbestos. National Park Act B.E. 2562 (2019) This new act supersedes the National Park Act B.E. 2504 112 Environmental Insurance Liabilities (1961) as amended, although provisions of the old act remain in force unless they conflict with the new act. The new act 11.1 What types of environmental insurance are extends protection to forest parks, botanical gardens, and arbo- available in the market, and how big a role does retums (also called “nature learning parks”), increases existing environmental risks insurance play in your jurisdiction? penalties, and introduces some new penalties and bounties for catching violators. There is an array of insurance covering environmental liability, e.g. insurance against environmental pollution liability, insur- Community Forest Act B.E. 2562 (2019) ance for the transportation of hazardous materials, insurance This act creates a separate level of protection for certain natural for mining activities. The law prescribes that certain actions resources, and is intended to benefit communities who have require insurance. However, insurance usually covers damages been obstructed from using forest resources due to Government to other parties resulting from pollution, but not the environ- reclamation or conservation efforts. Communities of at least 50 mental damage to nature, plant and animal life or restoration of people may apply for community forest status. the environment to the natural state.

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Fabrice Mattei is a partner and is the head of the firm’s climate change and intellectual property department. His practice focuses on advising on the environmental aspects of corporate transactions, environmental risk, climate change, clean air regulation, waste management issues, technology transfer and environmental impacts, and blockchain.

Rouse & Co International (Thailand) Limited Tel: +66 2 653 2730 Unit 1401-3 and 1408, 14th Floor, Two Pacific Place Email: [email protected] 142 Sukhumvit Road, Klongtoey URL: www.rouse.com Bangkok, 10110 Thailand

Norasak Sinhaseni is an associate at Rouse, with over seven years of experience. Having studied law in New Zealand, Sweden and the UK, including aspects of intellectual property law, information and technology (“IT”), international environmental law and international relations (“IR”) combined with extensive experience in Thailand, Norasak advises ASEAN and multinational companies on IP and environmental-related matters.

Our climate change practice group has advised extensively on carbon The geographic reach of Rouse means that we are able to keep abreast of related projects, initiatives to mitigate carbon impacts and the develop- the latest green initiatives and legislative developments occurring around ment of carbon management strategies for clients and carbon emission the globe. trading. www.rouse.com Rouse is also at the forefront of the renewable energy market, advising both companies and governmental agencies across the renewable energy spectrum, including hydro, energy from waste, solar, wind, biomass, biofuels and co-firing. We assist clients on the intellectual property, regulatory aspects of a wide range of renewables projects, as well as the environmental economic instruments. Our firm regularly participates to COP on Climate Change and Biodiversity. We have also created the world’s first calculation of GHG emissions incurred in protecting and enforcing intellectual property rights, CLIPMATE.

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Simon Tilling

Burges Salmon LLP Joanne Attwood

12 Environmental Policy and its illegal activity from occurring or continuing; putting right environmental harm or damage; and bringing illegal activity under Enforcement regulatory control, and so in compliance with the law and punishing and deterring offenders. 1.1 What is the basis of environmental policy in your The EA apply core principles to their enforcement approach: jurisdiction and which agencies/bodies administer and proportionality; having regard to the ‘growth duty’; consistency; enforce environmental law? transparency; targeting enforcement action and accountability.

In England, the Department for Environment, Food and Rural 1.3 To what extent are public authorities required to Affairs (Defra) is responsible for both safeguarding the natural provide environment-related information to interested environment and developing environmental policy. Defra persons (including members of the public)? works closely with the UK-devolved administrations and generally leads on negotiations both in the EU and internationally. Public authorities are required, on request, to give the public Other government departments drive environmental policy in access to environmental information they hold, under the their specific areas of focus, for example, the Department for Environmental Information Regulations 2004 (EIR). Business, Energy and Industrial Strategy (BEIS) has respon- Public authorities will disclose information unless one of the sibility for (amongst other things) energy, clean growth and exceptions in the EIR applies. Even then, excepted information climate change and the Department for Transport (DfT) has can be withheld only if the balance of public interest favours responsibility for making roads less polluted by promoting lower withholding disclosure: the presumption is in favour of disclo- carbon transport and encouraging the use of new technology. sure. The definition of environmental information under the The Environment Agency (EA) is an executive, non-depart- EIR is wide and can include information on measures and activ- mental public body responsible for administering and enforcing ities likely to affect environmental elements and substances and environmental law in England. The EA regulates issues from the state of the environment and factors likely to impact on it. the treatment of some contaminated land to water quality, resources and conservation. The EA also manages flood risk. Local authorities have the responsibility to administer and 22 Environmental Permits enforce certain aspects of environmental law including aspects of the contaminated land regime, regulation of certain industrial 2.1 When is an environmental permit required, and may activities, statutory nuisance and hazardous substances. environmental permits be transferred from one person to Other agencies/bodies which enforce and administer envi- another? ronmental law include the Water Services Regulatory Authority (Ofwat), Natural England, the Health and Safety Executive The Environmental Permitting (England and Wales) Regulations (HSE), Marine Management Organisation (MMO), the Office 2016 (as amended) (EP Regulations 2016) govern permit- for Nuclear Regulation (ONR) and the Food Standards Agency ting in England and Wales. The EP Regulations have brought (FSA). together a number of different permitting and licensing regimes In Wales, environmental issues are devolved to the Welsh with the aim of creating a more coherent, joined up and user- Government, which works with Natural Resources Wales friendly approach to permitting. One permit can cover a multi- (NRW) as the principal adviser on and regulator of issues tude of different activities. relating to the environment and natural resources. An EP is required for ‘installations’ (one of a defined list of industrial facilities, manufacturing sites or other business premises that produce potentially harmful substances); waste opera- 1.2 What approach do such agencies/bodies take to the enforcement of environmental law? tions; mining waste operations; combustion plant; small waste incineration plant; mobile plant and solvent emissions activity. Water discharge activities also require an EP as well as activ- The EA generally takes a risk-based and proportionate (and it ities involving radioactive substances and for certain flood risk would say, pragmatic) approach to enforcement. activities or works carried out near watercourses. The EA implements an “outcomes focussed” Enforcement EPs can usually be transferred from one holder to another, and Sanctions policy (which was last updated in January 2019) in whole or in part. The process for making a transfer varies (Policy). The four key outcomes in the Policy are: stopping depending on the type of EP. Transferring an installation permit

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is, for example, more onerous than the application to transfer an The offences above are punishable: EP concerned solely with water discharge. ■ On summary conviction in a magistrates’ court, for offences committed on or after 12 March 2015, with imprisonment for a term not exceeding six months, an unlimited fine or both. 2.2 What rights are there to appeal against the decision of an environmental regulator not to grant an ■ On indictment in the Crown Court, with an unlimited environmental permit or in respect of the conditions fine, up to five years’ imprisonment (two years for offences contained in an environmental permit? for flood risk activities) or both.

Regulation 31 of the EP Regulations sets out the grounds of 32 Waste appeal. These include the right of appeal for a person whose application has been refused (Regulation 31(a)) and where condi- 3.1 How is waste defined and do certain categories of tions have been imposed (Regulation 31(b) and (c)). waste involve additional duties or controls? Appeals are made to the Secretary of State for the Environment, Food and Rural Affairs (SoS). They are heard ‘Waste’ is any substance or object which the holder discards by the Planning Inspectorate in most cases with the Inspector or intends or is required to discard (see Article 3 of the Waste acting as a delegate of the SoS. The SoS may take over where Framework Directive 2008/98/EC (WFD) which is the main a case is particularly controversial or important. Potential EU directive regulating waste). The WFD is implemented in the outcomes may include quashing conditions, or directing the UK by the Waste (England and Wales) Regulations 2011 (Waste granting or variation of an EP subject to any conditions which Regulations). Defra has detailed guidance on how the defini- they see fit. tion applies in practice. Certain types of waste have specific obligations, including 2.3 Is it necessary to conduct environmental audits hazardous waste, packaging waste, waste electrical and electronic or environmental impact assessments for particularly equipment, waste batteries, mining waste, radioactive waste, polluting industries or other installations/projects? agricultural waste, ship recycling, refuse derived fuels and plastics including microbeads. Under the Environmental Permitting regime, the relevant regulator is obliged to inspect regulated facilities regularly. The EP 3.2 To what extent is a producer of waste allowed Regulations further impose requirements on specific kinds of to store and/or dispose of it on the site where it was activity. produced? For new projects, the local planning authority, as part of the planning process, usually carries out Environmental Impact Under the EP Regulations all types of ‘waste operation’ require Assessments (EIA) which are required under the Town and an environmental permit unless they are excluded or exempt. Country Planning (Environmental Impact Assessment) Anyone carrying out recovery or disposal of waste is carrying Regulations 2017 (EIA Regulations). This is to ensure the out a waste operation. authority accounts for the relevant environmental informa- A producer of waste is required, under the EP Regulations, to tion and the effects of a proposed development before giving obtain an environmental permit to store or dispose of waste on consent. An EIA must be carried out if a development falls site, unless exempt. There are exemptions for temporary storage within Schedule 1 of the EIA Regulations. These are generally (at the place of production, at a place controlled by the producer developments over a certain size, for example, power stations and at a collection point) – which are known as non-WFD and motorways. exemptions. They do not need to be registered but certain limits and conditions must be complied with. There are also certain 2.4 What enforcement powers do environmental exemptions which must be registered with the EA. regulators have in connection with the violation of Some types of waste operation are subject to bespoke regimes permits? (as per question 3.1 above).

Environmental law in England is predominantly a matter of 3.3 Do producers of waste retain any residual liability criminal law, with the ultimate sanction being a prosecution in respect of the waste where they have transferred it before the Courts. However, the Environment Agency (and to another person for disposal/treatment off-site (e.g. other environmental regulators) have been provided with a if the transferee/ultimate disposer goes bankrupt/ number of civil sanctions which can be used as an alternative disappears)? to prosecution. For example, for environmental permits, there is an option for an Enforcement Undertaking to be given by an The Environmental Protection Act 1990 (EPA 1990) imposes operator who has committed an offence. a waste ‘duty of care’ on anyone handling controlled waste, The main offences under the EP Regulations are: including where they are transferring it to be disposed of or ■ Operating a regulated facility without an environmental treated by someone else. permit, or causing or knowingly permitting such an oper- The person must take all reasonable steps to ensure that the ation (Regulation 38(1)). waste is not disposed of: unlawfully, without a permit/in breach ■ Causing or knowingly permitting a water discharge activity of a permit or in a way which causes pollution or harm; does not or groundwater activity (Regulation 38(1)). escape from a person’s control; is only transferred to an author- ■ Operating a regulated facility in breach of any conditions ised person (which includes a waste collection authority, regis- attached to an environmental permit (Regulation 38(2)). tered carrier or a licensed disposer); and is accompanied by a ■ Failing to comply with an enforcement notice, suspen- written description enabling the recipient of the waste to know sion notice or range of other notices that the regulator can enough about it to deal with it properly and avoid breaching serve (Regulation 38(3)) (see Enforcement below). their permit (known as a ‘waste transfer note’).

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It is important to have strong contractual protection in place 4.3 Can directors and officers of corporations attract where waste is transferred in order to demonstrate the passing personal liabilities for environmental wrongdoing, and of obligations along with good record keeping to demonstrate to what extent may they get insurance or rely on other compliance with the duty of care. indemnity protection in respect of such liabilities?

