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Finansiel sikkerhedsstillelse til dækning af operatørens betalingsforpligtelser efter miljøansvarsdirektivet

Summary and conclusions

The Environmental Liability Directive may require companies to provide for insurance cover or provide financial security for the costs of remedying or preventing environmental damage.

The purpose of the Environmental Liability Directive is to establish a framework of environmental liability for companies (referred to as “operators” in the Directive) based on the “polluter-pays” principle in order to prevent and remedy environmental damage. At the same time the Directive requires Denmark and other member states to take measures to encourage the development of financial security instruments and markets in order to provide operators with cover for their liability under the Directive. Such security may be in the form of insurance cover, bank guarantee or participation in a fund or pooling arrangement that would ensure the necessary financial means to cover the costs. Provision of financial security may be voluntary or required by law. A survey made by KPMG concludes that markets for financial security should be developed gradually and as a statistical basis becomes available.

Background and objective

EU requirement that member states encourage the development of financial security instruments and markets relating to environmental liability

As part of the implementation of Directive 2004/35/EC of the European Parliament and the Council dated 21 April 2004 on environmental liability in respect of prevention and remedy of environmental damage (the Environmental Liability Directive), the Danish Environmental Protection Agency has initiated a survey on financial security.

The reason for the project is that the Environmental Liability Directive requires Denmark and other member states to take measures to encourage the development of financial security instruments and markets in order to provide operators with cover for their liability under the Directive.

The purpose of the Environmental Liability Directive is to establish a framework of environmental liability for companies (referred to as “operators” in the Directive) based on the “polluter-pays” principle in order to prevent and remedy environmental damage. In connection with the implementation of the Directive in Danish legislation it must be ensured that an operator by a compulsory order from public authorities can be required to remedy or prevent environmental damage at the operator's own expense. The costs for such remedying or prevention following a public order must be covered by the operator, either directly or through a financial security arrangement.

For certain types of activities, as defined in annex III to the Directive, the public authorities will be able to issue a public order based on unconditional operator liability, meaning that such operators may be required to restore the environment or remedy environmental damage irrespective of how the pollution occurred. For other types of activities public orders are based on whether the operator is at fault or has acted negligently.

In this connection it is important to note that the Directive only applies to the operators' public law responsibility to comply a public order to prevent or remedy environmental damage. The Directive and this project do not affect with the operator's civil liability towards third parties, property damage etc. or financial losses and do not cover rights and responsibilities in this respect.

For this reason, the framework for the Directive, and therefore also this report on financial security, is situations in which an operator covered by the directive is required by a public order to remedy or prevent environmental damage covered by the Directive.

The costs incurred as a consequence of the Environmental Liability Directive do not only include remedying or preventing the damage itself, but also the public authorities' administrative expenses, costs related to enforcement and other general costs.

Survey

Report on financial security

During the autumn 2005 KPMG made a survey of financial security.

The purpose of the report is to describe various initiatives and opportunities that could facilitate the offering of various types of financial security instruments to operators to cover their liability under the Directive. The report also deals with the various relevant types of security - participation in a fund or pooling arrangement, bank guarantee, insurance cover or a combination of those - and concludes on the advantages and disadvantages of these types of security and of making security arrangements voluntary or mandatory. Further, the report contains a short description of selected financial security arrangements already existing in the market today. Finally, the report describes how certain other EU member states handle the issue of financial security in relation to the implementation of the Environmental Liability Directive.

Main conclusions

Markets for financial security should be developed gradually and as a statistical basis becomes available

As a result of the Environmental Liability Directive Denmark and the other member states are under obligation to participate in the development of financial security instruments and markets in order to provide operators with cover for their liability under the Directive by using financial security.

It is our opinion that markets for financial security should be developed gradually and as a statistical basis becomes available.

In the report we have assessed various initiatives that can facilitate the required market development. The initiatives are described as a step-by-step approach and comprise:

  1. information to operators of their environmental liability under the Environmental Liability Directive and of the implementation of the Directive in Danish legislation;
  2. participation in the development of new products that operators can use as financial security;
  3. obtaining a statistical basis that would serve to improve the foundation for provision of insurance and other types of financial security and that would serve to determine the need for mandatory provision of financial security;
  4. assessment whether mandatory provision of financial security, if enforced, should apply to all operators or selected operators and assess whether mandatory provision of security should be in the form of insurance cover, participation in a fund or pooling arrangement, bank guarantee, insurance cover or as a combination of those.

