Tort, regulation and environmental liability

Maria Lee King’s College London

This paper considers certain proposals made by the European Commission on environmental liability, particularly in its White Paper on Environmental Liability. Civil liability has made a relatively minor contribution to environmental policy in recent decades, given its many well-known shortcomings when applied to environmental problems. Its usefulness, however, is being reassessed, given something of a consensus that traditional forms of regulation are reaching the limits of their effectiveness and that new approaches to environmental law are necessary. This paper will consider how the White Paper would move beyond the limitations of existing civil liability frameworks, in particular the fundamental incompatibility between the interests recognised in English tort law and the interests at stake in environmental protection. The Commission’s recent retreat from the more ambitious elements of the White Paper may be a matter of concern.

1. THEWHITEPAPERANDENVIRONMENTALREGULATION

Liability for environmental harm has been a matter of controversy for some time in European Union law.’ The European Commission’s White Paper on Environmental Liability2 contains proposals that would alter quite fundamentally the use of tort law in the member states, as well as providing an important new regulatory technique in environmental law. The White Paper is an important stage in the Commission’s long-standing project of developing a European Union-wide scheme of environmental liabilities. It proposes a comprehensive liability system that would aim to make the ‘causer of environmental damage (the polluter) pay for remedying the damage’.’ brought about by any activity subject to European Union environmental l e g i ~ l a t i o n . ~

1. Progress on a European Union liability regime has been slow. See European Commission Green Paper on Remedying Environmental Damage COM (93) 47 final; M Grant ‘Environmental Liability’ in G Winter (ed) European Environmental Law: A Comparative Perspective (Aldershot: Dartmouth, 1996). On the studies used in the preparation of the White Paper, see B Poostchi ‘Follow up to the 1993 Green Paper on Environmental Liability’ [ 19961 5 RECIEL 328. On the preparatory drafts, see S Poli ‘Shaping the EC Regime on Liability for Environmental Damage: Progress or Disillusionment’ [ 19991 EELR 297; L Bergkamp ‘A Future Environmental Liability Regime’ [1998] EELR 200. 2. 3. 4.

COM (2000) 66 final (hereinafter the ‘White Paper’). White Paper, n 2 above, s 2.1 White Paper, n 2 above, s 4.2.2.

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Liability, in broad terms, is a frequently used regulatory tool in environmental law. Traditional ‘command and control’ regulation, the predominant regulatory technique in European Union environmental law, itself relies on liability. Command and control is a term which covers a wide range of regulatory techniques, based on the prohibition of specific actions, backed up by sanction^.^ These sanctions are generally incurred via criminal liability (for example, liability to pay a fine) or administrative liability (for example, to comply with a formal notice requiring compliance with the terms of a licence). This administrative or criminal liability arises under much European Union environmental legislation, and might well impose financial obligations on polluters. The meaning of ‘liability’ in the White Paper (and in this paper), however, is quite specific. Liability involves the requirement to provide payment of compensation for damage, or funds for the restoration of damage. A number of statutory provisions in United Kingdom environmental law require clean-up following breach of regulatory requirements, or even when there has been no such breach.h These statutory ‘liability’ schemes in the United Kingdom provide a supplementary legal mechanism for environmental regulators. In addition, private law remedies, for example, in tort, may require payment to individuals for environmental damage if that environmental damage also constitutes harm to certain individual interests. The White Paper’s proposals were for a rather more comprehensive system of liability, which would embrace and extend these ‘private’ and ‘public’ law mechanisms. The subsequent retreat from this comprehensive scheme in the Commission’s Draft Directive on Environmental Liability with Regard to the Prevention and Restoration of Environmental Damage’ leaves intact only a small part of the earlier proposals.

The White Paper proposed a non-retroactive liability scheme,* dealing with two types of harm. The first is ‘traditional damage’, meaning damage to those interests already protected by tort in the member state’s legal system. Strict liability and some, unexplained, ‘alleviation’ of the claimant’s burden of proof on causation, would apply to claims for traditional damage, if that damage is

5. For a review of command and control and its alternatives, see R Baldwin ‘Regulation: After Command and Control’ in K Hawkins (ed) The Human Face ofLaw (Oxford: Oxford University Press, 1997); R Baldwin and M Cave Understanding Regulation: Theory, Strategy and Practice (Oxford: Oxford University Press, 1999); J Scott EC Environmental Law (London: Longmans, 1998) chs 2 and 3. D Robinson ‘Regulatory Evolution in Pollution Control’ and J Steele ‘Assessing the Past: Tort Law and Environmental Risk’, both in T Jewel1 and J Steele (eds) Law in Environmental Decision Making (Oxford: Clarendon Press, 1998), review some of the dominant critiques of command and control. See also G Majone Regulating Europe (London: koutledge, 1996) on European Union approaches to regulation. 6. Under the contaminated land system in the Environmental Protection Act 1990, Pt IIA (introduced by the Environment Act 1995) the enforcing authority can serve a remediation notice requiring the clean up of a contaminated site. See also the Water Resources Act 1991, s 161 (in respect of water pollution). 7. COM (2002) 17 (hereinafter the ‘Draft Directive’). 8. White Paper, n 2 above, s 4.1. The Commission recognises that some detail on non-retroactivity will be necessary for a workable system. The Draft Directive also provides for a non-retroactive scheme: art 19.

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brought about by an activity regulated under European Union environmental law.9 The second type of harm is 'environmental damage', which covers both damage to biodiversity (on a Natura 2000 site" only) and contamination.'' Strict liability and alleviation of the burden of proof would again apply, save where biodiversity damage is caused by an activity not otherwise regulated by European Union environmental law,I2 in which case fault-based liability would apply. A claim in respect of environmental damage could in the first instance be brought only by the state, with a subsidiary power resting on public interest groups. Compensation for environmental damage (but not traditional damage) would have to be used in environmental restoration.

The Commission has now taken a very clear step back from its more ambitious proposals. In particular, the Draft Directive provides only for an administrative scheme, similar in scope to existing schemes in the United Kingdom, whereby state regulators are able to require restoration by p01luters.l~ The role of public interest groups is limited to the entitlement to request action from a public authority, or to seek judicial review.14 Such relatively slight proposals are a little disappointing, given that the issues raised (and to some extent addressed) in the White Paper undoubtedly remain. However, the White Paper's many unresolved controversies and ambiguities suggest that negotiating the detail of the proposals would have required significant efforts. What will come of these latest proposals, of course, remains to be seen.