3.4 To what extent do waste producers have obligations There is a general principle in English corporate law that a regarding the take-back and recovery of their waste? company is a separate individual. In general, this means that a company, not its directors, will be liable for the acts or omissions of directors acting in the ordinary course of business. Disposal of waste should be a last resort as the WFD prescribes Directors and officers can, however, be liable for environ- a hierarchy for how waste should be managed across the EU of: mental offences where they have committed the offence them- 1. Prevention. selves. In many cases the company and director will be jointly 2. Re-use. charged with the offence, with the director being considered 3. Recycling. liable as a principal offender or accessory. 4. Other recovery. There is further liability imposed under certain environmental 5. Disposal. regimes where an offence is committed by the company but In England and Wales, the Waste Regulations require anyone with the consent or connivance of the director or officer; or the who imports, produces, collects, transports, recovers or disposes offence is attributable to the neglect of the director or officer. of waste to apply the hierarchy when transferring waste. If guilty, directors can be subject to the penalties usually Certain categories of waste have their own requirements on associated with the offence but in addition may be subject to a take back and recovery including packaging waste, waste elec- disqualification order. trical and electronic equipment, end of life vehicles and batteries. Under section 172 of the Companies Act 2006 ( ), Directors For example, under the Producer Responsibility Obligations CA have a duty to promote the success of the company (including (Packaging Waste) Regulations 2007, companies with a turnover having regard to the impact of the company’s operations on the of over £2 million which handle over 50 tonnes of packaging environment and the community). Breach could lead to action annually must recover and recycle a proportion of their pack- by the company against the director or derivative action by a aging waste. shareholder against the director. Under the CA, a company may not indemnify its direc- 42 Liabilities tors against the legal costs of unsuccessfully defending criminal proceedings, fines in criminal proceedings and penalties 4.1 What types of liabilities can arise where there is a imposed by regulatory bodies. The CA also prohibits indem- breach of environmental laws and/or permits, and what nifying directors against liability in connection to any breach defences are typically available? of duty in relation to the company. A company may indemnify a director against liability incurred by the director to a A wide range of both criminal and civil liabilities can arise. person other than the company; this includes liability for envi- Criminal prosecution is available to regulators for environ- ronmental wrongdoing. Insurance policies are often referred mental offences where it is in the public interest to prosecute to as ‘directors’ and officers’ liability insurance’ (D&O insur- (generally, the more serious offences in terms of harm and/or ance) and are intended to cover liability incurred by the direc- culpability). In England, the principal regulators are the EA tors in relation to the discharge of their duties. D&O insurance and local authorities. Under the Regulatory Enforcement and often will not, however, cover pollution events although they Sanctions Act 2008, certain environmental regulators have may cover defence costs or shareholder claims alleging a fall in the power to use a range of civil sanctions as an alternative to value of the company due to a pollution loss. prosecution for a prescribed list of environmental offences. Civil sanctions can include fixed and variable monetary penal- 4.4 What are the different implications from an ties, compliance notices, restoration notices, stop notices and environmental liability perspective of a share sale on the enforcement undertakings. one hand and an asset purchase on the other? Defences available will depend on the legislation breached, but could include, for example, the use of best practicable means. In a share sale, because the purchaser acquires the entire company, Civil liabilities might also arise, for example, under the torts they take on all extant risks and historic liabilities associated with of negligence, nuisance and trespass. that company, including any environmental liabilities. In contrast, an asset sale involves the acquisition of specific 4.2 Can an operator be liable for environmental assets. The buyer in an asset sale does not automatically acquire damage notwithstanding that the polluting activity is all the historic liabilities associated with the company. Of course, operated within permit limits? liabilities inherent in the assets, such as land that is contaminated, will still pass on an asset sale, so both deal structures will In some cases, yes. The case of Barr and others v Biffa Waste Services need consideration from environmental law specialists. Ltd [2012] EWCA Civ 312 reaffirmed that an environmental Liabilities may be addressed in transaction documents with permit that permitted an environmental impact is not a defence warranties and indemnities. to a private action in nuisance. In other cases, however, compliance under a permit may be a 4.5 To what extent may lenders be liable for defence. For example, the restoration of environmental damage environmental wrongdoing and/or remediation costs? under the UK’s implementation of the Environmental Liability Directive 2004 is limited in cases where an operator is expressly authorised by a permit (the logic being that the environmental Under most environmental legislation, liability rests with those impact will be addressed through the permit). who caused or knowingly permitted the damage. Knowledge

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and control of the breach will therefore be essential for deter- therefore require additional works to be carried out even though mining a lender’s liability for environmental issues and this will a programme of environmental remediation has been ‘agreed’, be dependent on the facts of each particular case. although this is subject to procedural safeguards to prevent the Factors likely to be considered include the extent of their regulator acting, for example, unreasonably. control over the assets securing the loan, whether they exer- A third party has the right to challenge an agreement for cised financial control over particular activities and whether remediation works between a regulator and another party by the lender knew or should have known in the circumstances way of judicial review in the Administrative Court on the basis about the breach. It follows that lenders under, for example, a of the agreement representing a decision by the regulator. Cases standard commercial mortgage, will be unlikely to incur liabili- may also be heard by a dedicated fast-track court for environ- ties under environmental law. mental and planning judicial review cases. The third party must show grounds for bringing judicial review, for example, that the 52 Contaminated Land decision-maker reached its decision on the basis of illegality, irrationality or procedural impropriety. Third parties may complain to the Local Government 5.1 What is the approach to liability for contamination (including historic contamination) of soil or Ombudsman if they feel that a local authority’s behaviour has groundwater? resulted in injustice as a result of maladministration. After investigation, the Ombudsman could order compensation to be paid if the complaint is upheld. The Parliamentary Ombudsman The contaminated land regime is based on the general principle investigates complaints where the EA is involved. that the ‘polluter pays’. Liability, however, is often more complicated than that. Contaminated land is defined under section 78(A)(2) of the 5.4 Does a person have a private right of action to EPA 1990 as: any land which appears to the local authority in seek contribution from a previous owner or occupier of whose area it is situated to be in such a condition, by reason of contaminated land when that owner caused, in whole or in part, contamination; and to what extent is it possible substances in, on or under the land, that: (a) significant harm is for a polluter to transfer the risk of contaminated land being caused or there is a significant possibility of such harm liability to a purchaser? being caused; or (b) significant pollution of controlled waters is being caused or there is a significant possibility of such pollution being caused. Representing that a property is free from contamination when it These terms are more fully described in the Act and there is, in fact, heavily contaminated may give rise to a remedy under is statutory guidance accompanying the interpretation of a private action for misdescription, misrepresentation or fraud- liability and contamination issues under the regime (Statutory ulent concealment. Guidance). Statutory guidance under Part 2A EPA 1990 provides mech- Local authorities are required to carry out inspections with a anisms whereby a seller of land can effectively transfer the view to identifying contaminated land. If land is identified as liability risks associated with contamination to a purchaser and contaminated, then the local authority (or the EA for certain this is often supported by contractual agreements. sites) must consider the need for remediation. Contamination is often an issue on development sites. When gaining permission 5.5 Does the government have authority to obtain from for the development, the site will usually be subject to specific a polluter, monetary damages for aesthetic harms to conditions in relation to remediation of any contamination. public assets, e.g. rivers? This might also be in order to reach an end state sufficient for an Environmental Permit to be surrendered. The power to obtain monetary damages for aesthetic harm to public assets is limited. The Environmental Damage 5.2 How is liability allocated where more than one Regulations 2015 (EDR 2015) provide some scope for public person is responsible for the contamination? authorities to claim damages for aesthetic harms. They can require the operator to remediate the harm caused by returning the habitat to its baseline condition or, where this is not possible, Liability under the contaminated land regime falls in the first to provide complementary or compensatory remediation. instance to persons who have caused or knowingly permitted the presence of the pollutants (Class A person(s)) and in their absence, to the current owners and/or occupiers (Class B 62 Powers of Regulators person(s)). An ‘agreement on liabilities’ might be entered into to indicate 6.1 What powers do environmental regulators have to how to allocate liability between two persons of the same class require production of documents, take samples, conduct under the regime. In the absence of an agreement of liabilities, site inspections, interview employees, etc.? exclusion and apportionment tests are set out under the regime to govern how liability is allocated where more than one person The main regulatory bodies in England and Wales (the Environment is potentially responsible. Agency (EA) and Natural Resources Wales (NRW)) have wide investigatory powers conferred to them by section 108 of the 5.3 If a programme of environmental remediation Environment Act 1995. They have the power to enter a premises, is “agreed” with an environmental regulator, can the and require a person to answer questions and produce documents. regulator come back and require additional works or can Under the EP Regulations 2016 (EP Regulations 2016) a a third party challenge the agreement? person can be required to provide such information as the regulator reasonably considers necessary for the purposes of It is not always possible to determine at the outset what needs discharging its functions. to be done to remediate contaminated land. A regulator can

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In addition to their investigative powers of entry, exami- environmental problems to prospective buyers. Caveat emptor nation, and sampling, the EA and NRW both have powers to (‘let the buyer beware’) is a doctrine that places the burden on conduct interviews under caution (in accordance with the Police the buyer to satisfy itself as to the state and condition of the and Criminal Evidence Act 1984). property being acquired. In light of the caveat emptor principle, a buyer will usually 72 Reporting / Disclosure Obligations conduct environmental due diligence on the target asset/property and will seek environmental warranties from the seller. Seeking to formalise and document environmental representa- 7.1 If pollution is found on a site, or discovered to be migrating off-site, must it be disclosed to an environmental tions and warranties can be an effective way of requiring a seller regulator or potentially affected third parties? to disclose any environmental issues, as contractual remedies will be available if a representation is false or a warranty is breached. In the UK there is no general duty to report all pollution incidents, but such duties can be imposed under, for example, an 82 General environmental permit, or the category of harm might be such that it requires notification. For example: 8.1 Is it possible to use an environmental indemnity ■ Permit conditions may require notification to the regu- to limit exposure for actual or potential environment- lator in the event of a permit breach or on the occur- related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. rence of any incident that may cause significant pollution remediation) discharge the indemnifier’s potential or other adverse effects to health, safety or the environ- liability for that matter? ment. In addition, the Control of Major Accident Hazard Regulations 2015 (COMAH) aim to limit the consequences of major accidents involving hazardous substances Environmental indemnities are one of the principal mecha- to humans and the environment. nisms in apportioning and discharging liability in transactions. ■ Operators of COMAH sites (i.e. businesses that deal with Indemnities are often utilised where the nature of the relevant dangerous substances) are required to keep local author- land, or connected activities, carry environmental (particu- ities and the potentially-affected public informed about larly clean-up) risk. Often, the seller is able to restrict the scope the hazardous substances and about possible major acci- of the indemnity to issues where warranties alone would not dents and their consequences. Operators must inform the provide an adequate remedy. Competent Authority (HSE and EA/NRW) of a major Liability under the Contaminated Land Regime (see section 5) accident on their site as soon as is practicable. may be transferred to the buyer where the property is ‘sold with ■ The EDR 2015 require operators of a wide range of activ- information’ or there has been a ‘payment for remediation’, or ities to inform the enforcing authority of any ‘environ- the parties have entered into an ‘agreement on liabilities’ for the mental damage’, whether actual or of imminent threat. allocation of remediation costs. This can mean damage to water and land, as well as to species and habitats, but the damage has to reach a certain 8.2 Is it possible to shelter environmental liabilities off threshold of significance before it becomes ‘environmental balance sheet, and can a company be dissolved in order damage’ under the regime (and therefore notifiable). to escape environmental liabilities?