Each of the described initiatives has been assessed in the report based on:

  • the possibilities for establishing financial security arrangements;
  • the degree of assurance obtained that the operator will be able to fulfill the "polluter pays-principle"; and
  • the financial and administrative consequences for operators and the State.

We have stated that in order to establish a sufficient statistical basis further documentation should be obtained in addition to the information which is to be reported according to article 18 and annex VI of the directive.

Project results

Various financial security arrangements already exist and implementation is underway in other EU member states

Existing arrangements

A number of different financial security arrangements already exist in respect of the environmental area and in other areas. Some of these arrangements have been established by law whereas other arrangements have been established voluntarily.

The report contains a brief description of a selection of existing arrangements and primarily focuses on arrangements in respect of protection of the environment and nature. The following statutory and voluntary arrangements are described in the report:

  • Statutory insurance scheme for domestic oil tanks at private homes that covers the owner's obligation (legal order) to clean up the environment after oil tank pollution.
  • Statutory fund /pooling arrangement for scrap yard operators that cover the operator's obligation (legal order) to remove scrap waste.
  • Statutory provision of financial security for Waste Electrical and Electronic Equipment (WEEE) that covers the operator's obligation to handle electrical and electronic waste.
  • Statutory insurance scheme for hunters that covers the hunter's liability for personal injury of third parties.
  • Statutory insurance scheme for sea transport of hazardous and polluting substances that covers the operator's obligation (legal order) to remedy the environment after sea pollution.
  • Statutory insurance scheme for dog owners that covers the dog owner's liability for personal injury of third parties caused by the dog.
  • Statutory industrial injury insurance that covers the employer's liability for work-related injury of employees.
  • Voluntary pooling arrangement established by the Danish Petroleum Industry's Association for Remediation of Retail Sites that covers voluntary remedying at closed petrol station sites.
  • Voluntary insurance scheme for storm and flood damage that covers flood damage to real estate and reimburses costs connected with cleaning up and replanting after storm damage.
  • Voluntary professional indemnity insurance that covers a company's liability for injury of third parties or property damage caused during the company's operations.
  • Voluntary environmental insurance that covers companies' liability for injury of third parties and costs related to complying with a public order following environmental damage.

Other EU member states

The report provides a brief status on the implementation of the Environmental Liability Directive in a number of selected EU member states and describes other pieces of legislation and arrangements in these countries, among others:

Spain. In April 2005 a draft bill on the implementation of the Environmental Liability Directive was introduced by the Ministry of Environment. In relation to insurance cover and financial security it is proposed that the companies covered by the draft bill should be required to provide financial security to cover the statutory environmental liability, which depends on the specific company's activities. A company can choose between various types of security, which are described in detail in the report.

In addition, the draft bill proposes the establishment of a governmental environmental damage fund that in certain cases would cover the costs of remedying the environment following environmental damage on public property.

According to information received from the Spanish Ministry of Environment in late December 2005, the draft bill is currently being revised and a new draft bill will be submitted in mid-January 2006. It has not been possible to obtain any information as to whether the new draft bill will lead to changes regarding insurance and financial security.

Germany. In March 2005 the German Ministry for the Environment introduced a draft bill on the implementation of the Environmental Liability Directive. Section 12 of the draft bill proposes that the German government by statutory order may require mandatory provision of financial security for certain companies, as stated in annex 1 to the draft bill, to cover the liabilities specified in the draft bill. The draft bill also proposes that the German government be authorised to determine the nature, scope and size of any mandatory provision of security, including the size of any retention, and how supervision of companies should be established to ensure that companies comply with the required provision of security.

The authorisation has been included in the draft bill in order to avoid making legal changes in the future if the EU based on Article 14 of the Directive after 2010 adopts a system of mandatory financial security.

It has not been possible to obtain any information as to whether the provisions concerning financial security subsequently have been changed.

 

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Version 1.0 Marts 2006, © Miljøstyrelsen.