Environmental liability is clearly one element of the European Commission's commitment to diversifying its regulatory approaches, which is now an important part of European environmental p01icy.l~ Command and control regulation is subject to intense criticism, at least in its response to new or exceptionally persistent environmental problems. Environmental liability, as conceived in the White Paper, is receptive to many of these critiques. At its most general, the advocacy of novel forms of regulation promotes the increased use of economic instruments to influence market behaviour, in place of, or in addition to, prescriptive commands from regulatory bodies.I6 Liability fits into this market approach, and in support of its proposals, the Commission appeals to the intuitive link between a successful

9. White Paper, n 2 above, s 4.3. 10. Areas designated under Council Directive (EEC) 79/409 (OJ L103/1) on the conservation of wild buds and Council Directive (EEC) 92/43 (OJ L206L7) on the conservation of natural habitats and wild fauna and flora. 11. The definition of environmental damage in the White Paper is inadequate. Although the Draft Directive is more precise, environmental damage remains, perhaps inevitably, a somewhat open-ended concept. 12. This is the only part of the White Paper which proposes an extension of liability beyond 'dangerous' activities: s 4.4.2. Similar provisions would apply under the Draft Directive. 13. Above n 6. See also 'Working Paper on Prevention and Restoration of Significant Environmental Damage (Environmental Liability)' available on the Commission website at europa.eu.int/comm./environmentfliability/consul~tion-en.~f. 14. Draft Directive, n 7 above, arts 14 and 15. 15. Dating from European Commission, Fifth Environmental Action Programme Towards Sustainability: A European Community Programme of Policy andAction in Relation to the Environment and Sustainable Development COM (92) 23 final. See now Sixth Environmental Action Programme, Environment 2010: Our Future, Our Choice COM (2001) 31 final, under which broadening the range of regulatory instruments remains a stated priority.

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liability claim and the ‘polluter pays principle’. Liability is seen as a means of putting the appropriate price on an environmentally damaging activity. Although this is far from the only possible rationalisation of liability as a regulatory technique, it is perhaps dominant.” In the absence of liability, the costs of environmental degradation are an ‘externality’, which it is efficient for a polluter to ignore. If operators have to pay for the cost of any damage they cause, the Commission takes the view that they will act in a more precautionary manner, preventing some of the harm that would otherwise arise.I8

The pricing mechanism of liability could merely be an alternative legal tool for regulators, providing private funds for environmental re~toration.’~ Alongside the market approach, however, contemporary theories of regulation also envisage a more inclusive approach to regulation.?O Liability could allow individuals and environmental groups to act independently of regulators, countering perceptions of poor enforcement of environmental regulation. Private resources could be used at a time when public resources are notoriously stretched, and allegations of regulatory inefficiency or capture could be avoided. As well as supporting official enforcement, liability could also allow indirect challenges to fundamental regulatory tasks (such as the setting of environmental standards) by requiring polluters to comply with standards imposed from outside the regulatory process. A history of regulatory failure leaves room for this intervention of unofficial litigation or negotiation in the already heavily regulated area of environmental protection.?I

A number of approaches to regulatory development could be relied on to support the expansion of environmental liability. The lack of detail in the White Paper made it difficult to identify its proposals with anything other than very broad trends in regulation. The Commission’s focus seemed at that time to be on its wider concerns around the poor state of implementation of European Union

16. A I Ogus Regulation: Legal Form and Economic Theory (Oxford: Clarendon Press, 1994) ch 1 1 reviews some forms of economic incentives, and some of the claims made for them. 17. Based on law and economics approaches to tort. See R H Coase ‘The Problem of Social Cost’ [ 19601 3 J Law and Econ 1 ; G Calabresi and A D Melamed ‘Property Rules, Liability Rules and Inalienability: One View of the Cathedral’ [ 19721 85 Harv LR 1089; A I Ogus and G M Richardson ‘Economics and the Environment: A Study of Private Nuisance’ [ 19771 36 CLJ 284; D Campbell ‘Of Coase and Corn: A (Sort of) Defence of Private Nuisacce’ [2000] 63 MLR 197. 18. White paper, n 2 above, s 3.1 ; Explanatory Memorandum to Draft Directive, n 7 above. 19. As in the contaminated land scheme, n 6 above. The Draft Directive also seems to prioritise this objective. 20. This is reflected in the Sixth Environmental Action Programme, n 15 above. See also Royal Commission on Environmental Protection, 2 1 st Report Setting Environmental Standards Cm 4053. I Ayres and J Braithwaite Responsive Regulation (Oxford: Oxford University Press, 1992) and M Gunningham and P Grabosky Smart Regulation: Designing Environmental Policy (Oxford: Oxford University Press, 1998) consider the involvement of public interest groups in regulation to be significant. 21. K Stanton and C Wilmore ‘Tort and Environmental Pluralism’ in J Lowry and R Edmunds (eds) Environmental Protection and the Common Law (Oxford: Hart Publishing, 2000); Steele, n 5 above; D McGillivray and J Wightman ‘Private Rights, Public Interests and the Environment’ in T Hayward and J 0’ Neil1 (eds) Justice, Property and the Environment (Aldershot: Ashgate, 1997).

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environmental seeing both the pricing mechanism and the inclusion of third parties as means to improve enf~rcement .~~ Such an approach to liability may actually raise serious complexities, but the more limited scope of the Draft Directive implies far more limited aims.

The White Paper raised many questions on the optimum form of environmental liability, and its approach is of potentially enormous importance to the development of both civil liability generally and specific environmental liability rules. My intention here is not to look at all of the issues raised by new forms of environmental liability, or by the Commission’s White Paper.24 Focusing on English common law, I will consider why the assertion of private law interests is often unhelpful in an environmental context. The proposals in the White Paper could provide a way of bridging the gap between public (environmental) interests and private forms of law, thereby providing an effective regulatory tool. These issues have been on the agenda for some years, and even if comprehensive liability proposals are not currently being pursued at European Union level, the problems that prompted them persist. Challenges to traditional forms of law are likely continue in this area, and the Commission has expressed an intention ‘to consider afresh the matter’.’5

2. ‘TRADITIONAL DAMAGE

Tortious liability historically played a central role in environmental protection and pollution control in the United Kingdom, albeit probably not to great effect. In an age of increasing environmental awareness, however, the limitations of tort have become considerably more apparent than the advantages. To address some of those limitations, the White Paper’s proposals extended to rules on ‘traditional damage’ (damage already addressed by the civil liability rules in the member state) when brought about by regulated activities. The White Paper proposed two striking doctrinal changes to the English common law; the ‘alleviation’ of the burden of proof on causation and the introduction of strict liability.