7.2 When and under what circumstances does a person It is possible to set up a company with limited liability in order have an affirmative obligation to investigate land for to own property which may incur future liabilities to third contamination? parties (special purpose vehicles (SPVs)). However, the financial amount of liabilities stated in the SPV’s balance sheet may The contaminated land regime (see section 5) imposes an obli- require consolidation with the group’s accounts. gation on local authorities to inspect their areas to identify When a company becomes insolvent, its liabilities (including contaminated land. Local authorities have been slow to do this environmental liabilities) endure unless, and until, its dissolu- due to a lack of ring-fenced funding, and most contaminated tion. Even if a company has been dissolved and struck from land has been remediated under the planning regime rather than the register of companies, enforcing authorities and third under the contaminated land regime. The National Planning parties can apply to restore the company by virtue of section Policy Framework provides that potential development sites 1029 Companies Act 2006 in order to prosecute. An insolvent must be suitable for their new use and should not be capable company is still able to be prosecuted for its criminal liabilities; of being determined as contaminated land under Part 2A. As although this will depend on public interest considerations. such, developers seeking planning permission are often required There is an increasing trend in the English courts to hold to inspect the site and remediate any unacceptable contamina- parent companies liable for the environmental harm caused by tion. Certain environmental permits also require the investiga- its subsidiaries: the latest authority is the Supreme Court decision tion of land and, if necessary, remediation, before a permit can in Vedanta Resources PLC v Lungowe [2019] UKSC 20 (see below). be surrendered. 8.3 Can a person who holds shares in a company be held liable for breaches of environmental law and/ 7.3 To what extent is it necessary to disclose or pollution caused by the company, and can a parent environmental problems, e.g. by a seller to a prospective company be sued in its national court for pollution purchaser in the context of merger and/or takeover caused by a foreign subsidiary/affiliate? transactions?

The liability of shareholders in a limited liability company is Just as there is no general duty to report pollution incidents normally limited to paying up the unpaid amount of the nominal to regulators in the UK, there is no general duty to disclose

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value of their shares. However, section 157 of the EPA 1990 can amended. Claimants seeking to benefit from the rules must now render a company’s shareholders liable ‘where the affairs of a submit a statement of means, including any financial support body corporate are managed by its members’. provided by others. In light of that information, the Court now A parent company is not responsible for the acts or omissions has the power to vary the default cost caps. of its subsidiary solely by virtue of its role as parent. However, its actions (or indeed its public statements) can make a parent 92 Emissions Trading and Climate Change assume responsibilities. In Chandler v Cape plc [2012] EWCA (Civ) 525, the Court of Appeal confirmed that a parent company 9.1 What emissions trading schemes are in operation had ‘assumed’ a duty of care towards an employee of a subsid- in your jurisdiction and how is the emissions trading iary, in relation to harm suffered from working with asbestos. market developing there? See also the Supreme Court decision of Vedanta Resources PLC v Lungowe and others [2019] UKSC 20 where it was held that a parent may owe a duty of care to safeguard the environment and those The UK is currently a participant in the EU Emissions Trading who depend on it from the actions of its subsidiaries where it System (EU ETS), the largest multi-sector greenhouse gas has publicly undertaken to do so. The Supreme Court held that emissions trading scheme in the world. The trading system was there are no special principles for establishing parent company implemented by EU Directive 2003/87/EC and the Greenhouse liability for the conduct of a subsidiary. Rather, the principles in Gas Emissions Trading System Regulations 2012 (GHG Chandler are simply examples of circumstances in which a duty Regulations). It covers power stations and industrial plants of care may affect a parent. The Court also provided general (c.1,000 in the UK) along with some universities and hospitals guidance as to the conditions in which a parent will become and aviation operators flying into or from a European airport. liable, including where it promotes responsibility for the activi- The EU ETS operates a cap and trade scheme. An organisation ties of a subsidiary’s operations in public statements and reports. holds greenhouse gas emission allowances (Allowances) which The Supreme Court decision also contains a thorough review of represent the right to emit one metric tonne of CO2 equivalent into when cases can be brought in England for environmental harm the atmosphere. At the end of each scheme year the organisation to land and communities in foreign jurisdictions. must have in its account a number of Allowances equal to or more than the total volume of greenhouse gases it has emitted. Where an organisation emits below their limit they can sell surplus allowances 8.4 Are there any laws to protect “whistle-blowers” who to other organisations that have exceeded their limit. Organisations report environmental violations/matters? which do not have enough Allowances can purchase more. Allowances can be purchased on the secondary market (from Whistle-blowers in the UK are afforded protection by the companies who hold Allowances they do not need) or from Public Interest Disclosure Act 1998 (PIDA), which amends the auctions run by Member States. In the UK the auctions are Employment Rights Act 1996. This enables employees to make regulated by the Financial Conduct Authority. The rationale ‘protected disclosures’ about certain wrongdoings. Relevant fail- behind this system is that it enables emissions reductions to take ures include damage to the environment. Whistle-blowers must place where the cost of reduction is lowest. reasonably believe that a ‘relevant failure’ has occurred. Employees The system is currently in Phase III which began in 2013 and who make ‘protected disclosures’ under PIDA can claim unfair continues until 2020. The key change implemented in Phase III dismissal if their contracts are terminated because of the disclosures. was an EU-wide Allowances cap and an increase in the auctioning of those Allowances. This cap was expected to affect an overall reduction of 21% below 2005 verified emissions by 2020. 8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary The UK’s potential exit from the EU (Brexit) places some damages available? uncertainty over future participation in the EU ETS.

Claims in the English courts are underpinned by an ‘opt-in’ 9.2 Aside from the emissions trading schemes mechanism, with claimants issuing claims which are subse- mentioned in question 9.1 above, is there any other quently managed together by the Court under a group litigation requirement to monitor and report greenhouse gas emissions? order (GLO). GLOs have been made in a vast array of cases, including environmental claims. Punitive damages are possible but very rare: damages awarded do not generally contain any Since October 2013, large listed companies (not only compa- punitive element and the assessment is based solely on an assess- nies listed on the London Stock Exchange but also those offi- ment of the actual loss caused by the tort. cially listed in an EEA state, on the New York Stock Exchange or NASDAQ) must disclose their annual greenhouse gas emissions from activities for which they are responsible. 8.6 Do individuals or public interest groups benefit These obligations were extended under the Companies (Directors’ from any exemption from liability to pay costs when pursuing environmental litigation? Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (2018 Regulations). The 2018 Regulations apply for all financial years beginning on or after 1 April 2019. Generally, the loser pays the winner’s costs in litigation. The Now large unquoted companies and LLPs must also report Aarhus Convention has allayed some of the costs burden that their UK energy use and greenhouse gas emissions, include an claimants face. Since 2013, the Civil Procedure Rules (CPR) intensity ratio and information relating to energy efficiency have been amended to provide a degree of protection for claim- action in their annual reports. This is referred to as Streamlined ants bringing environmental judicial review claims. The Aarhus Energy and Carbon Reporting (SECR). Quoted companies Rules were introduced to provide certainty for claimants in envi- were already required to report their global greenhouse gas ronmental cases, by imposing a cap on liability for claimants of emissions and include an intensity ratio in their annual reports. £5,000 (or £10,000 if the claimant is a business). However, in They must now also include total global energy use and informa- 2017 this protection was diluted somewhat when the CPR were tion relating to energy efficiency action.

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The SECR has been implemented against the backdrop of of asbestos-related illnesses in receiving compensation as quickly the abolition of the CRC mandatory emissions trading scheme and easily as possible. Victims, or their estates or dependants, can (CRC). As well as being a trading scheme, the CRC placed an claim compensation from any responsible person (i.e. an employer obligation on large organisations and businesses to report annu- liable in negligence or in breach of statutory duty in relation to ally on their energy use. The SECR does not replace this scheme asbestos exposure) and it is then the responsibility of the respon- but implements new reporting obligations as outlined above. sible person to seek contributions from other responsible persons. A scheme is also in place to enable mesothelioma victims to be compensated in the absence of an employer or insurer, which 9.3 What is the overall policy approach to climate change regulation in your jurisdiction? is funded by levies on liability insurers. Recently, the courts have confirmed that there is no minimum level of asbestos exposure below which such exposure is ‘accept- The most significant development to the UK’s climate change able’ (Bussey v 00654701 Ltd (formerly Anglia Heating Ltd) [2018] policy in 2019, was the government’s commitment, via the EWCA Civ 243). introduction of the Climate Change Act 2008 (2050 Target In 2019, the first successful secondary exposure case (when Amendment) Order on 12 June 2019 (the Order), to reach people, usually family, are exposed to asbestos through others) net-zero greenhouse gas emissions by 2050. The UK is the first was brought in England and Wales. Carey v Vauxhall Motors Ltd G7 country to legislate for net-zero emissions. [2019] EWHC 238 (QB) establishes that secondary exposure This net-zero commitment was introduced as an amendment claims are legitimate. to the existing Climate Change Act 2008 (CCA) – in which the government committed to a legally binding target of an 80% reduction in greenhouse gas emissions by 2050 against 1990 levels. 10.2 What are the duties of owners/occupiers of How the government will implement the new target is the premises in relation to asbestos on-site? current primary political and regulatory question. It is difficult to see a successful net-zero strategy which does not involve These are set out in the Control of Asbestos Regulations 2012. greater regulation. Whilst the government has indicated its Regulation 4 imposes a duty to determine whether asbestos intention to review after five years whether British companies is present in the building for which dutyholders are responsible, are facing too significant a competitive disadvantage due to the assess risk and have a management system in place for mini- implementation of the target, it seems unlikely the government mising the risk. A dutyholder must ensure that ‘reasonably will go back on its commitment solely on the basis of short- accessible’ parts of a premises are inspected and that they take term cost, especially given recent popular support for action on ‘such steps as are reasonable in the circumstances’. climate change epitomised by the Extinction Rebellion protests If it is established that there is asbestos on site, the duty- in 2019. Conversely, it was recognised in the Green Finance holder must prepare a written plan that specifies measures Strategy, released in July 2019, that the net-zero target will for monitoring, maintaining or removing the asbestos (asbes- require investment in a number of key sectors suggesting losses tos-containing material (ACM) is usually left in place unless it is to business may not be as significant as some fear. damaged or likely to be disturbed); document all decisions made The net-zero commitment has not arisen in a vacuum. There in relation to the asbestos; and ensure that every person liable to is a backdrop of continual government communications with disturb the asbestos is informed of its location and condition. regards to climate change. In October 2017, the government published its Clean Growth Strategy which set out a process 112 Environmental Insurance Liabilities under which the government intended to meet statutory carbon budgets. The 2017 Industrial Strategy also focused on decar- 11.1 What types of environmental insurance are bonising the UK economy. available in the market, and how big a role does environmental risks insurance play in your jurisdiction? 102 Asbestos Historically we have not seen environmental insurance taken 10.1 What is the experience of asbestos litigation in out on the majority of day-to-day transactions we act on. This your jurisdiction? has generally been due to factors such as the (relatively) high cost of policies compared to the coverage they offer and our The courts have had a generally claimant-friendly track record in clients’ assessment of the cost/benefit analysis of taking out that relation to asbestos-related cancer (mesothelioma) cases. insurance. However, for certain deals where an environmental In Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22, issue is a sticking point, insurance policies do provide a solu- the House of Lords ruled that employees exposed to asbestos tion, and there are signs that attitudes are changing and policies dust by more than one employer would be entitled to recover are becoming more mainstream. Increased competition in the damages against each of those employers (with asbestos-ex- market is helping to drive down premiums and make obtaining posing employers to be jointly and severally liable). environmental insurance a less onerous prospect. This position was initially changed by the decision of Barker Environmental Liability Insurance (ELI) is available for costs v Corus (UK) Ltd [2006] UKHL 20, where the court held that arising from both common law claims and claims arising from liability should be divided according to each defendant’s contribu- both UK and EU legislation. The Association of British Insurers tion to the risk of the claimant contracting a disease. This would (ABI) notes that types of ELI on the market can cover: both be a question of fact, determined by considering duration of expo- sudden pollution and gradual pollution; first party (own site) sure, intensity of exposure, and the specific agent(s) to which clean-up costs imposed by regulatory authorities, i.e. regulatory the claimant was exposed, etc. However, the procedure estab- contaminated land liabilities; third-party liability including impact lished in Barker v Corus was lengthy and time consuming. The on property value; nuisance claims; and legal costs and expenses. decision was subsequently reversed and the government intro- Whilst clients may have other types of insurance, these will duced the Compensation Act 2006 which aims to assist victims often only provide limited cover for environmental issues.

