The European Commission is conducting a feasibility study into the creation of a fund to cover environmental liabilities for industrial accidents. If introduced, this could have a major impact on aggregates, mining and minerals companies. Ian Lamond of
An issue of increasing importance to the aggregates and minerals sector across Europe is the potential creation of a fund to cover environmental liabilities from industrial accidents.
This is currently the subject of a
The scope of the study is to examine the feasibility of setting up a fund or scheme that pools resources, which could be used to address the liability for damage from major industrial accidents involving pollution. The potential fund would be used for damage that is both ‘traditional,’ described as injury to people or property, and ‘environmental,’ which could include prevention of pollution as well as remedial work after pollution has occurred.
A key factor leading up to the feasibility study being set up is the so called ‘Hungarian Proposal’, which calls for the establishment of a European Industrial Disaster Risk-Sharing Facility to be funded by an annual levy on targeted industries and companies. The Facility would respond if the damage from a major industrial accident was likely to exceed €100 million.
The proposal was drafted partly in response to the major industrial accident at the MAL Aluminium factory near Kolontár, Hungary in October 2010. The collapse of a dam wall released toxic sludge and alkaline water which resulted in ten deaths; hundreds of injuries; the destruction of 300 homes, and the contamination of agricultural land and waterways.
A variety of funds to cover environmental liability already exist in the US (the Oil Spill Liability Trust Fund and Hazardous Substance Response Trust Fund); the Philippines (Environmental Guarantee Fund); Belgium (Toxic Waste Guarantee Fund) and Canada (Environmental Damages Fund).
The feasibility study will cover a number of issues including: the scope of the potential fund; risks and sectors that should be covered; ensuring that the ‘polluter pays’ principle is complied with in any new scheme; the threshold that would need to be met for funding to apply; whether a single scheme or multiple country or sectoral schemes should be introduced and whether contributions to the fund should be risk-based.
Many within the mining and minerals sector have argued that the current Directives offer sufficient protection for environmental damage, supporting the implementation and enforcement of existing legislation rather than creating an additional framework.
Contact
Ian Lamond is a partner and specialist planning and environmental lawyer at Stephens Scown LLP in the UK. The firm has more than 70 years’ experience representing mining and minerals clients and its mining and minerals team has recently been recognised once again by independent guides to the law Legal 500 and Chambers.
He can be contacted on +44 (0)1872 265100 or email
The guarantee must cover obligations under the permit and the rehabilitation of land affected by the waste facility. This Directive also requires each operator to create a waste management plan to ensure the safe management of extractive waste.
The Environmental Liability Directive (2004/35/EC) (ELD) provides the legal framework for an environmental liability system for industrial, commercial and other operations in the EU. It covers management of extractive waste, and applies a strict liability regime for environmental damage or the threat of it. Supporters of the proposed introduction of an environmental liability fund point out that while the ELD offers protection for environmental damage, it does not cover ‘traditional damage’ – that is injury to people or damage to property.
Key factor
Opponents of the fund also argue that the current insurance framework provides sufficient protection, should a major industrial accident take place. This is firmly the position of FERMA (Federation of European Risk Management Associations), which has also identified concerns that the fund would go against the polluter pays principle enshrined in EU law and may even reduce risk management efforts to protect the environment from commercial activities.
Some opponents of a shared compensation scheme also argue that its introduction may be counter-productive and lead to more illegal extraction.
The EC feasibility study has involved a consultation and workshop with key players, which took place in the latter part of 2012. A draft report is expected imminently and this is an area that all within the aggregates, mining and minerals sectors will read with interest.
Extractive minerals waste is identified by the EC in its study as a key sector likely to incur liability arising from pollution from a major industrial accident and it can be anticipated that more financial regulation will be imposed on mineral operators unless urgent political action is taken now to ensure that the present position is unchanged.