Causation is notoriously problematic in respect of liability claims related to environmental problems. This is most obviously the case in claims for personal injury, although similar issues are likely to arise in other cases. Disease (rather than traumatic injury such as a broken leg) is the most likely health effect of pollution. The English common law has a basic requirement that the defendant be shown to have caused the claimant’s recognisable injury. We have, however, only a limited understanding of disease It is difficult enough to

22. European Commission Implementing Community Environmental Law COM (96) 500. 23. See further M Lee ‘From Private to Public: the Multiple Roles of Environmental Liability’ (2001) 7 European Public Law 375. 24. For a more comprehensive review, see L Bergkamp ‘The Commission’s White Paper on Environmental Liability: A Weak Case for an EC Strict Liability Regime’ (2000) 9 EELR 105 and 141. 25. Explanatory Memorandum to the Draft Directive, n 7 above, at 16. 26. Recovery for disease, rather than traumatic injury, is notoriously difficult, see J Stapleton Disease and the Compensation Debate (Oxford: Oxford University Press, 1986). Note that when property damage takes the form of ill health or death of domestic animals, similar issues arise: see Graham v Rechem [1996] Env LR 158.

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establish potential causal links between an activity and damage, for example, between the emission of a pollutant and increased incidence of disease.*’ It is simply impossible in many cases to distinguish between pollution effects and the general background incidence of disease, that is between the individual tortiously injured as distinct from individuals with the same disease brought about by background factors. In addition, multiple sources of pollution, together with non-environmental factors, can combine to create complex causal links, to the extent that it may not even be meaningful to ask what ‘causes’ an ailment. As well as creating difficulties for individual claimants, any deterrent effect of tort will be lessened by the reduced likelihood of a successful claim.

Establishing fault is also likely to be a recurrent barrier to a successful tort claim in an environmental context. This may be due to practical questions of evidence. Claims will often arise in complex technical areas, where evidence is in the hands of the defendant, perhaps decades after the event that gave rise to liability.28 More fundamentally, non-faulty, reasonable industrial operations can cause traditional damage. Otherwise beneficial economic activity is often expected to bring about environmental damage from gradual pollution.

The White Paper proposed altering existing rules on causation, presumably to avoid the perennial problems alluded to above. Disappointingly, no detail was provided,29 although the Commission may have in mind a rebuttable presumption of causation.30 Changes to rules on causation could amount to much more than the simple technical alterations that the White Paper seemed to envisage. Because the absence of causation will often be as difficult to prove as its pre~ence,~’ the burden of proof may determine who bears the burden of scientific uncertainty in a field where uncertainty is endemic. Such a change could shift the legal focus away from actual harm, and from the hitherto vital relationship between the claimant’s damage and the defendant, to the potential to cause harm, if such harm later materialises. Such a fundamental alteration to tort would not be warranted by the Commission’s laconic treatment of causation.

The White Paper would introduce strict liability to avoid the difficulties posed by fault. It invokes the polluter pays principle to justify liability in the absence of fault. The polluter pays principle, however, can be implemented by a variety of regulatory techniques. It does not necessitate even a liability system, and certainly does not dictate the standard of liability that should apply. We may need to examine more closely the rationale for treating one injury differently from other similar injuries, simply on the basis that it was brought about by an activity regulated by European Union environmental law. And again, the White Paper itself provided insufficient detail on the proposal. Strict liability is not a

27. In Reay and Hope v British Nuclear Fuels Limited [ 19941 Env LR 320, frequently cited as exemplifying the difficulties raised by causation in this area, the claimants failed to convince the court of the plausibility of the causal route alleged. 28. Consider, eg, the delayed impact of asbestos litigation, as in Margereson and Hancock v J W Roberts [ 19961 Env LR 304. 29. ‘The Community regime could . . . contain one or other form of alleviation of the traditional burden of proof, to be more precisely defined at a later stage’: White Paper, n 2 above, s 4.3. 30. See Bergkamp, n 1 above; S Poli, n 1 above. 31. An issue that the Commission does not acknowledge, referring instead to the difficulty of proving causation as the reason for the proposed change: White Paper, n 2 above, s 4.3.

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monolithic concept; it can fall anywhere in between negligence-type fault and absolute liability. The White Paper did not propose how strict liability should be. Foreseeability was not properly ~ons idered ,~~ and the range of defences was left open. So, for example, although the Commission seemed reluctant to accept regulatory compliance as a defence to liability,” the White Paper somewhat ambiguously suggested that a permit may raise questions of equity in respect of the extent of liability, and that in those circumstances the permitting authority could be required to provide c~mpensat ion.~~ These factors are clearly crucial to any real understanding of the role of liability in such a heavily regulated and scientifically uncertain area as environmental law. It is only in the detailed design of a regulatory scheme that the polluter pays principle begins to acquire any meaning. More detail is forthcoming in respect of the administrative scheme provided for in the Draft Dire~tive.3~ Here, both foreseeability and compliance with a permit would be a defence -the strictness of liability all but disappears in these circumstance^.^^

There is insufficient detail in the White Paper to predict with any certainty how either causation or strict liability would operate. The changes proposed, however, particularly taken together, had the potential to bring about drastic alterations to the structure of tort. The White Paper focused on the instrumental, environmental benefits from the easier assertion of tortious liability. The impact on private law in the member states is, however, equally important, and should also be a matter for debate. The Commission failed to justify treating harm brought about by activities regulated by European Union environmental law so differently from the same harm brought about in a different ~ontext.~’ Perhaps this explains the quiet abandonment of these proposals in the Draft Directive.

3. PRIVATE LAW INTERESTS: PERSON AND PROPERTY

It would be somewhat paradoxical if ancient remedies in tort were to be reinvigorated in the pursuit of innovative regulation, the limitations of private law in this field being formidable. As considered in the previous section, causation and fault consistently thwart environmental litigants. A more fundamental problem with using private law in environmental regulation relates to the narrow range of interests protected by tort. It must be acknowledged that it would be

32. In the House of Lords’ decision Cambridge Water v Eastern Counties Leatherplc [ 19941 2 AC 264, no fault needed to be established as the tort is nominally strict liability, but the unforeseeability of the harm famously led to an absence of liability. The White Paper, n 2 above, s 4.3 seems to reject a state of the addevelopment risk defence. 33. White Paper, n 2 above, s 4.3. 34. White Paper, n 2 above, s 4.3. 35. There is no provision on causation. 36. Draft Directive, n 7 above, art 9. This is more restrictive than the United Kingdom’s contaminated land scheme, n 6 above. Stricter national schemes can be maintained under the Draft Directive, art 18. 37. On this point, see P Cane ‘Are Environmental Harms Special?’ (2001) 13 JEL 3, which, referring to what the White Paper would call ‘traditional damage’, argues that there is nothing unique about environmental harm. Cane also rejects liability for harm to the environment itself.

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anachronistic to assert the existence of a sphere of private law distinct from political or public interference, if only because political values and enforcement mechanisms underlie private law, and public and private law share certain ‘common values’.38 The White Paper itself further undermines notions of a rigid dichotomy between public and private law, and private and public interests. Nevertheless, the law of civil responsibility is usefully characterised for present purposes as predominantly private law, as compared with the public approach of command and control regulation. These labels reflect reasonably well the parties and interests directly involved in the exercise of different legal tools, and require no assumption of ideological or political neutrality in private law.