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11.2 What is the environmental insurance claims Wales. At the time of writing, the ‘exit’ date is still to be deter- experience in your jurisdiction? mined, but under the current proposals, The European Union (Withdrawal) Act 2018 will repeal the European Communities Act 1972 at the point of exit. Directly-applicable EU law There is little published information on environmental insur- adopted before the end of the transition period would automat- ance claims figures although current estimates of annual ically apply in the UK. premium spend within the UK environmental insurance market The Climate Change Act 2008 (2050 Target Amendment) has been approximated at £100 million. Order 2019 passed in the summer of 2019 signifies a bold step by the UK Government. The UK is the first G7 country to 122 Updates legislate for net-zero emissions. This is likely to have enormous implications for the whole UK economy for decades to come. 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 UK’s exit from the European Union continues to be a major issue for the future of environmental law in England and

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Simon Tilling is a partner at UK independent firm Burges Salmon and is head of the market-leading environmental law team. His practice encompasses the full breadth of environmental law, from the regulation of chemicals and products to contamination claims and regulatory appeals. Simon is qualified in England, Wales and Scotland and his experience encompasses UK, EU and international environmental law. He is recommended in Who’s Who Legal: Environment and in Chambers & Partners UK, where he has been described as an ‘extremely bright and a very skilled lawyer’ and he is nominated in The Legal 500 UK Awards for ‘Real Estate (outside London) Lawyer of the Year 2020’ for his environmental work. Simon is also the Vice-Chair of the UK Environmental Law Association and his role includes promoting the organisation’s international networks.

Burges Salmon LLP Tel: +44 117 902 7794 One Glass Wharf Email: [email protected] Bristol, BS2 0ZX URL: www.burges-salmon.com United Kingdom

Joanne Attwood is an experienced environmental, regulatory and licensing lawyer. Joanne specialises in both contentious and non-contentious environmental and regulatory issues. She regularly advises on: environmental risk; liabilities and regulation; real estate and corporate transactions; general environmental and regulatory compliance; site exits, decommissioning; and remediation liabilities and regulatory actions. Joanne is also head of the firm’s Licensing practice. Joanne advises clients across a number of sectors including energy and utilities, education, food, hotels, leisure and tourism, manufacturing, real estate, sport and transport and is ranked in Chambers UK 2020 as a ‘Star Associate’.

Burges Salmon LLP Tel: +44 117 902 7257 One Glass Wharf Email: [email protected] Bristol, BS2 0ZX URL: www.burges-salmon.com United Kingdom

Burges Salmon LLP is a UK independent firm with a market-leading repu- international and overseas law firms seeking genuine expertise in the UK tation in energy, transport, infrastructure and environmental law. The envi- market for support on transactions or for troubleshooting environmental ronment team is ranked in the top tier in the UK directories and has three issues. environmental lawyers recommended in Who’s Who Legal: Environment for www.burges-salmon.com England, more than any other UK firm. The Legal 500 testimonials include: ‘This is a great and genuinely international environment practice’ and ‘The practice has an amazing strength in depth, and all team members are exceptional’. The size and strength of the practice allows it to tackle some of the biggest environmental law cases and most complex challenges. The team acts for a spectrum of clients, from large FTSE corporates, multinational businesses with UK or EU footprints, and high hazard industries, to government bodies (the firm is appointed to the panel of the Scottish Environment Protection Agency). The team is regularly instructed by

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Uruguay Uruguay

Anabela Aldaz Peraza

Guyer & Regules Fiorella Arenas Bollazzi

12 Environmental Policy and its B) Cumulatively proceed to publicly publish the resolution which sanctioned the offender, when the infringement is Enforcement not considered a minor offence. C) Cumulatively with other penalties, confiscate objects or 1.1 What is the basis of environmental policy in your products used in the illicit activity. jurisdiction and which agencies/bodies administer and D) Arrange for the suspension (for up to 180 days) or for the enforce environmental law? expiration of the permits, authorisations, or concessions of the offender, when the committed infractions are consid- Environmental policy in Uruguay is based on Section 47 of the ered to be serious or repeated offences. Uruguayan Constitution, Law Number 17,283 (Environmental General Law), its regulatory Decree Number 152/013, Law 1.3 To what extent are public authorities required to Number 16,466 and its regulatory Decree Number 349/005. provide environment-related information to interested Such provisions declare the protection of the environment persons (including members of the public)? against any kind of depredation, destruction or pollution of national interest, which includes the prevention of any negative Public authorities are obliged to provide environment-related environmental impact, and, as the case may be, the restoration information to interested persons who require such informa- of damaged environments. tion, with the limitation of information that is considered a trade Law Number 16,112 establishes that the Ministry of Housing, or industrial secret (Section 15 of Law Number 16,466). Land Planning and Environment (hereinafter, “MVOTMA”) is the main agency that administers and enforces environmental law. Specifically, the main agency is the National Environmental 22 Environmental Permits Agency (“Dirección Nacional de Medio Ambiente”) (hereinafter, “DINAMA”). 2.1 When is an environmental permit required, and may Pursuant to Section 8 of Law Number 17,283, municipal environmental permits be transferred from one person to another? authorities are also able to administer and enforce environmental law in certain delegated aspects. Pursuant to Law Number 16,466 and Decree Number 349/005, Besides the Ministry of Public Health (hereinafter, “MSP”) several environmental permits are required prior to starting (through the “División Salud Ambiental y Ocupacional ”) and the certain activities, constructions and works expressly listed in National Naval Prefecture (through the “Dirección de Protección such regulations. de Medio Ambiente”) have sectorial competencies regarding their For instance, those interested in carrying out any of the commitments. activities, constructions and works are subject to the request of a Prior Environmental Authorisation (hereinafter, “AAP” 1.2 What approach do such agencies/bodies take to – “Autorización Ambiental Previa”) and shall communicate the the enforcement of environmental law? project to the MVOTMA by submitting certain information depending on the category of the same. Decree Number 349/005 also establishes that parties inter- In general terms, such agencies impose fines in order to enforce ested in performing certain activities, constructions or works environmental law. The fines depend on the kind of infringe- included in Section 20 of said Decree shall communicate the ment, but in general vary from 10 R.U. (Readjustable Units location and a description of the area of execution and influence – “Unidades Reajustables”) to 10,000 R.U. (currently: 1 R.U. = to the DINAMA and, as the case may be, include an assessment Uruguayan $1195.70 = UUSD31 approximately). Moreover, they of the location or section of the site where the project is to be are also entitled to impose warnings, confiscations and suspen- performed, including an analysis of any alternatives. sions. According to Section 6 of Law Number 16,112, MVOTMA Some projects that require an AAP must also obtain an will be in charge of controlling whether public or private activities Operating Environmental Authorisation (hereinafter, “AAO”) comply with environmental protection standards. Specifically, in order to start operating. The AAO shall be requested by the Section 15 of Law Number 17,283 allows MVOTMA to: interested party, and, once there has been a full verification of the A) Sanction with warnings when the offender lacks any conditions established in the AAP, the project is filed before the prior convictions regarding the commission of minor MVOTMA and, if the Environmental Impact Assessment criteria infringements. are met, the MVOTMA grants the AAO.

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Those activities that were built, authorised or put into oper- 2.3 Is it necessary to conduct environmental audits ation without being required to obtain the AAP (because the or environmental impact assessments for particularly activity was prior to the entry into force of the Decree or, when polluting industries or other installations/projects? the activity started, it did not meet the requirement established in the Decree for obtaining the AAP), would require a Special Under Uruguayan law, there is no obligation to conduct envi- Environmental Authorisation (hereinafter, “AAE”), included in ronmental audits for particularly polluting industries. However, Section 25 of Decree Number 349/005, if they expand the facil- Law Number 16,466 and Decree Number 349/005 establish that ities or increase the productive capacity. it is necessary to perform an Environmental Impact Assessment Environmental permits can be transferred from one person for certain activities, constructions and works expressly listed in to another, provided the transferee assumes the same obliga- such Law (Section 6). tions that the transferor had assumed before, and as long as this is allowed by the corresponding governing body. 2.4 What enforcement powers do environmental regulators have in connection with the violation of 2.2 What rights are there to appeal against the permits? decision of an environmental regulator not to grant an environmental permit or in respect of the conditions contained in an environmental permit? In the case of violations of environmental protection regulations, the environmental regulator may impose warnings, the confiscation and/or destruction of vehicles, instruments and In Uruguay, decisions by an environmental regulator rejecting devices directly linked to the commission of the offence or the an environmental permit, or in respect to conditions contained transit of objects or products, or even a suspension of the offend- in an environmental permit, may be challenged through an er’s authorisations, permits, etc., for up to 180 days, cumulatively administrative recourse before the authority rejecting the permit with a fine of 10 to 10,000 R.U. and then an appeal before the Executive Power. Furthermore, Section 453 of Law Number 16,170 establishes The term to file said administrative actions is 10 calendar that apart from the possibility of imposing fines in order to days from the publication of the administrative resolution in the enforce environmental legislation, the environmental regulator Official Gazette or its notification to the affected person, as the (MVOTMA) can request the assistance of the Police and the case may be. Only those individuals or legal entities that have National Naval Prefecture. 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 administra- 32 Waste tive action. However, such grounds and arguments do not need to be filed together with the administrative action, and may be 3.1 How is waste defined and do certain categories of filed later, before the term for the Administration to resolve waste involve additional duties or controls? expires (in the meantime, the Administration may nevertheless decide the case even without having received such grounds). Waste Management Law Number 19,829, for the purpose of Once the administrative action has been filed, the Administration this law, defines waste as: “substances, materials or objects which are has a term of 200 days as from the filing to issue a resolution discarded or disposed of, or intended or required to be discarded or disposed to decide upon the challenge. If the term expires without any of.” Decree Number 182/013, Resolution Number 1708/2013 resolution from the Administration, the action shall be deemed and Resolution Number 266/014, which regulate industrial rejected. wastes, also define “waste” in a similar way. In the case that the administrative action is expressly or tacitly There are certain categories of waste which involve additional rejected, the Company shall have the right to file an annul- duties or controls such as: (i) industrial solid wastes (Decree ment action before the jurisdictional court called “Tribunal de lo Number 182/013); (ii) hospital wastes (Decree Number 586/09); Contencioso Administrativo” (hereinafter, “TCA”) (it is the rough (iii) batteries (Decree Number 373/003); (iv) agricultural, horti- equivalent to a Supreme Court in administrative cases). cultural and forestry wastes (Decree Number 152/013); (v) Such action does not suspend the application of the reso- lamps and other mercury-containing waste (Decree Number lution, save for the cases in which the Company requests the 15/019); and (vi) tyres (Decree Number 358/015) and packages immediate suspension of the effects of the resolution and the (Decree Number 260/007). Administration favourably resolves (highly unlikely). The term to file an annulment action before the TCA is 60 3.2 To what extent is a producer of waste allowed days from the notification of the rejection of the administra- to store and/or dispose of it on the site where it was tive action, or as from the expiration of the 200-day term for the produced? resolution of the administrative action (that is, after the administrative action has been tacitly rejected). The TCA may confirm or annul the resolution, as applicable, In general terms, an approved Management Plan which regu- but it may not modify its content. lates all aspects related to waste is necessary prior to storing and/ Also, in case the environmental regulator rejects the environ- or disposing of such waste. mental permit, and the Company is not willing to file an annul- With regard to the Waste Management Plans of solid industrial ment action before the TCA, it could file a lawsuit before our waste, the same must include generation, internal management, judicial authorities to claim for the damages that the rejection storage, transport, recycling, recovery, treatment and final disposal of the permit causes the Company (the term to file the lawsuit of all the solid waste generated by the activity of the Company. is four years). The location, kind of waste and other conditions related to the disposal of such waste shall be approved by the environmental regulator.

