EUROPEAN COMMISSION Brussels, 14.4.2016 SWD(2016) 121 final COMMISSION STAFF WORKING DOCUMENT REFIT Evaluation of the Environmental Liability Directive





Accompanying the document Report from the Commission to the European Parliament and to the Council pursuant to Article 18(2) of Directive 2004/35/EC on environmental liability with regard to the prevention and remedying of environmental damage {COM(2016) 204 final}

{SWD(2016) 122 final}



TABLE OF CONTENTS 1.INTRODUCTION 1.1.Purpose of the evaluation 1.2.Scope of the evaluation 2.BACKGROUND TO THE INITIATIVE 2.1.Description of the initiative and its objectives 2.2.Baseline 2.2.1.Overview on the functioning of the Environmental Liability Directive 2.2.2.Objectives of the Environmental Liability Directive 2.2.3.The Polluter-Pays Principle 2.2.4.The Liability Scope and Standard of the ELD 3.EVALUATION QUESTIONS 4.METHOD/PROCESS FOLLOWED 4.1.Process/Methodology 4.2.Limitations – robustness of findings 5.TRANSPOSITION AND IMPLEMENTATION OF THE ENVIRONMENTAL LIABILITY DIRECTIVE (STATE OF PLAY) 5.1.Transposition of the ELD 6.2. Implementation of the ELD

6.ANSWERS TO THE EVALUATION QUESTIONS 6.1.Relevance 6.2.Effectiveness 6.3.Efficiency 6.4.Coherence 6.5.Complementarity 6.6.EU-added value 7.CONCLUSIONS ANNEXES ANNEX 1: PROCEDURAL INFORMATION ANNEX 2: ELD STUDIES ANNEX 3: MEMBER STATES REPORTS ANNEX 4: THE POLLUTER-PAYS PRINCIPLE



1.INTRODUCTION 1.1.Purpose of the evaluation Pursuant to the Commission's Regulatory Fitness and Performance Programme (REFIT), the purpose of this evaluation is to examine to what extent Directive 2004/35/EC on environmental liability (Environmental Liability Directive – ELD) remains fit for purpose with regard to the prevention and remedying of environmental damage remains fit for purpose and whether it delivers the intended results. REFIT is the European Commission's Regulatory Fitness and Performance programme, whose main purpose is to make EU law simpler and to reduce regulatory costs, thus supporting growth and jobs by contributing to a clear, stable and predictable regulatory framework. The evaluation of Directive 2004/35/EC is triggered by the legal requirement pursuant to its Article 18(2) and (3), to report on the experience gained in the application of the ELD including a review (COM(2016)204). According to this requirement, the Commission shall submit a report to the European Parliament and to the Council by 30 April 2014 based on the reports on the experience gained in the application of the Directive between 30 April 2007 and 30 April 2013, as submitted by the Member States to the Commission according to Article 18(1) of the ELD. According to Article 18(3) ELD the report must review the following points:

(a) the application of Article 4(2) and (4) ELD relating to the exclusion of pollution covered by the international instruments listed in Annexes IV and V of the ELD from the scope of the Directive and of Article 4(3) ELD relating to the right of an operator to limit his liability in accordance with the international conventions in Article 4(3); (b) the application of the Directive to environmental damage caused by genetically modified organisms (GMOs); (c) the application of the Directive in relation to protected species and natural habitats; (d) instruments that may be eligible for incorporation into Annexes III (occupational activities covered by strict liability), IV (international Conventions in the maritime sector) and V (international instruments in the nuclear sector). In 2013, the REFIT programme included the ELD which required an evidence-based judgment carried out according to the main evaluation criteria of relevance, effectiveness, efficiency, coherence, and EU-added value as well as further criteria, as appropriate. This evaluation will examine to which extent the ELD is fit for purpose and will look into what works and what does not, including to what extent objectives have been achieved between April 2007 and April 2013 and why some elements or features were successful or not. It is thus an ex-post evaluation of the Environmental Liability Directive, based on the evidence mainly gathered in the context of the ELD report. It will examine the performance of the ELD according to the abovementioned five standard evaluation criteria, supplemented by the further evaluation criterion of complementarity with MS legislation which appears to be relevant in the context of the ELD. The evaluation will deliver a summary overview of the functioning and implementation of the Directive and of how and to what extent its objectives were reached. It will also describe the challenges and problems of the Directive regarding its legal obligations, technical requirements, the national transposition, the implementation deficits, shortcomings and sometimes wide variations in implementation, and indicate possible solutions how weaknesses and divergences in the application of the Directive, could be improved on the basis of the evidence gathered in the evaluation. The results of this evaluation will be used to strive for further improvement of the implementation of the Directive to the extent necessary, through a range of practical measures as presented in the final conclusions and the consequential action plan consistent with the elaborated means and methods in the report under Article 18(2) ELD. 1.2.Scope of the evaluation This evaluation covers the scope of the Environmental Liability Directive, its implementation in practice, and links to related EU law, national law or international law. It looks into all aspects of the functioning of the Directive which consists in ·the trigger as well as in the application of preventive action as well as remedial action of liable operators, ·the enforcement including approval of remediation plans by the competent authorities, ·the use of the three remedial action types under the ELD: primary, complementary and compensatory remediation of environmental damage, ·the contribution by civil society (persons affected by environmental damage and environmental NGOs) to the detection and remediation of environmental damage, ·the cover (offer and demand) of financial security including insurance for ELD liabilities,