In civil liability there is generally some correlative arrangement between norms of behaviour and harms caused, balanced within a sanctioning process.39 Although the ‘public interest’, which may include environmental interests, will sometimes be invoked,40 only two sets of interests are directly involved: an act (or omission) which the law is prepared to address has interfered with an interest which the law is prepared to recognise. The number of tortfeasors and claimants can be multiplied, in theory without limit, but in any particular case there is a notional relationship between the individual interest of the claimant and the individual behaviour of the tortfeasor.‘“ If this is the paradigmatic structure of tortious responsibility, it is clear that environmental harm fits uncomfortably within it.42 While an individual may be passionately concerned about environmental issues, the environment is not solely a private interest. Environmental damage is borne collectively, and forms a generalised harm. It may not be helpful or realistic to attempt to assess environmental damage in terms of a relationship between, for example, the large number of individuals who breathe polluted air and the large number of individual air polluters, groups that will in any event overlap.

A negligence claim in English law would focus on either personal injury or property whilst damage to person or property is clearly not the only impact of environmental degradation. I have already considered the difficulty posed by the need to establish causation of personal injury. Even a successful

38. D Oliver Common Values and the Public-Private Divide (London: Buttenvorths,

39. P Cane The Anatomy of Tort Law (Oxford: Hart Publishing, 1997). 40. J Wightman ‘Private Law and Public Interests’ in T Wilhelmsson and S Hum From Dissonance to Sense: Welfare State Expectations, Privatisation and Private Law (Aldershot: Ashgate, 1998); H Collins ‘The Voice of the Community in Private Law Discourse’ (1997) 3 ELJ 407. 41. Significant exceptions, eg the vicarious liability of employers, of course, distort this idealised structure. 42. Arguments are made that problematic mass torts (including environmental claims) themselves alter the individualised approach. See particularly D Rosenberg ‘The Causal Connection in Mass Exposure Cases: A “Public Law” Vision of the Tort System’ (1984) 97 Harv LR 849; D Rosenberg ‘Individual Justice and Collectivising Risk-Based Claims in Mass-Exposure Cases’ (1996) 71 NYULR 210. 43. Note that similar restrictions would apply in a liability claim against the state for a breach of European Union law, under Case C-6/90 and C-9/90 Francovich and Bonifaci v Italian State [ 19911 ECR 1-5357, which also requires damage to an individual’s rights. The restrictions are not identical: as in the Court of Appeal decision in Bowden v South West Water Services Ltd [ 19991 Env LR 438, infringement of economic interests may be sufficient.

1999).

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personal injury claim, however, has only a partial effect. It addresses only part of the harm, which may extend beyond individual health problems to environmental effects and more diffuse public health effects. Damage to property in negligence is also problematic. The point at which the presence of contamination, or harm to plant or animal life, can be classified as damage is a significant conceptual problem. Contamination does not break property in any readily identifiable sense, unless, for example, it kills crops.44 Further, environmental harm may affect things which do not necessarily even constitute property, such as air space45 or wild animals. In negligence, damage to unowned property, or property belonging to someone else, will generally not be actionable. Any financial impact of such damage, for example, in falling property values or lost business to tourism, is likely to be pure economic loss, recovery of which is severely restricted in English

Private nuisance is widely considered to be a more useful action for environmental lawyers than negligence, not only because of a less severe fault requirement, but also because of the recognition of less tangible harms than personal injury or damage to property. Private nuisance will address interference with the use and enjoyment of real property. Even here, environmental harms may be too intangible for a property law focus to address effectively. Interference with the use and enjoyment of property most commonly involves the physical interference with the users of property, for example, by noise or odours, although invisible contamination may be a~t ionable .~~ Amenity interests are moreover recognised simply as a facet of the underlying proprietary interests with which the law is really concerned; environmental conditions are largely irrelevant. Private nuisance is a tort against property interests in not directly concerned with the effect of pollution on people or the environment.

Both negligence and nuisance, then, focus on property ownership, although personal injury can also form the basis of a cause of action in negligence. Property owners are not the only, or necessarily the best, groups to protect much more diffuse environmental interests. On the contrary, there is a wide diversity of views on the ‘undamaged’ condition of the environment, legitimately held by similarly divergent groups. A property owner may be indifferent to pollution, or may welcome the destruction of a pest. Owners may not be aware of environmental

44. But see the approach of the Court of Appeal in Blue Circle Industriesplc v Ministry of Defence [ 19981 3 All ER 385, where contamination was found to have damaged land. 45. The fact that it was air (rather than soil or water) that was affected seems to have conhibuted to the claimants’ difficulties in Merlin v British Nuclear Fuels Ltd [ 19901 3 All ER 7 1 1 : ‘The plaintiffs argument that ‘property’ included the air space within the walls, ceilings and floors . . . , that this has been damaged by the presence of radionuclides . . . seems to me to be too far- fetched’, at 720. 46. On recovery of such losses in different international and domestic settings, see P Wetterstein ‘A Proprietary or Possessory Interest: A Conditio Sine Qua Non for Claiming Damages for Environmental Impairment?’ in P Wetterstein (ed) Harm to the Environment: The Right to Compensation and the Assessment of Damages (Oxford: Clarendon Press, 1997). See also Landcatch Ltd v International Oil Pollution Compensation Fund [ 19991 2 Lloyd’s Rep 316. 47. In Cambridge Water v Eastern Counties Leather plc [I9941 2 AC 264, the contamination could not be directly perceived. 48. Hunter v Canary Wharf[ 19971 AC 655; J Wightman ‘Nuisance - the Environmental Tort? Hunter v Canary Wharfin the House of Lords’ [1998] 61 MLR 870.

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damage, which can be rather less tangible than a broken arm or a broken window; similarly, they may not have the information or resources to litigate or negotiate a solution.49 Furthermore, many individuals are only likely to stand on their rights if that is in their own interest, with little consideration of any wider public interest. Some recognition of the practical limitations of relying on private interests already exists in areas of English law such as statutory nuisance and public nuisance. Public bodies are able to take criminal or administrative action in respect of an ongoing nuisance, where perhaps it would not be realistic to expect individuals to do s0.5~ Statutory and public nuisance continue, however, aside from a somewhat wider public health perspective?’ to rely on common law notions of nuisance. The fundamental limitations of that form of law are then to some degree perpetuated.

As well as the practical limitations of a reliance on private rights, the link between property and liability inhibits an appreciation that environmental damage is harmful to a wider public interest, rather than simply being a number of discrete individual difficulties. The extinction of a species, the loss of a habitat and the reduction of air quality are ignored by law’s individual and property focus. There are, of course, alternative conceptions of ‘property’, which would more effectively encompass environmental concerns.s2 As the law stands, however, the nexus with property, in both negligence and private nuisance, limits the usefulness of tort in environmental law.