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3.3 Do producers of waste retain any residual liability Parliament (hereinafter, the “2017 Bill”) which seeks to incor- in respect of the waste where they have transferred it porate a specific Section in the Uruguayan Penal Code regu- to another person for disposal/treatment off-site (e.g. lating “Crimes Against the Environment”. The crimes which if the transferee/ultimate disposer goes bankrupt/ are punishable under this project of law are those regarding disappears)? pollution, crimes against biodiversity, and crimes against environmental management. Section 7 of National Waste Management Law establishes that any producer of waste of any type will be responsible for the 4.2 Can an operator be liable for environmental management of the same at all stages, and shall bear the costs damage notwithstanding that the polluting activity is thereof. operated within permit limits?

3.4 To what extent do waste producers have Under Uruguayan law, there is no obligation regarding liability obligations regarding the take-back and recovery of their when pollution is caused when operating within permit limits. waste? However, in general terms, Section 3 of Law Number 17,283 and Law Number 16,466 establish that all persons have an obligation Fundamentally, waste producers shall submit a Management not to cause environmental impacts. Plan that regulates all aspects related to such waste to the Furthermore, Section 4 of Law Number 16,466 establishes MVOTMA. that the polluter is liable for all of the damages caused, without If it is not possible to reintroduce the waste in the production exception. process, the producer shall take back and/or recover the same under the Management Plan. 4.3 Can directors and officers of corporations attract personal liabilities for environmental wrongdoing, and 42 Liabilities to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities? 4.1 What types of liabilities can arise where there is a breach of environmental laws and/or permits, and what Under Uruguayan law, there is not yet any particular regula- defences are typically available? tion that establishes direct liability for directors and officers of corporations for environmental wrongdoing. However, the Three different types of liabilities arise where there is a breach Uruguayan Corporate Law establishes the liability of directors of environmental law and/or permits: civil; administrative; and and administrators before the Company, its shareholders and criminal liability. third parties for all damages (it is not exclusive to environmental Regarding civil liability: Uruguayan law provides that damages) they may cause if acting against the law or by-laws. whoever causes depredation, destruction or contamination of In that sense, directors and officers of corporations could the environment in violation of law shall be held liable for the be liable for environmental wrongdoing. However, there is no payment of all damages caused. The law also obliges the liable express provision which establishes the possibility of getting party to conduct and perform all works to reduce or mitigate the insurance or relying on other indemnity protection in respect damage caused. of such liabilities. In general, doctrine and jurisprudence recognise that the Furthermore, the 2017 Bill adds a chapter referring to envi- claimant must give evidence of the following issues: that there ronmental crime to the Uruguayan Penal Code. The 2017 Bill has been a harmful act; that such an act has caused real harm regulates the liability for corporations that commit environ- (not potential or eventual damage); that there is a direct link mental crimes, and establishes that, in that case, the liability between such a deed and the harm caused by the same; and that will lie with the people that have effective control over a corpo- the party has caused such an act by acting fraudulently or by ration, provided they have contributed to and determined the acting with severe negligence. This means that such liability is commission of the said environmental crime. Although this not objective or based on the mere risk, but the claimant must has not been approved yet, it gives a hint of the tendencies of prove that the defendant acted with the full intention of causing Uruguayan regulation. the damage or with severe negligence. Moreover, as previously explained, all persons who cause Regarding administrative liability: Laws Number 16,112, environmental damage are liable for such damage as a general 16,170, 16,466, 16,688 and 17,283 and Decree Number 100/991 rule. provide administrative sanctions in the case of a violation of environmental protection regulations, which vary from a 4.4 What are the different implications from an warning to a confiscation and/or the destruction of vehicles, environmental liability perspective of a share sale on the instruments and devices directly linked to the commission of the one hand and an asset purchase on the other? offence or the transit of objects or products, or even a suspension of the offender’s authorisations, permits, etc., for up to 180 In principle, under Uruguayan law, shareholders are not liable days, cumulatively with a fine of 10 to 10,000 R.U. according to for the obligations of the Company, save in the case that the Law Number 16,226 (Section 67). corporate veil is pierced, which is unlikely in Uruguay, since Regarding criminal liability: As stated in Environmental the standard to raise the veil is quite high. In such sense, in Law Number 17,220 (dated November 17, 1999), a person intro- order to pierce the corporate veil of a Company, article 189 of ducing hazardous wastes (as defined in Annex I and II of the Law Number 16,060 (hereinafter, the “Uruguayan Company Basel Convention on Movements of Hazardous Wastes and Law”) establishes some prerequisites that must be met: (i) Their Disposal, as of March 22, 1989) into a zone subject to fraudulent avoidance of the law; (ii) fraud in detriment of the Uruguayan jurisdiction may be punished with up to 12 years in rights of shareholders, partners or third parties; or (iii) breach prison. Also, on February 1, 2017, a bill was presented before of Public Order.

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The Uruguayan Company Law demands that the use of the request all works that may be necessary to remediate the damage Company for the purposes previously listed must be proven caused to the environment. beyond any reasonable doubt. The disregard mechanism should be applied restrictively and as an exception. The legal threshold for 5.4 Does a person have a private right of action to piercing the corporate veil in Uruguay is quite high. Both scholars seek contribution from a previous owner or occupier of and courts have understood that the Uruguayan Company Law contaminated land when that owner caused, in whole or consecrates a special requirement in the evidentiary field. in part, contamination; and to what extent is it possible Therefore, the transfer of shares between shareholders has no for a polluter to transfer the risk of contaminated land consequences regarding the liability of the Company, who is the liability to a purchaser? liable entity. In the case of an asset purchase (the transference of an ongoing Under Uruguayan legislation, there is no regulation that expressly business concern), provided a special procedure is followed, regulates a private right of action to seek contribution from a the liability of the purchaser will be limited to the obligations previous owner or occupier of contaminated land when that resulting from the balance sheet and those not included in the owner caused, in whole or in part, the contamination. However, balance sheet but denounced by creditors within a specific term. under Uruguayan tort rules, the polluter is liable for all damages caused without exception. Nonetheless, under the freedom of 4.5 To what extent may lenders be liable for contract doctrine, it can be agreed between the parties which of environmental wrongdoing and/or remediation costs? them shall bear the environmental liability (save for the clarification made under question 5.2 regarding the 2017 Bill). Under Uruguayan law and jurisprudence, there is no specific provision or precedent that establishes a liability to lenders for 5.5 Does the government have authority to obtain from environmental wrongdoing and/or remediation costs. a polluter, monetary damages for aesthetic harms to However, as it is understood under Uruguayan law, as a public assets, e.g. rivers? general rule all persons who cause environmental damage are liable for such damage. Yes. Aesthetic harms are included under the definition provided by Law Number 17,283. 52 Contaminated Land 62 Powers of Regulators 5.1 What is the approach to liability for contamination (including historic contamination) of soil or 6.1 What powers do environmental regulators have to groundwater? require production of documents, take samples, conduct site inspections, interview employees, etc.? Liability for the contamination of soil or groundwater is regulated mainly by Decree Number 253/79. Such Decree estab- Environmental regulators have different powers, such as the lishes the possibility of imposing fines in case of contamina- possibility of imposing warnings and fines, in order to require tion and establishes certain limitations for spilling waste on production of documents, take samples, conduct site inspec- groundwater. tions, interview employees, etc. In addition, the 2017 Bill, which regulates environmental crime, establishes a penalty of prison for up to eight years in case 72 Reporting / Disclosure Obligations of contamination of groundwater, as well as damage to the environment caused by toxic substances. 7.1 If pollution is found on a site, or discovered to be migrating off-site, must it be disclosed to an environmental 5.2 How is liability allocated where more than one regulator or potentially affected third parties? person is responsible for the contamination? Under Uruguayan legislation, there is no directive that regulates Section 11 of Law Number 16,466 establishes a joint and several such situation specifically. liability when more than one person is responsible for contami- However, following the general rules, such situation must be nation; including, not only the owner of a project, constructions disclosed to an environmental regulator. Specifically, under and works, but also the professionals and technicians who have Section 34 of Decree Number 152/013, the omission of environ- participated in such project. mental information or the submission of false or incorrect infor- Also, as mentioned above, the 2017 Bill adds environmental mation to the Administration is considered a serious infraction crimes to the Uruguayan Penal Code, and the Uruguayan Penal of environmental regulation. Code establishes the possibility of criminal liability of a “group”, Furthermore, according to the 2017 Bill, it is a crime to hinder in cases where the crimes were committed by more than one environmental control or to provide false information to the person. corresponding authorities, which may incur a penalty of prison for up to two years. 5.3 If a programme of environmental remediation is “agreed” with an environmental regulator, can the 7.2 When and under what circumstances does a person regulator come back and require additional works or can have an affirmative obligation to investigate land for a third party challenge the agreement? contamination?

Although there is no specific regulation in this regard, as a Under Uruguayan legislation, there is no law that imposes the general rule the environmental regulator has the power to obligation to investigate land for contamination. However, as

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all persons are obliged to take care of the environment, it could 8.4 Are there any laws to protect “whistle-blowers” who be construed that such obligation exists. report environmental violations/matters?

