Gordons construction health & safety update - What the EU Environmental Liability Directive means for the construction industry

The Environmental Damage (Prevention and Remediation) Regulations 2009 came into force a year ago, implementing the Environmental Liability Directive and putting into black letter law the ‘polluter pays’ principle.

It is estimated that there are more than 30,000 instances of environmental damage in the UK each year, of which only about 1% are thought to be covered by the new Regulations. However, before the regulations are dismissed out of hand as an irrelevance, contractors would do well to note that where the Regulations do apply, a markedly higher standard of remediation is likely with correspondingly increased costs.

Under the regulations, environmental damage is:

• serious damage to surface or ground water 
• contamination of land where there is a significant risk to human health  
• serious damage to EU protected natural habitats and species or damage to Sites of Special Scientific Interest (SSSIs) or Areas of Special Scientific Interest (ASSIs) in Northern Ireland.

It is estimated that costs for those responsible could range from £10,000’s for damage to Sites of Special Scientific Interest (“SSSIs”)  to several £100,000’s for water damage, and costs for very serious cases could far exceed that.

Only certain activities are covered by the regulations:

• Activities regulated under the Environmental Permitting regime (currently PPC and waste management activities), with certain exclusions.
• The management of mining waste.
• Discharges to water and groundwater.
• Water abstraction and impoundment.
• Use of pesticides, biocides or dangerous substances.
• Transport of dangerous goods.
• Use, transport or deliberate release of Genetically Modified Organisms.

The Regulations also apply to any other activity in the case of environmental damage to protected species, natural habitats or SSSIs if the responsible operator:

• intended to cause damage; or
• was negligent as to whether environmental damage would be caused

However, most importantly the Regulations create new pro-active duties and liabilities for companies:

• To act immediately to prevent and notify imminent threats of, and further, environmental damage.
• To carry out complementary and compensatory remediation for damage to natural resources.

The Regulations do not place any obligation on operators to take out insurance against their potential liability arising under the Regulations. However, the Defra Guidance recommends that operators extend their insurance policies or other financial guarantees to cover potential liabilities for environmental damage. This may be easier said than done, or at the very least prohibitively expensive to insure for certain processes and activities which are deemed to be high risk.  Later this year the European Commission will be reviewing the need for financial security, so the current status quo with regard to insurance may be set to change.

If you would like to speak to someone about the issues raised in this article, please contact Katherine Southby

Published: 17th June 2010

Katherine Southby

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