4. ENVIRONMENTAL LIABILITY: BEYOND PRIVATE LAW INTERESTS

The White Paper did not propose any alterations to the definition of ‘traditional damage’ in the member states. Under the White Paper, tort would retain its fundamental conflicts and incongruities when used as an instrument of environmental protection, notwithstanding changes to rules on causation and standards of care. Pollution or environmental damage would only coincidentally infringe individual common law interests. In these circumstances, it is difficult to envisage civil liability taking a central role in environmental law. The proposals in the White Paper, however, moved beyond the purely ‘private’ nature of civil liability, bringing interests which are usefully viewed as not solely private within the scope of liability. The proposals on liability for environmental damage broadened significantly the range of interests addressed by the White Paper.

49. S Shave11 ‘The Optimal Structure of Law Enforcement’ [ 19931 J Law and Econ 270; S Rose-Ackerman ‘Public Law Versus Private Law in Environmental Regulation: European Union Proposals in the Light of United States Experience’ [ 19951 4 RECIEL 312. 50. So the classic definition of public nuisance - ‘a nuisance which is so widespread in its range or so indiscriminate in its effect that it would not be reasonable to expect one person to take proceedings on his own responsibility to put a stop to it, but that it should be taken on the responsibility of the community at large’: A-G v PYA Quarries [1957] 2 QB 169 at 19 1 per Lord Denning. 51. Statutory nuisance can include particular situations that are ‘prejudicial to health’, Environmental Protection Act 1990, s 79. 52. Eg J Sax ‘The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention’ (1970) 68 Mich L Rev 47 1 ; K Gray ‘Equitable Property’ [ 19941 CLP 157.

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(a) Environmental damage

The White Paper proposed liability for two types of damage: traditional damage and environmental damage. ‘Environmental damage’s3 only is covered by the Draft Directive. Environmental damage immediately raises questions of standing; of whose interests are affected.

Creating privately enforceable interests in the environment generally would clearly recognise the wide public interest in environmental quality. It would, however, create a potentially indeterminate number of claimants. Conversely, there may be few individuals prepared in such circumstances to spend their financial and emotional-resources on a claim in respect of a relatively small individual loss when they could equally free-ride on another claim. At the other extreme, a fairly minor revision to schemes of civil liability, which would encourage some incorporation of environmental values, would be to make environmental quality an incident of personal or property interests. Property interests could conceivably be expanded to include environmental interests, such as the death of wild birds on private property; interests in the person could conceivably be expanded to include a freedom from exposure to a particular harmful degree of p o l l ~ t i o n . ~ ~ This approach would expand the concept of personal interests, whilst maintaining the link between liability and property damage or personal injury. The public nature of environmental goods would be ignored.

The White Paper did not rely on the assertion of private interests, and does not propose the creation of enforceable personal interests in a healthy environment. It instead explicitly proposed additional and separate liability for ‘environmental damage’, in respect of which the state is primary claimant, with subsidiary powers resting on public interest groups. The interest in an undamaged environment (however that might be defined) would in effect be vested in the state and in public interest groups. This broadens the range of interests captured by liability. If a polluter only has to consider the costs of private damage, pollution comes too cheap, as environmental harms extend more broadly than the simple aggregation of individual harms. Incorporating the costs of ‘environmental damage’ provides a means for assessing costs more comprehensively. Significantly, the identity of the claimants also breaks the link between property interests and liability. Without giving ‘rights’ to the environment as such? damage to unowned property could be addressed, as could damage which is unobjectionable to the owner of property, who might actually be the polluter. Consideration of environmental damage allows liability a direct role in environmental quality. The Draft Directive is relatively modest in this respect, providing an administrative scheme for public

53. Which now means biodiversity damage, water pollution and contaminated land: Draft Directive, n 7 above, art 2. 54. Liability for risk has been urged in some toxic torts commentary in the United States. For differing perspectives on the issue, see C H Schroeder ‘Corrective Justice and Liability for Increasing Risks’ (1990) 37 UCLA LR 439; G 0 Robinson ‘Risk, Causation and Harm’ in R G Frey and C W Moms (eds) Liability and Responsibility: Essays in Law and Morals (Cambridge: Cambridge University Press, 1991); Rosenberg (1984), n 42 above. Changes to the burden of proof could go some way to this conclusion, by shifting the emphasis from causation of damage to exposure to a (proven) risk which then materialises. 55. C Stone ‘Should Trees Have Standing?’ (1972) 45 Southern California L Rev 450; G Betlem ‘Standing for Ecosystems -Going Dutch’ (1995) 54 CLJ 153.

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authorities to seek private sector funding of environmental restoration. Public interest groups are reduced to a supporting role.

The White Paper reinforces this extension beyond private interests in its treatment of remedies. Unsurprisingly, given the nature of the interests that they are designed to address, the award of damagess6 in a common law action has no necessary connection with environmental pr~tection.~’ The trading of interests is an integral part of civil liability, and traditional liability systems assume that rights not to be polluted (such as they are) can be bought and sold by private interest holders. This allows those individuals to trade what may also be broader public interests in environmental protection. The involvement of interest groups and the state could provide a means to override that trading in the interests of environmental quality. Furthermore, a damages award has no necessary impact on the ongoing state of that damaged environment, as there is no obligation to use compensation in the remediation of environmental damage. The common law assumes that a damaged interest is compensated by an equivalent amount in money, which can then be spent how the claimant wishes. The requirement that damages for ‘environmental damage’sB be used in restoration would move away from the compensatory functions of liability in the English common law. The payment ceases to be in compensation for an interference with private interests and becomes a payment in pursuit of an environmental objective.

(b) Calculation of damages

The destination of damages was an important, and relatively clear, element of the White Paper. A number of ambiguities, however, remained on calculation of damages.

Given the different approaches to traditional and environmental damages, it is disappointing that the Commission did not consider the potential for overlap. Unremediated ‘traditional damage’ may also constitute ‘environmental damage’, which the state or a public interest group wishes to restore. Unless the polluter pays twice, there is a gap in private funds for clean-up. Also, the boundary between damage and no damage in cases of contamination is often uncertain, and the finding of ‘environmental damage’ may influence the court’s assessment of ‘traditional damage’,5y possibly making private losses such as reduced property prices recoverable.“

56. Injunctions can be awarded against an ongoing private nuisance, and would be possible in an ‘urgent case’ under the White Paper, n 2 above, s 4.7.2. ‘Preventive measures’ could be required under the Daft Directive, n 7 above, art 4. 57. See further J Steele ‘Remedies and Remediation: Foundational Issues in Environmental Liability’ [ 19951 58 MLR 615. 58. Not traditional damage. The only environmental impact of liability for traditional damage would then be any normative effect of internalising those particular costs. 59. Regulatory standards may affect fmdings of damage in civil litigation in the United Kingdom: see eg Cambridge Water v Eastern Counties Leather plc [ 19941 2 AC 264 and Blue Circle Industries plc v Ministy ofDefence 119981 3 All ER 385. See M Lee ‘Civil Liability for Contamination: Blue Circle Industriesplc v Ministry of Defence’ [ 19991 50 NILQ 403. 60. In the absence of traditional damage, in English common law the claimant has suffered pure economic loss, recovery for which is severely restricted. Such economic loss may moreover be provoked by the market reaction to a finding of ‘environmental damage’, and this stigma may persist even after restoration work.

