LIABILITY

USA: Superfund

A wave of publicity about hazardous waste contamination of residential areas in the 1970s, including Love Canal in New York State and Times Beach in Missouri, raised the issue of contaminated sites in the USA.

In addition, the chemical and oil industries, as industries likely to cause contamination, were charged a tax to fund the clean-up of sites where the parties who were liable could not be directly identified (about 30 per cent of sites). This tax was later supplemented by a corporate envi­ronmental income tax. The total industry contribution was running at around $2 billion per year in the early 1990s. From 1995, however, Congress refused to authorise these taxes, so that increasingly the clean­up of contaminated sites has been funded by general taxpayers. Inevitably, the rate of clean-up has slowed right down. Holdings in the Superfund trust fund declined from $3 billion in 1995 to $25 million in 2003 (Haggerty & Welcomer 2003).

Without those funds, the EPA is no longer able to clean up more than a few sites, or to force polluters to pay. Moreover, the community rather than the responsible industry is being forced to pay for the clean-up of sites where individual polluters cannot be identified. Consequently, the community is paying for the cost of pollution, particularly those who live near the contaminated sites that are not being cleaned up.

The discontinuance of the tax is the result of industry lobbying, industry spokespersons having justified the shift of the burden to the general community by arguing that everyone is a polluter: 'We're all pol­luters to some extent. I mean, anyone who's ever thrown paint in the garbage can or pesticides in the garbage can or used oil or whatever, not to mention some of the cities have not done a good job on their landfills' (quoted in Haggerty & Welcomer 2003). Such reasoning runs counter to the whole rationale of the PPP, which seeks to identify those directly responsible for particular instances of environmental damage and make them liable in order to ensure fairness and promote prevention.

Europe

While the USA has been moving away from the PPP, it is being given greater emphasis in other parts of the world. In 1993 the EC adopted a strict liability regime for waste as a way of further enforcing the PPP. Many countries also adopted liability laws to deal with damage to prop­erty and human health.

In 2004 the EC issued a directive on environmental liability (EC 2004) that extends the notion of liability to cover damage to natural resources. Like Superfund, it was aimed at repairing environmental damage rather than the mere collection of money from polluters, but its application was far wider than contaminated sites. It specifically covered damage to pro­tected natural habitats and wild flora and fauna, including wild birds, and also water contamination and air pollution that damaged water, land, natural habitats or protected species.

The directive was aimed at making 'the causer of environmental damage (the polluter) pay for remedying the damage that he has caused' (EC 2000b).

• administrative, legal and enforcement costs;

• the costs of data collection and other general costs;

• measures to control and contain the damage and prevent further damage;

• the costs of assessment of actual damage, imminent threats of damage, remediation options;

• remedial measures including 'mitigating or interim measures to restore, rehabilitate or replace damaged natural resources and/or impaired services, or to provide an equivalent alternative to those resources or services' (EC 2004: 58-60).

The EC notes that for the PPP to be fully and properly implemented, environmental damage should be repaired whenever there is an identifi­able polluter who can pay for the repair, rather than fining the polluter and using the money for something else. Where several parties are responsible for the damage, the allocation of costs should be decided according to national laws.

Strict liability

The idea of strict liability, that is, making polluters liable for damage whether or not it can be proven that they were at fault or negligent, has often been adopted in the case of environmental liability because it is more effective in protecting the environment. This is because fault can be difficult to prove in the case of environmental damage. Moreover, it is thought to be only fair that someone undertaking an activity which is recognised to be dangerous should bear the risk of the damage it might cause, rather than those who suffer the damage or the wider community (EC 2000b: 18).

The EC Directive (EC 2004) lists the following activities as subject to strict liability:

• waste management operations

• all discharges into inland surface water

• discharges into groundwater that require permits, authorisation or registration

• discharges into surface water that require permits, authorisation or registration

• water abstraction and impoundment

• manufacture, use, storage, processing, filling, release into the envi­ronment and onsite transport of:

- dangerous substances

- dangerous preparations

- plant protection products

- biocidal products

• all transport of dangerous or polluting goods

• operation of installations subject to authorisation

• use, release, sale and transport of genetically modified micro­organisms

• transboundary shipment of waste.