7.3 To what extent is it necessary to disclose No. In Uruguay, there is no law which protects “whistle-blowers” environmental problems, e.g. by a seller to a prospective who report environmental violations/matters. Nevertheless, in purchaser in the context of merger and/or takeover the event that the 2017 Bill is approved, those who denounce transactions? crimes against the environment in circumstances of danger or risk will be protected as set out in Decree Number 209/000. Under Uruguayan legislation, there is no law that regulates such a situation in particular. Nonetheless, general principles 8.5 Are group or “class” actions available for pursuing of law determine the obligation of the parties in an agreement environmental claims, and are penal or exemplary to act with good faith, avoid fraud and disclose any possible damages available? hidden faults of the object of the negotiation. Thus, according to such principles, not disclosing environmental problems may Yes. Under Uruguayan law (Section 42 of the Procedural be construed as bad faith and may entail legal consequences General Code), in the case of matters related to environmental regarding liability. protection, cultural and historical values, and any other matters belonging to an indefinite number of persons, any interested 82 General party shall be entitled to promote the relevant process in order to protect such values. Furthermore, Law Number 16,112 estab- 8.1 Is it possible to use an environmental indemnity lishes the same possibility for the MVOTMA. to limit exposure for actual or potential environment- Moreover, in some types of claims on which a direct, personal related liabilities, and does making a payment to another and legitimate interest is required to file the claim (such as person under an indemnity in respect of a matter (e.g. annulment actions against administrative acts, or unconstitu- remediation) discharge the indemnifier’s potential liability for that matter? tional 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 Under Uruguayan regulations, there is no provision that regu- party can promote them. However, said flexibility regarding lates such situation yet. Therefore, under the freedom of special legitimation requirements has not been unanimously contract principle, an environmental indemnity should be accepted for protective actions “Acciones de Amparo” – which are upheld by Uruguayan courts, as well as payments thereof. commonly used for environmental protection. However, in the 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 8.6 Do individuals or public interest groups benefit limit criminal liability, provided such person was responsible for from any exemption from liability to pay costs when the crime and accountable according to the general rules. pursuing environmental litigation?

No. Uruguayan law does not establish any exemptions from 8.2 Is it possible to shelter environmental liabilities off liability to pay costs when pursuing environmental litigation. balance sheet, and can a company be dissolved in order to escape environmental liabilities? 92 Emissions Trading and Climate Change It is not possible to shelter environmental liabilities off balance sheet. The shareholders could decide to dissolve the Company 9.1 What emissions trading schemes are in operation but, in such a case, the Company’s assets and liabilities will be in your jurisdiction and how is the emissions trading market developing there? allocated with the shareholders.

The emissions trading market is related in general to renewable 8.3 Can a person who holds shares in a company energy projects that want to be settled in Uruguay. In this sense, be held liable for breaches of environmental law and/ or pollution caused by the company, and can a parent Uruguay has implemented a major change in the energy matrix company be sued in its national court for pollution because of a significant number of projects that have been caused by a foreign subsidiary/affiliate? promoted in relation to the production of energy from renewable sources: mainly wind; solar; and biomass. The development of wind projects was, essentially, the beginning of the produc- Under Uruguayan law, the principle is that shareholders are not tion of energy from renewable sources in Uruguay. liable for the obligations of the Company, and there are no court Besides, 2018 saw the launch of the project “Towards a sustain- precedents stating the contrary. Nevertheless, as we mentioned, able and efficient urban mobility system in Uruguay”, whose Uruguayan law establishes the possibility of piercing the corpo- purpose is to adapt institutional capacity and the regulatory frame- rate veil in certain situations (see question 4.4). In such scenario, work in order to promote the reduction of carbon emissions in shareholders could be held liable for the Company’s actions. the mobility system. This project is executed by the Ministry of However, as mentioned above, in Uruguay the standard to Industry, Energy and Mining (“ ”) and the Ministry of pierce the veil is quite high. MIEM Housing, Land Management and Environment (“ ”). Moreover, a parent Company can be sued in the name of a MVOTMA It is supported in its implementation by the United Nations foreign subsidiary if the foreign Company has no capital to pay Development Programme (hereinafter, “ ”) and in collab- its environmental liabilities. UNDP oration with the Uruguayan Agency for International Cooperation (“AUCI”). Its funding comes from the Global Environment Facility (“GEF”).

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9.2 Aside from the emissions trading schemes In August 2018, Law Number 19,644 approved the Montreal mentioned in question 9.1 above, is there any other Protocol on substances that deplete the ozone layer. requirement to monitor and report greenhouse gas emissions? 102 Asbestos

According to Law Number 19,147, the National Environmental 10.1 What is the experience of asbestos litigation in Observatory (“Observatorio Ambiental Nacional”) shall register and your jurisdiction? update the information regarding the conditions of the environment, carrying out a quantification of polluting emissions, Decree Number 154/002 prohibits the manufacture, hazardous substances, waste in the environment and greenhouse commercialisation and introduction to its territory of any product gas emissions. that contains asbestos. Further, Law Number 18,195, which has the purpose of The above-mentioned Decree establishes that in order to promoting and regulating the production, marketing and introduce asbestos into Uruguay, it is necessary to request an use of agrofuels, establishes that it also aims to reduce green- authorisation from the MSP prior to the opinion of the “Honorary house gas emissions under the terms of the Kyoto Protocol to Committee of Unhealthy Jobs” (“Comisión Honoraria de Trabajos the Framework Convention of the United Nations on Climate Insalubres”). By way of example, Judgment No. 319/2011 of the Change, approved by Law Number 17,279, contributing to the Civil Court of Appeals of the 7th Circuit relates to a Customs sustainable development of the country. Offence due to the import of materials containing asbestos, Obligations on companies to monitor their greenhouse thereby breaching the mentioned Decree. gas emissions arise from the processing of an Environmental Authorisation. In other words, it is common for the MVOTMA, in order to authorise the operation of certain activities, to estab- 10.2 What are the duties of owners/occupiers of lish some requirements to monitor and report greenhouse gas premises in relation to asbestos on-site? emissions. In addition, please note that the Project for the Production of The competent authorities may require the substitution of Electricity from Biomass in Uruguay (PROBIO) which is a joint asbestos on-site. initiative of the National Government and the UNDP, has the aim of reducing greenhouse gas emissions from the generation 112 Environmental Insurance Liabilities of electricity from fossil fuels in Uruguay, through the promotion and development of decentralised energy generation from 11.1 What types of environmental insurance are industrial waste biomass and by-products. available in the market, and how big a role does Finally, by Law Number 19,640, Uruguay approved the environmental risks insurance play in your jurisdiction? Decision 1/CMP.8 Amendment to the Kyoto Protocol in accordance with article 3, paragraph 9 (Doha amendment) which, among other things, encourages developing countries, such as The market for environmental insurance is not quite developed Uruguay, to contribute to the overall effort of reduction of emis- yet, and there is only one compulsory environmental insurance sions through the mitigation measures established therein. for the companies that provide port services; namely, Section 9 of Decree Number 413/92 stipulates that companies that provide port services shall have policies to cover civil liability 9.3 What is the overall policy approach to climate which include protection against environmental liabilities. change regulation in your jurisdiction? Although insurance companies do offer specific environmental policies, they are not yet commonly used, since envi- The Kyoto Protocol was approved by the Uruguayan Parliament ronmental liability is usually covered within general insurance in November 2000, with the same being incorporated into which covers civil liability in general. Uruguayan regulations by means of Law Number 17,279. In 2013, Law Number 19,158 founded the Uruguayan Institute of 11.2 What is the environmental insurance claims Meteorology and Hydrology which, among other commitments, experience in your jurisdiction? advises the Executive Branch in terms of climate change. Further, in 2016, Decree Number 172/016 created the National There are no precedents in environmental insurance claims in Environmental System (hereinafter, “NES”) with the purpose of strengthening, articulating and coordinating public policies Uruguay. on the matter, which is composed of various State agencies. Said Decree also creates the National Environmental Cabinet (here- 122 Updates inafter, “NEC”), which will have as a function, among others, to propose to the Executive Power an integrated and equitable 12.1 Please provide, in no more than 300 words, a environmental policy of the State for sustainable and territori- summary of any new cases, trends and developments in ally balanced national development. Also, said Decree regulates environment law in your jurisdiction. the National Secretariat of Environment, Water and Climate Change, whose purpose is to supervise compliance with the Aside from the 2017 Bill, currently, one of the most important agreements of the NEC, as well as to provide it with technical developments regarding the preservation of the environment and operational support. One of its main tasks is to coordi- in Uruguay is the National Waste Management Law, Number nate – alongside the institutions and organisations which are 19,829. This law was issued on September 2019. members of the NES – the execution of public policies related The purpose of the National Waste Management Law is to to environment, water and climate change, agreed in the NEC, protect the environment, promoting a model of sustainable nationally and internationally.

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development, through the prevention and reduction of adverse Another significant development in Uruguay is the implemen- effects of the generation and management of waste and the tation of Law Number 19,655, which was approved in 2018 and its recognition of waste as a reusable and recyclable resource, Decree Number 3/019. The law states that it is of general interest capable of generating value and employment. The Law provides to pursue the prevention and reduction of the environmental for the elaboration of a National Waste Management Plan that impact derived from the use of plastic bags, through actions to will establish the guidelines of waste management that shall discourage their use and promote their reuse, recycling and other apply in all the national territory. Along with this, the provinces forms of valorisation. The law prohibits the manufacture, import, shall also draw up their own Waste Management Plans that will distribution, sale and delivery, in any capacity, of plastic bags apply within their jurisdiction, taking into account the guide- that are not compostable or biodegradable. Plastic bags author- lines provided by the National Waste Management Plan. ised by the present law may only be distributed, sold or delivered One of the main features of this Law is the establishment of for any purpose on the national territory, when the manufacturer the extended responsibility of the manufacturer and importer in or importer has obtained the corresponding compliance certifi- the management of special waste – except in those cases where cate established by the regulation. Furthermore, Decree Number the Specific Internal Tax is applicable to the products from 3/019 has set a minimum price and method of billing for author- which it is generated. In such cases, the Executive Power may ised plastic bags. According to recent studies, the use of plastic bags impose a tax (IMESI) on the products from which the waste is in Uruguay in the last few months has considerably decreased as a generated, or increase the current tax rate. consequence of this regulation.

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Anabela Aldaz Peraza 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 – Environment, for her outstanding performance in the area of environmental law. Currently she is the President of the Women’s Entrepreneur Association (“Organización de Mujeres Empresarias”).

Guyer & Regules Tel: +598 2902 1515 Plaza Independencia 811 Email: [email protected] 11100 Montevideo URL: www.guyer.com.uy Uruguay

Fiorella Arenas Bollazzi, lawyer, works in the Corporate & Banking Department, specializing in Environmental and Regulatory matters. At present, she is studying for a degree in International Relations. Besides, she usually attends seminars and conferences on environmental law and sustainable development. Her practice in the Regulatory and Environmental area includes: conducting legal audits; giving advice and legal support in the day to day business; preparing regulatory matrix for each client; obtaining environmental and regulatory licenses; providing continuous Legal Monitor Service (regulatory update reports); advising sponsors and lenders in the purchase, sale and project financing of different industries; and presenting administrative appeals before the controlling agencies.

Guyer & Regules Tel: +598 2902 1515 ext 365 Plaza Independencia 811 Email: [email protected] 11100 Montevideo URL: www.guyer.com.uy Uruguay

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. This reputation finds its basis 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. www.guyer.com.uy

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USA USA

Snell & Wilmer Denise A. Dragoo

12 Environmental Policy and its 1.3 To what extent are public authorities required to provide environment-related information to interested Enforcement persons (including members of the public)?