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The Commission also inadequately identified what it considers to be the costs of environmental damage. In an ordinary tort claim, damages have no connection with environmental quality. Damages represent the costs of the infringement of the claimant’s personal interests, and their amount will depend on the position of the claimant. The market assessment of the value of the claimant’s interest,6’ rather than environmental conditions, determines the cost of pollution. The full environmental costs of damage must extend to certain societal costs in addition to individual market costs. Whilst the courts have familiar methods of assessing the value of undamaged property, and even of goods in which there is no market, such as health, environmental damage is relatively novel.

The Commission did provide some guidance on valuation. The starting point was restoration costs. To begin with contamination, the standard of restoration is to achieve ‘the removal of any serious threat to man and the environment’.(’* Some emphasis is placed on the existence of national regimes, so presumably the United Kingdom contaminated-land regime would continue to apply to some, unspecified, extent.h3 The threat is to be assessed on the basis of ‘actual and plausible future use’ of the property. Multi-functional clean up, that is a standard of restoration fit for any use, however sensitive or unlikely, is rejected. Although it makes little economic sense to invest resources in creating an environment suitable for a sensitive use which it will never see, a difficulty with the Commission’s approachM is that current, and future, use may be constrained by the existence of contamination. Further, the environmental burdens of contamination are not necessarily related to the human use of that land.

Where ‘biodiversity damage’ occurs, the costs of reinstating natural resources would also need to be met. The White Paper is far from clear on this element of environmental damage. The level of restoration is in the first instance to ‘the state of the natural resource before the damage o c ~ u r r e d ’ , ~ ~ subject to cost benefit analysis. If total restoration is not possible, or not at an acceptable cost, the aim is to ‘bring the damaged resources back to a comparable condition, considering also factors such as the function and the presumed future use of the damaged resources’ >6 although there may be some inconsistency between such a suitable for use approach and a concern with biodiversity. Where this degree of restoration is not possible, it will be necessary to assess the cost of alternatives, it being envisaged that natural resources ‘equivalent to the destroyed natural resources’ can be pr~vided.~’

The White Paper also required the assessment of environmental values, independently of the assessment of restoration costs. This involves putting a price on the environment, and is in part necessary for the cost benefit analysis of restoration. There seems to be a number of possible measures of damage: total

61. A large part of the damages for serious personal injury will be lost earnings, and so depend on the claimant’s earning power in the market. 62. White Paper, n 2 above, s 4.5.2. 63. Conflicts between national schemes and the ‘serious threat to man and the environment’ standard are not addressed. 64. The United Kingdom system also takes a ‘suitable for use’ approach. 65. White Paper, n 2 above, s 4.5.1. 66. White Paper, n 2 above, s 4.5.1. 67. White Paper, n 2 above, s 4.5.1.

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restoration; ‘comparable condition’ restoration; ‘equivalent resources’ restoration. The White Paper was imprecise on how cost benefit analysis will operate to choose between these options. Generally, one presumes i t will count against restoration if the value of the environmental goods is lower than the cost of restoration. The Commission states that the valuation will also be ‘of particular importance for cases where damage is irreparable’. So to the list of possible measures of compensation can be added ‘environmental value’. Perhaps this value is to be used to assess resources deemed to be ‘equivalent’ to those lost.hx

Environmental valuation is a discipline with a large and growing 1iteratu1-e;~ subject to debate in the context of cost benefit analysis of other regulatory measures, as well as in imposition of liability. Valuing environmental damage is an enormously controversial technical exercise. Even a relatively modest, purely anthropocentric approach to environmental values can identify a number of matters that are not readily converted to a financial value. These include the ‘use values’ of natural resources (for example, the agricultural capacity of soil, commercial, subsistence or recreational fishing, aesthetic enjoyment); the non-use value of knowing that the resource is available to current and future generations; the non-use value of simply knowing that the resource exists. No method of assessing environmental values, many of which are expensive and unpredictable, meets with universal acceptance. The most common way of attributing a value to something is by reference to the market, but many environmental values escape market assessment. There are, however, a number of techniques for attributing monetary values to environmental goods, which can be roughly divided into ‘revealed preference’ methods and ‘hypothetical preference’ methods. The former involves looking at what people actually pay for environmental resources. This includes hedonic valuation (where, for example, the cost of noise would be assessed by reference to relative property values in quiet and noisy areas) and travel cost valuation (where the cost of travelling to a natural resource is used to assess the value attributed to that resource). ‘Hypothetical preference’ methods are based on the expressed preferences of individuals in surveys of their willingness to pay for the receipt of environmental benefits, or willingness to accept payment for their r e m ~ v a l . ~ ”

Environmental valuation methods are controversial, and subject to much severe criticism, broadly on the basis of accuracy and fa i rne~s .~’ Accuracy is challenged in the context of highly disputed and variable outcomes of the valuation methods,

68. White Paper, n 2 above, s 4.6. However, the Commission seems (surprisingly) to view the cost of the provision of equivalent sources as a valuation technique, rather than viewing valuation as a way of assessing comparability: s 4.5.1. 69. It is not appropriate to consider the enormous literature on environmental valuation here. For further consideration of the issues considered below, see D Pearce and E B Barbier Blueprint fora Susrainable Economy (London: Earthscan, 2000), especially ch 3; M Jacobs The Green Economy (London: Pluto Press, 1991), especially ch 17; D A Farber Eco-pragmarism (Chicago: University of Chicago Press, 1999), especially ch 2. 70. The latter approach gives consistently higher figures than the former. 71. The citations at n 69 above review the difficulties. These authors, however, generally consider environmental valuation to be a useful tool. M Sagoff The Economy ofrhe Eurrh (Cambridge: Cambridge University Press, 1988) takes a more negative stance. More fundamental concerns as to whether monetary valuation is appropriate for environmental goods will be returned to below.

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although techniques seem to be increasingly refined.72 As to fairness, a major concern is that, in the absence of compensating mechanism^,^' the environmental concerns of the rich will take priority over the environmental needs of the poor. The value placed on environmental goods, relative to the value created by environmentally damaging activity, may depend on the wealth of the people who are asked (directly or by reference to ‘revealed preference^').^^ The incorporation of the environmental needs of later generations is similarly of concern.

