ANALYSIS

Environment: Legislating for biodiversity

Scientists tell us that the Earth is going through its sixth mass extinction; the last taking place approximately 65 million years ago, which saw the total extinction of all dinosaur species. Mainly as a result of deforestation, we are currently losing something in the order of 30,000 species every year - nearly 100 every day. The Intergovernmental Panel on Climate Change has warned that these rates are likely to increase drastically once global temperatures start to rise through climate change. Given the stark position in which humankind now finds itself, any legislation that aims to protect biodiversity is likely to be enthusiastically endorsed. In Europe, one of the most important pieces of new legislation that has biodiversity protection as a specific aim is the Environmental Liability Directive (ELD).The ELD came into force on 30 April, 2004. It required transposition by member states by 30 April, 2007 but the UK has still not met this deadline. The Department for Environment, Food and Rural Affairs (Defra) has issued two consultation papers, the second of which contained draft regulations and invited comments by 27 May, 2008. Defra has stated that it intends the final regulations to be in place by the end of this year. A key aim of the ELD is to provide a strong financial incentive on landowners and 'operators' for preventing environmental damage in the first place. This incentive largely rests on the legal liabilities that may result from an incident that causes environmental damage. Under current UK law, if a landowner (say a farmer) had an incident that led to environmental damage, his main concern regarding his potential financial liability would be a claim for damages from a neighbour and/or - depending on the circumstances - a prosecution. However, civil claims for environmental damage are rare; there are a number of well-known defences, and damages are generally limited to the actual financial losses of the plaintiff. Moreover, although environmental prosecutions by regulators are more common, and with fewer defences available, the levels of fines are often unacceptably low. Given this low chance of risk, landowners may take the view that it does not pay to invest in equipment and training to prevent environmental incidents.Once enforced, however, the ELD should start to change such attitudes. For the first time in English law a landowner could be required to pay whatever it takes to restore the biodiversity damaged by the incident for which he is responsible. The draft regulations take biodiversity damage to mean protected species, natural habitats and sites of special scientific interest (SSSIs). These are all defined under the draft regulations but in practice will cover many habitats and species (i.e. much wider than just damage to SSSIs, as is sometimes assumed).Once in place the regulations will be policed by a mix of local authorities, the Environment Agency and countryside and land management agency Natural England. As the experience with the enforcement of part 2A of the Environmental Protection Act has shown, dividing enforcement responsibility between different regulators is likely to frustrate the goals of the ELD; especially since some of them lack the necessary technical understanding or financial resources to deal adequately with environmental damage. But one hope for better enforcement is paragraph 18 of the draft regulations, which allows anyone who has a 'sufficient interest' to initiate an action by notifying the authorities. This provides additional legal status to non-governmental organisations, enabling them to take a keen interest in their area and to report instances of environmental damage to the regulator.Unless a landowner is carrying out an operation listed in schedule two of the draft regulations (which are essentially high-risk activities such as waste operations and in which case liability is strict) then he will only be liable under the regulations if he intended to cause the damage or was negligent as to causing the damage. Undoubtedly the most common defence tactic used by lawyers acting for landowners will be that their client was not negligent.The negligence test will give the courts wide discretion in determining liability. But environmental awareness has heightened immeasurably over the last decade and what was yesterday's best practice is today's expected minimum standard. The courts may have little sympathy for a landowner who took the minimum precautions in order to keep his costs down. Faced with the huge potential costs of biodiversity restoration, even the most parsimonious landowner may conclude that skimping on environmental protection is not a risk worth taking.While the ELD was going through its various draft stages there was much discussion about environmental insurance. There was an early suggestion that there should be compulsory insurance for operators of high-risk activities (listed in annex III of the ELD and in schedule two of the draft regulations), but the composite insurers lobbied against this. This was dropped in favour of a much weaker, general encouragement to insurers to develop suitable policies for ELD-related liabilities. Nonetheless, the specialist insurance market is responding to the challenge and the opportunities. A prudent operator would do well to check the available insurance policies and to see which provides best value and express coverage for ELD liabilities. In conclusion, the ELD will soon become UK law - albeit belatedly. It will then be a matter of time before the first enforcement action is brought. It will be very interesting to see what the remediation notice requires to restore biodiversity, the costs involved and, ultimately, who ends up footing the bill. nSimon Boyle is the legal director and Stephen Sykes the chairman of Argyll Environmental; he is also convenor of the UK Environmental Law Association Insurance Liability Working Party.

July 02, 2008 at 09:03 PM

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