·the potential deterrent effect and enhanced risk management (changed behaviour), ·the contribution of the Directive to reducing of environmental damage and halting biodiversity loss, improving the freshwater and marine water quality as well as soil protection in the EU. The evidence base of this evaluation includes the Member States reports of 2013, the targeted external implementation and evaluation studies launched by the Commission in 2012 and 2013, the conclusions from the Commission ELD report 2010 and relevant stakeholder input or feedback. As basic knowledge of the ELD enables a better understanding of the investigation, information and findings, the relevant basic information in chapter 2 below including figure 3 summarises the functioning of the Directive. In addition to the four specific review points in Article 18(3) ELD mentioned above, particular reference should also be made to the Commission report of October 2010 which covers in its conclusions and recommendations the points to be looked at by this second Commission report on the ELD: the uneven biodiversity damage scope across the EU, the uneven application of the permit and state of the art defences across the EU, the divergent national transposing rules potentially creating difficulties, the sufficiency of the financial capacities of operators in particular in case of major accidents, and the potential need for an EU-wide mandatory financial security system. 2.BACKGROUND TO THE INITIATIVE 2.1.Description of the initiative and its objectives The background to the adoption of the ELD was the need to reduce environmental damage to natural resources and to ensure that the polluter who caused the damage takes responsibility in order to avoid that such damage remains unrestored or that the general tax payer bears the costs of the restoration. Industrial and other activities in the 20th century have caused considerable damage to the environment and put the environment under increasing pressure. Hence, the protection and restoration of the environment have become a growing global concern. In the European Union, this has led to the development of an environmental policy based on the current Articles 191 to 193 of the Treaty on the Functioning of the European Union (TFEU). In its Article 191(2), the guiding principles for the implementation of this policy are mentioned. All of these principles and particularly the polluter-pays principle are of direct relevance and are implemented through the ELD. Problems with contaminated sites posing significant health risks and loss of biodiversity as well as pollution of freshwaters required action in various respects. While environmental impact assessments, the setting of permit requirements or of technical standards to limit pollution levels and the establishment of plans and programs to monitor and better control the environmental degradation and improve environmental protection levels tackle environmental pollution mainly ex ante, a general instrument to tackle it ex post was still missing. In the light of many pollution incidents and events including in particular some major accidents with or without transboundary effects at EU level which contributed significantly to environmental damage, the Commission had started in the 1990s to work on the establishment of a general binding liability instrument to prevent and to repair environmental damage where such damage can be clearly attributed to individual responsible polluters. The complete and detailed intervention logic is presented as follows:



Figure 1: The intervention logic for the Environmental Liability Directive Objectives ·To establish a framework of environmental liability based on the ‘polluter-pays' principle, to prevent and remedy environmental damage ·Ensure effectiveness in terms of actual remediation of environmental damages including for interim losses ·Ensure the availability at reasonable costs of insurance and other types of financial security · Actions ·Member States to transpose the Directive into national legislation ·Member States to enforce and implement the Directive ·Member States to take measures to encourage the development of financial security instruments including, as appropriate, to establish mandatory financial security ·Member States to report on the application of the Directive to the Commission in 2013 ·Commission to assess timely and conform transposition by all Member States ·Commission to monitor the implementation of the Directive and react as appropriate ·Commission to support implementation, and to engage with stakeholders, practitioners and experts ·Commission to report to Council and European Parliament in 2010 and to evaluate and report in 2014 Expected results / Impact ·Prevention and remediation of environmental damage works effectively in the EU, thus contributing to the halting of biodiversity loss, to safeguarding the European waters and to protecting the soil quality ·Liability in environmental damage cases is clearly and rapidly attributed to the actual polluters ·Compliance with international obligations ·Appropriate financial security instruments and markets for ELD liabilities are available at reasonable costs ·Awareness of risks and liabilities is improving gradually with operators and financial security providers ·Communication, and cooperation as appropriate, between the relevant stakeholders is growing Consequences ·All MS applying the Directive meaning effectively preventing and remedying environmental damage ·Harmonised remediation methods and standards developed as necessary ·Functioning information and notification system / inventory of ELD instances system established as appropriate ·Functioning financial security system established as necessary ·Developing and putting in motion awareness, information, exchange of experience and training of operators, competent authorities, financial security providers and ENGOs at national and at EU levels ·Evaluating and reviewing the implementation (effectiveness, etc.) and taking action as necessary External factors ·Transposition, compliance and willingness to enforce by Member States ·(Pre-)existing national legislation in this and neighbouring fields, the relevant national legal framework ·Resources, supporting tools and expertise within competent authorities ·Level of cooperation at all levels and between stakeholders ·Economic and financial environment ·Expertise and available funds within insurance and financial security industry ·Climate change (warmer climate = more biodiversity loss etc.)