The Commission suggested in the White Paper (albeit with no detail or justification) that the implementation of its proposals would draw on existing European approaches to valuing environmental damage. In view of the expense of other methods, it also proposed that ‘benefits transfer’ techniques, which transfer the values of well researched cases to other comparable cases, could be used. This does not reduce the potential for dispute, as the initial research will itself have been carried out according to contentious methods. The Draft Directive is somewhat less ambiguous on costs, although many of the same doubts remain. Restoration to ‘base line’ conditions is required in respect of biodiversity damage and water pollution, and restoration by reference to the avoidance of ‘serious harm or serious potential harm to human health’ in respect of ~ontaminat ion .~~ Again, however, environmental valuation may be required, particularly in order to assess ‘compensatory restorative actions’ for ‘interim loss’ or unrestored This maintains some of the more innovative aspects of the White Paper. Environmental valuation includes use and non-use values, and is to be assessed by reference to willingness to pay or to accept payment, as discussed above.77

Although it is likely that the need for valuation (rather than assessment of restoration costs) will be kept to a minimum, it will not be completely avoidable. The practical difficulties of attributing monetary valuations to environmental goods remain considerable. However, without wishing to downplay the controversy, it is the case that the law is accustomed to assessing intangibles in which there is no market, such as health.78 Incorporating those intangibles into assessments of liability provides a more comprehensive treatment of environmental problems than simply ignoring them.

5. ENVIRONMENTAL LIABILITY AS A REGULATORY TOOL

The role of tort is necessarily limited to the periphery of environmental law by the narrowness of the interests directly recognised: the very privateness of private law limits its use for environmental benefit. Once we turn to a scheme

72. Pearce and Barbier, n 69 above. 73. Which must in any event make explicit the incorporation of non-economic criteria in the exercise. 74. See C R Sunstein ‘Endogenous Preferences, Environmental Law’ (1993) 22 J Legal Studies 217. 75. Draft Directive, n 7 above, Annex 11. 76. Draft Directive, n 7 above, Annex 11. 77. Draft Directive, n 7 above, art 2( 19). See text to nn 69-70 above. 78. At least in the United Kingdom, complicated assessments of what value people place, eg on a leg, are not made.

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such as that proposed in the White Paper, however, it is clearly no longer correct to say that liability plays a merely peripheral role in environmental law. Liability for environmental damage is not, however, as simple a regulatory tool as the Commission seems to envisage.

There are essential concerns that the very attempt to put a price on the environment is wrong.” If economists view environmental degradation as an economic externality,’” others see the environment as independent of economic and instrumental In similar vein, it could be argued that economic strength rather than argument from principle would determine the acceptable amount of pollution under a liability regime. It may still be economically efficient to pollute (or destroy a habitat, or consume a resource to extinction). It certainly seems fair to say that any monetary assessment only inadequately captures the way we value environmental goods. However, that does not involve concluding that economic modes of regulation are, in an imperfect world, inappropriate in all circumstances. Environmental regulation seeks to influence actors in markets. Liability is one more subtle way of doing so than attempting simply to prohibit certain levels of pollution by external regulation. Looking to the material condition of the environment and incorporating environmental costs, albeit inadequately, within assessments of liability, has to provide a more complete picture than ignoring them. Two further aspects of the overall regulatory framework also need to be borne in mind. First, a reliance on traditional regulation, with its systems of standard setting and prohibition, does not necessarily mean that those standards will be met. Implicit in a move beyond command and control is the recognition that simply prohibiting something is not always enough to prevent it. Secondly, and most importantly, it is accepted that there may be good reasons (for example, justice between different groups or generations) for sustaining a resource beyond the level at which it would be economically efficient to pay for its destruction. In these circumstances, liability is a supplement to traditional regulatory mechanisms. This mixed regulatory approach is common in the European Union.

Liability does not just face objections from principle. Some serious practical questions were raised by the White Paper, which stemmed in part from ambiguities in the White Paper itself. A more sophisticated understanding of the White Paper is dependent upon how liability would fit in to the broader legal framework. So, for example, without knowing whether there will be a defence of compliance with a permit,*? we cannot understand the relationship between liability and other forms of regulation. The Draft Directive does provide for a compliance defence, making liability subsidiary to regulator’s decisions, but remains silent on the relationship of liability with other market mechanisms such as environmental taxes. Similarly, the constitution of the public interest

79. The arguments rest in part on claims of incommensurability between market and environmental values and inconsistencies between market and political behaviour. A prominent critique is provided by Sagoff, n 71 above; see also C R Sunstein ‘Incommensurability and Valuation in Law’ (1994) 92 Mich L R 779; Sunstein, n 74 above. But see D A Farber ‘Environmentalism, Economics and the Public Interest’ [ 19891 41 Stan LR 1021, a review of Sagoff n 7 1 above; N Duxbury ‘Do Markets Degrade?’ ( 1996) 59 MLR 33 1 . 80. Coase, n 17 above; G Hardin ‘The Tragedy of the Commons’ [ 19681 62 Science 1243. 81. Sagoff, n 7 1 above; L Tribe ‘Ways Not to Think About Plastic Trees: New Foundations for Environmental Law’ ( 1 974) 83 Yale LJ I3 IS. 82. See nn 33-35 above.

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groups under the White Paper determined the admission of unorthodox views into the system, and so liability’s independence from regulators. Public interest groups, according to the White Paper, have to comply with ‘objective, qualitative criteria’, and meet member state standardsa3 This could limit involvement to a small number of established groups, or could cover ad hoc or local groupings.R4 Public interest group action is subsidiary, to take place only when the state ‘does not act at all or does not act p r ~ p e r l y ’ . ~ ~ Given that environmental interests are themselves subject to different interpretations, and may conflict with other legitimate public interests, the manner of determining the ‘proper’ course of action will be vital. Under the Draft Directive, public interest groups would far more clearly be dependant on the regulatory framework, since they are restricted to requesting action of public authorities or seeking judicial review.

These factors determine the strength of the liability scheme, and the Draft Directive provides for a far weaker scheme than the White Paper. It should not, however, be thought that a strong liability system is straightforwardly beneficial. The encouragement of private litigation by public interest groups or, especially, by those who have suffered ‘traditional damage’ is likely to make an unpredictable regulatory and could shift the determination of environmental priorities away from the state. The incoherence caused by displacing pollution from one very visible (physically or politically) manifestation, to another less tangible, but not necessarily less harmful, area is still with us. It may be that the diffusion of regulatory control is not a price worth paying for the potential benefits of a strong system of liability.