Environmental groups have criticised this list for leaving out many dan­gerous activities, including the activities of small installations, mining activities and oil and gas drilling and transport. They have also criticised the directive for only covering protected habitats and species rather than all habitats and endangered species (BirdLife International et al. 2001).

Activities not included in the list - apart from armed conflict, civil war, national defence and international security, and natural disaster, which are not covered by the directive - incur liability only if the oper­ator is at fault or negligent; this is 'fault-based liability'. Moreover, the Directive (EC 2004: 58-61) allows national governments to exempt pol­luters who have not been negligent, provided their discharges were authorised by the government and they could not have known the damage those discharges would cause.

Court cases

Environmental liability has been enforced by the courts in Canada as a way of upholding the polluter pays principle. The Supreme Court of Canada ruled in 2005 that BC Hydro was liable to clean up a severely contaminated site where, as the BC Electric Corporation, it had disposed of toxic coal tar for 37 years (FOE Canada 2005).

Similarly, the Canadian Supreme Court reinforced the PPP when it dismissed an appeal by Imperial Oil in 2003. Imperial Oil had contami­nated a site where it had a petroleum depot some 25 years earlier. It had sold the site six years later, and the new owners had partially remediated the area in order to develop it for residential housing, with the approval of the Quebec government. When high levels of hydrocarbon contamina­tion were later found there, the residents sued the developer, the city and the Quebec Ministry of the Environment. In turn, the Minister for the Environment ordered Imperial Oil to do a full assessment of the site and clean-up options. Quebec's environmental legislation incorporates the PPP and allows it to be applied retrospectively, and the court duly found that Imperial Oil had to comply with the order, despite its pollution having predated the legislation and even though it had no say in the decision to build residences on the site (Buttigieg & Fernando 2003; Ferrara & Mesquita 2003).

In Ireland, the High Court found that individual directors of a company that was responsible for dumping 8000 tonnes of waste - including hazardous waste - were personally liable despite the limited lia­bility that directors of corporations are afforded. The Court argued that unless the liability flowed on to directors, the PPP could not be fully imple­mented if a company was unable to pay its liability costs (Linehan 2003).

Australasia

The Australian and New Zealand Environment and Conservation Council (ANZECC), which is made up of environment ministers in state and national governments, published a paper on liability for contami­nated sites in 1994. The recommendations in that paper (Environment Australia 1999) were adopted in each state. These included:

• Governments should ensure that the polluter, when solvent and identifiable, ultimately bears the cost of any necessary remedia­tion.

• When the polluter is insolvent or unidentifiable, the person(s) in control of the site, irrespective of whether that person is the owner or the current occupier, should be liable, as a general rule, for any necessary remediation costs.

• If a site is a risk to human health and/or the environment, gov­ernments should be empowered to intervene to direct remedial action to minimise risk (and to recover costs as above).

• The polluter is responsible for bearing the cost of any offsite remedial works, as a result of contamination from their site.

• When ownership of a non-risk site is transferred, the level of cleanup prior to transfer is a matter for commercial agreement between the parties. This would apply to most land transfers in the mining industry in the form of a mining lease.

However, unlike the US and EU legislation, the ANZECC approach was to clean up sites only to suit their proposed use. Thus a site to be used for housing would require a higher standard of clean-up than a site to be used for a factory, and other sites might remain contaminated but still be judged non-risk until such time as their use changed. In the latter case, as long as environmental contamination remains confined to the site, it is not considered a problem. If a later owner wishes to use the site differently, it is then their responsibility to clean it to the required standards. In buying a potentially contaminated site it is up to buyers to inform themselves about its state; in other words, 'buyer beware' (Schulz 1994: 442).

In the case of a site that poses a health risk or environmental risk due to migration of pollution, government can direct the owner to remediate the site, but the polluter is strictly liable. Owners or government authorities that undertake such remediation have 'a statutory entitlement to recover costs incurred from the polluters'. Where the polluter cannot be identified, however, it is government's responsibility. The Superfund approach of an industry levy or tax was rejected in Australia (Schulz 1994: 443).