1.1 What is the basis of environmental policy in your Most environmental data filed with state and federal govern- jurisdiction and which agencies/bodies administer and ment is publicly available. Information filed with federal agen- enforce environmental law? cies can be requested by the public pursuant to the Freedom of Information Act. State governments generally have similar laws Environmental law and policy in the United States derives allowing public access. Confidentiality is the exception, not the from traditional common law notions of trespass and nuisance. rule, but trade secrets and commercially sensitive information Modern U.S. environmental law, however, is primarily based on that is clearly marked as confidential may be exempt from public statutory and regulatory enactments. disclosure. 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 22 Environmental Permits for environmental requirements. Consequently, U.S. environmental law is driven by the major federal statutes, and their 2.1 When is an environmental permit required, and may implementing regulations, including the Clean Air Act, the environmental permits be transferred from one person to Clean Water Act, the Comprehensive Environmental Response another? Compensation and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA). Additionally, most Environmental permits are authorised under local, state and states, and some Tribes, have been delegated the authority to federal law to assure site-specific compliance with environ- implement aspects of federal law, and their statutory and regu- mental performance standards. In some cases, the permits are latory requirements may exceed the requirements of federal law. standardised for an industry and can be issued as a general or These federal regulatory agencies are also tasked with enforce- nationwide permit. In most cases, environmental permits are ment of U.S. environmental laws. Because of state delegation, transferrable upon notice to the issuing agency, subject to the however, the bulk of environmental enforcement has also been transferee’s assumption of responsibility. The transferee may delegated to the states. need to demonstrate the financial and technical ability to meet permit conditions. A transferee’s poor environmental compliance history may block the permit transfer. 1.2 What approach do such agencies/bodies take to the enforcement of environmental law? 2.2 What rights are there to appeal against the Civil penalties and criminal fines are authorised by statute to decision of an environmental regulator not to grant an environmental permit or in respect of the conditions enforce state and federal environmental laws and permits. contained in an environmental permit? 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 State and federal agencies generally have an administrative of a notice of violation and/or a corrective action order. The appeal process set by statute or rule. Permit denial or disputed alleged violator may contest the fact of violation or amount of permit conditions are initially considered by an administrative the penalty before the administrative agency and appeal a final law judge or appeals board. After this administrative process decision for judicial review. Larger civil penalties or criminal is exhausted, the final agency decision can then be appealed for penalties may be prosecuted in court against an alleged violator. judicial review. The scope of review depends on the enabling Wilful and knowing violations may be prosecuted as a crime statute and is either a review on the administrative record or a (generally a misdemeanour) resulting in fines and possibly trial de novo. Under the federal Administrative Procedure Act imprisonment. Actions to recover natural resource damages can (APA), the court may set aside agency action found to be arbi- be brought in the appropriate state or federal court with jurisdic- trary, capricious, an abuse of discretion, or otherwise not in tion over the alleged violation. accordance with law.

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2.3 Is it necessary to conduct environmental audits recycling and reusing, composting, incinerating, or landfilling or environmental impact assessments for particularly wastes. These rules are primarily implemented and enforced by polluting industries or other installations/projects? delegated states.

Environmental assessments have different meanings in different 3.2 To what extent is a producer of waste allowed contexts. The term “environmental site assessment” arises in to store and/or dispose of it on the site where it was the context of CERCLA liability. Prospective purchasers of produced? property may be protected from liability under CERCLA for certain environmental conditions by conducting “all appro- Generally, a facility that treats, stores or disposes of solid wastes, priate inquiries” (AAI). To meet AAI, an environmental site including the waste generator, must obtain a permit. There are, assessment process must be followed which meets specified however, exceptions. For instance, a large quantity generator industry standards issued by the American Society for Testing can store waste on site for less than 90 days without a permit, and Materials (ASTM). As a separate matter, under the National and a small quantity generator can do so for less than 180 days Environmental Policy Act (NEPA), if the project involves major without a permit. There are also exceptions that may apply for federal action or approvals, an environmental assessment or transporters, for farmers, and for parties remediating contami- environmental impact statement must be prepared to inform nated sites. 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 prob- 3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it lems. Some states, including Utah, have enacted legislation and to another person for disposal/treatment off-site (e.g. rules of evidence which protect environmental audit reports if the transferee/ultimate disposer goes bankrupt/ from disclosure in state administrative and judicial proceedings. disappears)? If violations are properly reported and remediated as a result of self-audit, these statutes and rules may result in the waiver of Yes. This is a substantial issue under U.S. environmental civil penalties for noncompliance. Without these protections, law. In particular, under CERCLA, a party that disposes voluntary self-audits may provide a basis for liability. or treats, or arranges for the disposal, treatment or transportation, of a hazardous substance is strictly liable, jointly and 2.4 What enforcement powers do environmental severally, without regard to fault, for releasing the hazardous regulators have in connection with the violation of substance into the environment. In 2009, however, the U.S. permits? Supreme Court limited CERCLA “arranger” liability to those parties who intended for disposal of hazardous substances to See question 1.2. occur. Considering that remediation of CERCLA sites can cost hundreds of millions of dollars, and that the responsible 32 Waste 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. 3.1 How is waste defined and do certain categories of waste involve additional duties or controls? 3.4 To what extent do waste producers have The duties and controls required for the disposal of waste obligations regarding the take-back and recovery of their 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 Generally, waste producers do not have any obligation regarding waste, for which separate rules apply. Finally, certain wastes the take-back and recovery of their waste. Some states, however, (for instance, certain recycling) are exempt from classification require that certain electronic waste, pharmaceuticals, batteries as either solid or hazardous waste. Unfortunately, there is often and/or bottles and cans must be collected and recycled by their uncertainty, and disagreement with regulators, as to the appro- manufacturers and distributors. Additionally, many businesses priate waste classification. Because the duties and controls vary and municipalities have voluntary programmes designed to take substantially, depending on the classification, this uncertainty is back and recycle these wastes. often hotly contested. Hazardous wastes are tracked and regulated from their gener- 42 Liabilities ation to their disposal, to ensure that they are handled safely. Under the USEPA’s regulations implementing RCRA, hazardous 4.1 What types of liabilities can arise where there is a wastes exhibit at least one of four characteristics: ignitability; breach of environmental laws and/or permits, and what corrosivity; reactivity; and/or toxicity. The RCRA regulations defences are typically available? contain extensive requirements for hazardous wastes. For instance, the regulations specify how hazardous wastes are iden- A breach of environmental laws can give rise to administrative, tified, how they can be recycled and how they can be trans- civil and/or criminal penalties, damages, injunctions and (rarely) ported. The regulations governing the treatment, storage and incarceration. The extent of liability typically will depend on disposal of hazardous wastes are particularly extensive. Both the amount of damage caused, the duration of the damage, the federal regulatory agencies and the delegated states have the cooperation of the party causing damage, and their prior substantial authority under RCRA to enforce compliance with compliance history. Criminal liabilities generally are reserved the applicable regulations. for cases where the damage is particularly egregious and/or the The RCRA regulations also govern non-hazardous solid conduct was intentional. waste. These rules primarily focus on the requirements for

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There are limited statutory defences for breaching environ- As discussed in question 3.3, CERCLA imposes strict liability on mental laws. Primarily, they relate to equipment malfunctions a range of parties for the disposal of hazardous substances. This and emergency responses. In order to qualify for a defence, an strict liability also applies to the past and present owners and operator usually must provide notice of the breach to the proper operators of facilities where hazardous substances are disposed. regulatory authority within a matter of days, and must correct The clear public policy in the United States is to find a respon- the situation as quickly as possible. Violations may also be time- sible party, or parties, to pay for remediation of contamination. barred by statutes of limitation. Also, some states have additional statutes affecting the trans- ferability of potentially contaminated land. For instance, New Jersey’s Industrial Site Remediation Act permits the state to 4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is rescind any transfer of industrial property if the buyer and seller operated within permit limits? have not first investigated and remediated any site contamination to the extent required by the state. Yes. Many environmental statutes provide that compliance does not pre-empt other local, state or federal requirements. However, 5.2 How is liability allocated where more than one operation within permit limits demonstrates compliance with the person is responsible for the contamination? specific performance standards addressed by the permit. There is no definitive CERCLA law on how allocation should 4.3 Can directors and officers of corporations attract be done. Consequently, allocation of responsibility between personal liabilities for environmental wrongdoing, and potentially responsible parties is always a substantial issue in to what extent may they get insurance or rely on other CERCLA matters. indemnity protection in respect of such liabilities? As a general matter, usually the parties or a neutral third party will determine the allocation scheme for a given CERCLA site. Yes, corporate officers and directors can be personally liable for Issues that are usually considered for each party include: volume wilful and knowing violations, intentional acts including failure of waste disposed; type of waste; toxicity or other hazardous to report or to disclose known violations, and for fraudulent, nature of waste; culpability as to the transportation, treatment, grossly negligent or illegal acts that result in contamination. storage and/or disposal of the waste; degree of cooperation with Personal liability may be established where it is shown that the government authorities to remediate the waste; and degree of officer and director actively participated in or exercised control care taken to ensure proper disposal of the waste. As noted in over the operations. Fraudulent, criminal or grossly negligent question 3.3, whether a party intended to arrange for disposal of acts are generally excluded from indemnification clauses and the waste has become a primary issue in recent years. insurance policies. 5.3 If a programme of environmental remediation is “agreed” with an environmental regulator, can the 4.4 What are the different implications from an regulator come back and require additional works or can environmental liability perspective of a share sale on the a third party challenge the agreement? one hand and an asset purchase on the other?

Yes, both the government and third parties usually have oppor- In a share sale, the buyer “steps into the shoes” of the company tunities to either reopen the required work (for instance, if addi- purchased and assumes the environmental liability of the seller. tional unknown contamination is found), or to challenge the By contrast, in an asset sale, environmental liability relates to the agreement (if, in the case of a third party, their own rights may assets acquired. Through due diligence, the buyer may deter- be impacted by the agreement). These opportunities, however, mine whether or not to acquire certain assets and associated are often time limited, particularly with regard to third-party liability. In addition, the asset purchase agreement may be struc- challenges of the initial agreement. tured to limit or cap liability.

5.4 Does a person have a private right of action to 4.5 To what extent may lenders be liable for seek contribution from a previous owner or occupier of environmental wrongdoing and/or remediation costs? contaminated land when that owner caused, in whole or in part, contamination; and to what extent is it possible Lender liability largely depends on the amount of control exer- for a polluter to transfer the risk of contaminated land cised by the lender over the contaminated property. Lenders liability to a purchaser? who hold a mortgage primarily to protect their security interest in the property are provided a limited “safe harbour” from Yes, CERCLA, RCRA and state statutes all provide private CERCLA liability, if they do not directly participate in manage- rights of action against previous owners and operators of ment of the property. If the lender exercises decision-making contaminated land. authority as to the use, management or environmental compli- Additionally, it is possible to transfer the risk to a purchaser. ance of the property, the lender may become liable for environ- This is discussed below in question 8.1. mental remediation costs.

5.5 Does the government have authority to obtain from 52 Contaminated Land a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers? 5.1 What is the approach to liability for contamination (including historic contamination) of soil or Yes, the federal government, the Tribes, and the states can, and groundwater? frequently do, seek to recover natural resource damages.