Another problem with liability is that its deterrent effect is difficult to assess and unpredictable,8’ although the same can be said of other forms of regulation, notwithstanding a more prescriptive form. The whole notion of pricing is moreover somewhat undermined by the funding of liability. Not only will insolvent polluters never provide funds for restoration, but in assessing relative costs of prevention, liability will be discounted by polluters beyond the amount that they would actually pay, ie beyond solvency. The Commission appears to be confident that the development of an insurance market will remove the problem of insolvency.x8 If an insurance market does develop, of course, the polluter will not pay the costs of liability itself. The Commission merely makes

83. White Paper, n 2 above, ss 4.7.1 and 4.7.3. English High Court decisions on standing in judicial review may be useful by analogy, eg R v Inspectorate of Pollution, exp Greenpeace (No 2 ) [ 19941 4 All ER 329. The European Court of Justice has been more restrictive than the English courts: see case C321l95 P Stichting Greenpeace Council v Commission [1998]

84. The Commission emphasises the importance of the Arhus Convention Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Marters (1998) which envisages broad public access in environmental litigation. 85. White Paper, n 2 above, s 4.7.1. This does not apply in ‘urgent’ cases, when the public interest group may ask for an injunction: s 4.7.2. 86. Gunningham and Grabosky, n 20 above, pp 104-106 considers potential difficulties of interest group involvement. 87. Baldwin and Cave, n 5 above, pp 5 1-53. 88. White Paper, n 2 above, s 4.9. Note that the Commission rejects the use of an industry funded joint compensation scheme, which was a possibility considered in the Green Paper, n 1 above, s 4.2. See now Explanatory Memorandum to the Draft Directive, n 7 above.

ECRI-1651.

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cursory reference to the ability of insurers to ensure that potential polluters still have ‘an interest in behaving respon~ibly’,~~ without developing that notion further either in the White Paper or in the Draft Directive.

Finally, in its treatment of traditional damage, the White Paper raised, and failed to answer, questions about the relationship between liability and tort. Tort is not directly concerned with the protection of the environment, but with relationships between individuals. Changes to rules on causation and strict liability could ease the assertion of established private interests in environmental law, affirming the importance of those interests to environmental protection. As long as the interests protected by liability are restricted to private interests in property or health, however, liability can perform only a limited role in internalising the costs of environmental degradation. Strengthening the position of traditional claims is a blunt instrument by which to strengthen environmental protection. It is true that, although the Commission did not dwell on notions of environmental justice in the White Paper, some of the emotive language suggests that intuitive notions of justice underlie the polluter pays principle.90 The Commission was also clearly concerned that there could be negative reactions to providing a more effective remedy for environmental damage than for personal injury. Both of these factors point to the desirability of amendments to tort. Nevertheless, if individual interests harmed by environmentally damaging industries do require further protection, that should be addressed on its own terms rather than as a side-effect of regulatory changes. The White Paper ignored the major impact of its proposals on the claims of individuals, concentrating simply on the instrumental advantages of increased liability. The inability of the Commission to justify more effectively its proposals on ‘traditional damage’ may be behind the retreat from that element of the White Paper.

6. CONCLUSION

The proposals in the White Paper had the potential to provoke a radical rethinking of the role of liability in environmental policy. The position could be reversed from one in which a regulatory pay off is a possible side effect of liability rules to one in which the aim of liability is more effective environmental regulation. With this aim in mind, the usefulness of English common law actions in tort is extremely restricted by their limitation to narrow interests in person and property. The proposals in the White Paper clearly envisaged the assertion of much broader interests in the avoidance of ‘environmental damage’. The recognition of these broad interests begins to separate liability from property, a separation that would be completed by the proposed restoration requirements and identity of claimants. Although a form of ‘entitlement’ is granted to public interest groups, this takes liability well away from tort, creating a new type of

89. White Paper, n 2 above, s 4.9, note 22. 90. The Commission refers to ‘the suffering and painful death of several hundred thousand seabirds and other animals’ following the Erika incident. Note, however, that this would not fall within the definition of ‘traditional damage’. Indeed, it may not fall within the White Paper at all, as s 4.8 raises the possibility of a separate regime for oil spills.

Tort, regulation and environmental liability 51

‘environmental liability’, with many potential benefits for environmental regulation.

Concurrently with this break with tort, however, the White Paper proposed increasing the availability of existing tort claims. Doctrinal changes to liability for ‘traditional damage’ would make certain claims in tort far easier to sustain. Although the proposals could be developed quite conservatively, the lack of specifics in the White Paper left room for absolutely fundamental alterations to civil liability in the member states. The Commission has largely failed to make a convincing case for such changes. Moreover, although the proposals on traditional damage seem to be designed to increase liability findings, that would only be the case within the narrow private interest perspective that dominates in tort. Any environmental benefits would be incidental, contingent on factors irrelevant to environmental quality. This would tend to perpetuate the perception of environmental damage as a large number of individual property or health problems, ignoring the diffuse and generalised nature of environmental harm. Although some possible benefits are apparent, the White Paper’s proposals on tort raised complex questions.

The White Paper was the product of many years’ labour. In this context, it has to be admitted that it is a badly flawed document. The distinct lack of detail, or even in many respects broad design, makes a thorough assessment of the proposals difficult. The vagueness of the proposals probably indicates an attempt by the Commission to draw wide political support for a framework directive. None the less, the Commission’s neglect of two vital relationships (between liability and other regulatory techniques, and between specifically environmental liability and tort generally) would leave environmental liability in a void. The effectiveness of any system of regulation depends on the relationship between its various component^.^'

Given these difficulties, it is perhaps not surprising that the Commission has completely changed its approach to the appropriate role of liability in environmental law. Rather than using liability and the civil justice system as potentially powerful tools to open up regulation to third parties, thereby side- stepping some of the restrictions of traditional forms of regulation, the Commission seeks an administrative tool to allow regulators to require polluters to cany out restoration. Although the Draft Directive still refers to ‘liability’, this is really a very different notion from that anticipated in the White Paper, or indeed during that document’s very long gestation.92 This hugely simplifies consideration of ‘liability’: many of the difficulties raised by the White Paper can be ignored, whilst maintaining some of the elements of economic deterrence and providing a tool for the restoration of environmental damage. It should be recalled, however, that the White Paper developed in the context of a double failure of existing legal techniques. First, the White Paper proposed an important practical step in advancing the European Union’s regulatory tools at a time when the effectiveness of existing approaches is doubted by many. Liability could take its place within a sophisticated range. of regulatory techniques in

91. The importance of the overall regulatory pattern and interactions is vital. See eg, Gunningham and Grabosky, n 20 above; S Rose-Ackennann ‘Tort Law in the Regulatory State’ in PH Schuck(ed) Tort Law and thePublicZnterest (New York WWNorton, 1991). 92. Above n 1.

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environmental law; the involvement of third parties is central to that. Secondly, traditional tort law fails by its very nature to consider directly anything other than narrow individual interests. The White Paper was an ambitious attempt by the Commission to move beyond the limitations of private law rights as a tool of environmental protection, and to create a new framework within which to address environmental degradation. The Draft Directive’s failure to engage more completely with the complexities and difficulties of environmental liability, and its potential benefits, may need to be revisited.93

93. Explanatory Memorandum to the Draft Directive, n 7 above.