Improving Financial Security in the Context of the Environmental Liability Directive
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Improving financial security in the context of the Environmental Liability Directive No 07.0203/2018/789239/SER/ENV.E.4 May 2020 Study Prepared by: Valerie Fogleman, Stevens & Bolton LLP, Cardiff University School of Law and Politics Contributions to Section 11.6 Kristel De Smedt, Maastricht University, Faculty of Law Stephen Stec, Central European University, Department of Environmental Sciences and Policy Disclaimer: The information and views set out in this assessment are those of the author(s) and do not necessarily reflect the official opinion of the European Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use which may be made of the information contained therein. EUROPEAN COMMISSION Directorate-General for Environment Directorate E – Implementation and Support to member States Unit 4 – Compliance and Better Regulation Contact: Hans Lopatta E-mail: [email protected] European Commission B-1049 Brussels Improving financial security in the context of the Environmental Liability Directive TABLE OF CONTENTS TABLE OF CONTENTS ......................................................................................................................................................... 3 ABSTRACT .......................................................................................................................................................................... 5 EXECUTIVE SUMMARY ...................................................................................................................................................... 7 LIST OF ACRONYMS ......................................................................................................................................................... 21 1. INTRODUCTION .................................................................................................................................................... 28 1.1. Background .............................................................................................................................................. 30 1.2. Objectives ................................................................................................................................................ 31 1.3. Approach ................................................................................................................................................. 32 2. FINANCIAL SECURITY AND THE ENVIRONMENTAL LIABILITY DIRECTIVE .............................................................. 35 2.1. History of financial security in the ELD .................................................................................................... 35 2.2. Polluter pays principle ............................................................................................................................. 41 2.3. Financial security provisions in the ELD ................................................................................................... 43 2.4. European Commission report on financial security ................................................................................. 43 2.5. Post-2004 views on insurability and mandatory financial security .......................................................... 44 3. VOLUNTARY AND MANDATORY FINANCIAL SECURITY FOR ENVIRONMENTAL LIABILITIES .................................. 46 3.1. Types of environmental liabilities and responsibilities to which financial security can apply ................. 46 3.2. Comparison of voluntary and mandatory financial security .................................................................... 47 3.3. Voluntary financial security instruments and mechanisms ..................................................................... 49 3.4. Reinsurance ............................................................................................................................................. 56 3.5. Mandatory financial security instruments and mechanisms ................................................................... 57 4. ELD AND US LEGISLATION THAT IMPOSES SIMILAR LIABILITIES ........................................................................... 68 4.1. Environmental Liability Directive ............................................................................................................. 68 4.2. US federal environmental liability legislation .......................................................................................... 81 4.3. Comprehensive Environmental Response, Compensation, and Liability Act........................................... 85 4.4. Comparison and analysis ......................................................................................................................... 96 5. US AND EU MANDATORY FINANCIAL SECURITY REQUIREMENTS ...................................................................... 101 5.1. US mandatory financial security requirements ..................................................................................... 101 5.2. EU mandatory financial security requirements ..................................................................................... 113 5.3. EU legislation that implies or recommends financial security ............................................................... 118 5.4. Comparison and analysis of EU and US mandatory financial security requirements ............................ 120 6. FINANCIAL SECURITY UNDER THE ELD ................................................................................................................ 124 6.1. Mandatory financial security systems for ELD liabilities ........................................................................ 124 6.2. Mandatory financial security provisions for ELD liabilities .................................................................... 131 6.3. Mandatory financial security for ex post environmental damage ......................................................... 132 6.4. Comparison and analysis of ex post financial security ........................................................................... 141 7. FINANCIAL SECURITY REQUIREMENTS UNDER EU LEGISLATION ........................................................................ 145 7.1. Financial security for national liabilities and responsibilities................................................................. 145 7.2. Comparison and analysis ....................................................................................................................... 153 8. FINANCIAL SECURITY REQUIREMENTS UNDER NATIONAL LAW ......................................................................... 155 8.1. Member State legislation ...................................................................................................................... 155 8.2. Comparison and analysis ....................................................................................................................... 163 9. US AND EU ENVIRONMENTAL INSURANCE MARKETS ........................................................................................ 170 9.1. US environmental insurance market ..................................................................................................... 170 9.2. EU environmental insurance markets ................................................................................................... 179 Improving financial security in the context of the Environmental Liability Directive 9.3. Comparison between the US and EU environmental insurance markets .............................................. 183 10. ENVIRONMENTAL INSURANCE MARKETS IN MEMBER STATES .......................................................................... 189 10.1. Availability and demand for environmental insurance in Member States ............................................ 189 10.2. Comparison and analysis ....................................................................................................................... 203 11. PUBLIC FUNDING FOR PREVENTING AND REMEDIATING ENVIRONMENTAL DAMAGE IN MEMBER STATES ..... 207 11.1. Funds and risk-sharing facilities ............................................................................................................. 208 11.2. Study on a potential fund or risk-sharing facility ................................................................................... 210 11.3. Views on an EU fund for ELD liabilities .................................................................................................. 211 11.4. European Parliament Resolution ........................................................................................................... 213 11.5. Problems encountered by Member States ............................................................................................ 214 11.6. Industrial disasters ................................................................................................................................. 217 11.7. Problems in other States ....................................................................................................................... 222 11.8. Member State funds and funding mechanisms ..................................................................................... 223 12. CORPORATE LAW FINANCIAL SECURITY MECHANISMS ...................................................................................... 227