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62 Powers of Regulators 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. 6.1 What powers do environmental regulators have to require production of documents, take samples, conduct site inspections, interview employees, etc.? 82 General

Environmental regulators have inherent police power to enforce 8.1 Is it possible to use an environmental indemnity environmental statutes. This means that they may require the to limit exposure for actual or potential environment- production of documents, take samples, conduct site inspections related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. and interview employees. Moreover, they may, and sometimes remediation) discharge the indemnifier’s potential do, arrest site personnel for impeding their investigations. liability for that matter? 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 Parties frequently include contractual indemnities for environ- regulators will work with the targets of their investigations mental liabilities. The efficacy and enforceability of such provi- (particularly, if the targets are themselves cooperative) to obtain sions depends on the terms of the provisions, the extent of any information. In this regard, it is prudent for regulated entities to relevant disclosures, representations and warranties, and the maintain cooperative relationships with their regulators. underlying environmental laws involved. Payment under an indemnity does not alter claims that the government may have against the indemnitor. Moreover, even 72 Reporting / Disclosure Obligations if responsible parties allocate responsibility among themselves, each responsible party remains strictly liable under CERCLA, 7.1 If pollution is found on a site, or discovered without regard to fault, for the discharge of hazardous substances. to be migrating off-site, must it be disclosed to an environmental regulator or potentially affected third parties? 8.2 Is it possible to shelter environmental liabilities off balance sheet, and can a company be dissolved in order to escape environmental liabilities? On or off-site pollution may need to be disclosed to environmental regulators. The legal requirements vary tremendously, Yes, it is possible to “escape” environmental liabilities. This however, depending on the jurisdiction of the site, the environ- is an issue, however, that is impacted not only by environmental law(s) at issue, and the characteristics of the pollution. mental laws, but also by corporate, bankruptcy and securities This issue is best resolved by a legal practitioner within the juris- law. Accordingly, any such endeavour should only be under- diction. Because, however, some jurisdictions have extremely taken, if at all, after careful review by an appropriate team of short mandatory reporting timelines (for instance, as short as 15 legal counsel. 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 8.3 Can a person who holds shares in a company disclosed to third-parties; although, as a practical matter, failure be held liable for breaches of environmental law and/ to warn third parties can expose the property owner to new or or pollution caused by the company, and can a parent greater liabilities if the third parties are harmed. company be sued in its national court for pollution caused by a foreign subsidiary/affiliate?

7.2 When and under what circumstances does a person Shareholders are usually protected from corporate environ- have an affirmative obligation to investigate land for contamination? mental 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 Obviously, a release of contaminants will often trigger an obli- instance, courts may “pierce the corporate veil” of a parent gation to investigate and remediate that release. Otherwise, it is corporation, if the corporate form is not maintained by a subsid- generally the case that there is no obligation to investigate land iary, and courts may hold a shareholder liable if a company is for contamination unless either: (i) the ownership or operation merely an alter ego. of the land is being transferred; or (ii) the financial strength of While the United States federal courts may entertain lawsuits the owner has changed, thereby calling into question the finan- involving foreign subsidiaries or foreign companies, a recent cial ability of the owner to conduct any necessary, future reme- decision from the United States Supreme Court has limited the diation. Because CERCLA makes current owners and operators extent to which federal courts will exercise their general jurisdic- of contaminated land strictly liable for hazardous substances, tion to hear such cases. prudent purchasers as a matter of course engage in “all appropriate inquiry” prior to purchase. Finally, property used as collateral must usually be investigated. 8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters?

7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective Yes. Federal environmental laws protect “whistle-blowers” who purchaser in the context of merger and/or takeover report environmental violations from retaliation. Special protection transactions? is provided under the federal CAA, CWA, RCRA and CERCLA. In addition, the federal False Claims Act offers environmental

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whistle-blowers a financial incentive to report environmental power plants. The Supreme Court had stayed implementation violations in connection with federal contracts. of the CPP in February 2016. In response to the EO, USEPA proposed a repeal of the CPP in October 2017 and the CPP was finally repealed in a rulemaking published on July 8, 2019. A 8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary new replacement rule entitled the “Affordable Clean Energy” damages available? rule (ACE) was published in its final form on the same day. Under this rule, USEPA will issue the “best systems of emission reductions” as guidelines to be used by states to develop plans The Federal Rules of Civil Procedure provide for class action to address GHG emissions from existing electric utility gener- suits for a variety of legal claims, including environmental claims. ating units. The rule provides more flexibility to state regu- As a practical matter, however, courts have determined that class lators and allows states three years to develop implementation action lawsuits are not well-suited for the enforcement of envi- plans. USEPA’s best systems guidance does not include emis- ronmental laws. Consequently, such actions are fairly rare. sions trading between power plants. 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 9.3 What is the overall policy approach to climate punishment. change regulation in your jurisdiction?

8.6 Do individuals or public interest groups benefit There is no overall policy approach to climate change regu- from any exemption from liability to pay costs when lation in the United States. The Supreme Court has held that pursuing environmental litigation? 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 No. As a general rule, litigants must bear their own litigation USEPA has sought to implement. Meanwhile, there seems to be costs. There are, however, exceptions. First, many federal envi- a virtually universal agreement, including within the USEPA, ronmental statutes allow for citizens’ suits, in which private indi- that the Clean Air Act – last amended in 1990 – is not well suited viduals seek to enforce environmental laws. If citizens prevail in for the regulation of greenhouse gases. Whether the current those suits, they are generally able to recover their costs of liti- Congress would amend the Clean Air Act, or pass a climate gation. Second, there are countervailing provisions that seek to change bill, remains doubtful. 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. 102 Asbestos

92 Emissions Trading and Climate Change 10.1 What is the experience of asbestos litigation in your jurisdiction?

9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading The United States continues to experience substantial asbestos market developing there? litigation. The plaintiffs’ bar has depleted, or bankrupted, many of the original asbestos manufacturer defendants. As a result, The United States has fragmented emissions trading schemes plaintiffs have sought an ever-wider array of corporate defend- for greenhouse gases, primarily in the northeast and California. ants who may have used asbestos in their goods or services, or It remains an open question whether such markets will develop who may have had asbestos installed in their premises. fully in the United States. Indeed, the new Administration seems openly hostile to any such trading, or to acknowledging 10.2 What are the duties of owners/occupiers of that climate change is occurring. premises in relation to asbestos on-site?

The United States does have established trading of SO2, which has reduced nationwide SO emissions. Additionally, new 2 The requirements related to on-site asbestos are determined source air permitting often requires credits of banked, tradi- based on a range of federal, state and local health and safety tional air pollutants, thereby reducing those emissions. statutes and codes. Asbestos removal from school buildings is subject to the federal Asbestos Hazard Emergency Response 9.2 Aside from the emissions trading schemes requiring the certification of contractors and workers. Many mentioned in question 9.1 above, is there any other states have established asbestos work practices and certification requirement to monitor and report greenhouse gas programmes for contractors and other persons engaging in the emissions? removal and disposal of friable asbestos-containing material.

Yes, the USEPA requires the monitoring and reporting of 112 Environmental Insurance Liabilities greenhouse gas emissions. The USEPA enacted regulations that would have required such reporting from a wide variety 11.1 What types of environmental insurance are of major sources of greenhouse gases, but the Supreme Court available in the market, and how big a role does issued a decision limiting such reporting to sources that are environmental risks insurance play in your jurisdiction? already regulated under Title V of the Clean Air Act (so-called “anyway sources”). On March 28, 2017, President Trump issued The environmental insurance market in the United States is an executive order (EO) calling for the repeal of the Clean currently fairly soft and growing. Until recently, however, Power Plan (CPP) rule finalised in the previous administration environmental insurance was difficult to obtain. Many of the to regulate greenhouse gas emissions (GHG) from coal-fired companies that offered such insurance in the 1990s experienced

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losses far in excess of their expectations. Currently, to obtain 2.0 landscape-scale planning rules and the Federal Office of environmental insurance, a contaminated site must be well Surface Mining stream protection rules were among the regula- characterised. tions repealed under the CRA. The Trump administration has curtailed aggressive expansion of the USEPA authority in rule- makings under both the Clean Water Act and the Clean Air Act. 11.2 What is the environmental insurance claims experience in your jurisdiction? See question 9.2 regarding repeal and replacement of the Clean Power Plan. On October 22, 2019, USEPA and the Army Corps of Engineers adopted a narrower definition of “waters of the Comprehensive general liability insurance policies, particu- United States” (WOTUS) which limits agency jurisdiction under larly those issued prior to 1974, continue to provide extensive the Clean Water Act (CWA). Rules adopted by the previous coverage for environmental liabilities. The extent of available administration in June 2015 broadly define the scope of jurisdic- coverage, however, varies dramatically from state to state, as the tion of USEPA and the Corps of Engineers over WOTUS. The various states’ courts have often rendered distinctly different new rule adopted in October 2019 restores the pre-2015 rule and interpretations of identical policy terms. Consequently, the state will be implemented in agency guidance documents. in which a claim is filed (or adjudicated) can determine whether The new administration has significantly changed its environmental insurance coverage is available, and the amount approach to controlling GHG emissions. USEPA’s Clean Power of coverage available. Plan (CPP) finalised in August 2015 extended climate change mandates to existing coal-fired power plants. Carbon emis- 122 Updates sions from these sources were to be reduced 32 per cent from 2005 levels by 2030. These climate change mandates expanded 12.1 Please provide, in no more than 300 words, a USEPA’s authority under the Clean Air Act. As noted in ques- summary of any new cases, trends and developments in tion 9.1 above, the new administration repealed the CPP and environment law in your jurisdiction. adopted a new replacement rule entitled “Affordable Clean Energy” (ACE) which was published in its final form on July 8, President Donald Trump took office on January 20, 2017 and at 2019. Under this rule USEPA issues “best systems of emissions that time both the House of Representatives and the Senate were reductions” that can be applied to individual power plants to controlled by the same party as the President. Congress and reduce GHG emissions. The best systems focus on improving the Executive Branch undertook a comprehensive review of the the heat-rate efficiency of coal-fired facilities. USEPA identifies environmental regulations and policies of the previous admin- six heat rate improvement technologies. However, USEPA does istration. The Congressional Review Act (CRA) was used to not recommend measures previously encouraged under the CPP repeal several rules finalised at the end of the previous admin- including emissions trading between power plants. The best istration. Under the CRA, agencies must notify Congress when systems are to be used by states to develop implementation plans rules are issued. Congress then had 60 days from the date of within the next three years. The ACE rule provides State regu- notice or publication to issue a joint resolution of disapproval lators with more flexibility in developing implementation plans by a simple majority. The Bureau of Land Management’s new than the now-repealed CPP.

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Denise A. 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 practices 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.

Snell & Wilmer Tel: +1 801 257 1900 Gateway Tower West Email: [email protected] 15 W. South Temple URL: www.swlaw.com Suite 1200 Salt Lake City, Utah 84101 USA

Founded in 1938, Snell & Wilmer is a full-service law firm with more than contaminated property and brownfield development including drafting and 425 attorneys practicing in 12 locations throughout the United States and negotiating prospective purchaser agreements, voluntary clean-up agree- in Mexico. The firm represents clients ranging from large, publicly traded ments, institutional controls, deed and land use restrictions. corporations to small businesses, individuals and entrepreneurs. www.swlaw.com 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

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