2.2.Baseline Before the ELD was adopted, environmental liability had been scattered around many national jurisdictions in the EU. Some Member States had environmental liability regimes either for specific damage categories, others had broader defined regimes which were in general not much elaborated and in practice often ineffective. Environmental liability for biodiversity was lacking nearly everywhere. Apart from some specific laws, strict liability standard for environmental damage was rather the exception; many laws required time-consuming and often inefficient prove of fault, thus failing the purpose of quick remediation. The public liability regimes were in most of the Member States not supported by participation rights of the civil society (affected persons and environmental NGOs). Often the national liability system did not require restoration of the damaged natural resources to the condition which existed before the time of the damage. Serious accidents leading to major losses in terms of natural capital could not be tackled appropriately as the damage was left un-remedied or was remedied at tax payer's expense. Most severe damage incidents, such as the Boliden's Doñana accident in 1999, briefly described in the box below, had even a direct effect on spurring the development of the Directive, proposed by the Commission in 2002. Box 1: Severe environmental damage case example: Doñana accident of 1999 illustrating the baseline before intervention On 25 April 1998, a dam at the Los Frailes pyrite mine operated by Boliden Apirsa (Apirsa), a subsidiary of the Swedish mining company Boliden, at Aznalcóllar near Seville, Spain, collapsed, resulting in the release of water and slurry from a 1.5 square kilometre tailings pond. Acidic water and heavily contaminated slurry tailings spilled into the Agrio, Guadiamar and Los Frailes rivers. Around 4 500 hectares of agricultural land were contaminated by the polluted water; 2 600 hectares were covered with tailings. The contamination resulted in the closure of over 50 irrigation wells and a ban on the sale of agricultural produce and shellfish affected by the spill. Only the emergency construction of barriers stopped most of the nearby Doñana National Park, a Natura 2000 and World Heritage Site and Spain’s largest park, from being contaminated. The disaster had direct economic impacts on the agriculture and fishing industry, on the mining sector and on tourism in the region. Costs arising from the spill were substantial. Source: Summary, based on the ELD Fund Study, p. 20, 21 To better understand the baseline, in a first step, a general overview of the functioning of the ELD will be provided. Then, the objectives, principles and scope of the Directive will be explained. The baseline is to be compared with the practical experience in the implementation of the ELD, mainly on the basis of the Member States' reports.

2.2.1. Overview on the functioning of the Environmental Liability Directive The ELD aims at ensuring that significant natural resource damage (harm to biodiversity, water or land) is restored to the condition which existed before the damage occurred. The economic operator who caused the environmental harm has to take the necessary restoration action and to bear the costs. Besides the restoration of damage to the environment, another important objective of the Directive is to prevent damage in case of an imminent threat that such damage will happen in the near future. The ELD provides for the responsibility of an operator, based on the 'polluter-pays' principle: An operator is a (natural or legal, private or public) person who operates or controls the damaging occupational (professional) activity. Operators who carry out certain – mostly industrial – activities potentially dangerous to the environment (listed in Annex III of the Directive) are liable according to the standard of strict liability, which means that no proof of fault (intent or negligence) is necessary. This makes the liability faster and more efficient. It is however necessary to proof that the operator has caused the damage (causal link). In addition, economic operators, other than those carrying out the listed dangerous activities, are liable for the damage they caused to protected animal or plant species or to protected natural habitats (biodiversity damage) on the basis of fault. The ELD requires that the damaged environment is physically reinstated. This is achieved through the replacement of the damaged natural resources by identical or, where appropriate, equivalent or similar natural components ('primary remediation'). If measures taken on the affected site do not allow achieving the return to the baseline condition, 'complementary remediation' measures have to be taken elsewhere (preferably at an adjacent site). Finally, 'compensatory remediation' has to be taken to compensate for the 'interim losses', i.e. loss resulting from the fact that the damaged natural resources are not able to perform their ecological functions or services after the damage until the environment is fully restored. Such measures consist in additional improvement of the ecological structures and functions to compensate for the interim losses. The following graphics shows how remediation under the ELD is basically working. Figure 2: Anatomy of damage, source ELD training slides Source: ELD Training Handbook (2 days version), p. 13 The liable operator must take the necessary preventive or remedial measures and bear the costs thereof. The competent authorities play a major role within the administrative liability system of the ELD. They have to survey and enforce the environmental liability, in particular to identify the liable operator, to assess the significance and to approve or determine the remedial measures. The third key player in the system is civil society. Natural or legal persons affected by environmental damage and enabled environmental NGOs have the right to request the competent authority to decide on an instance of observed environmental damage. Figure 3: Overview on the functioning of the Directive, Source: 2.2.2. Objectives of the Environmental Liability Directive The two main objectives of the ELD are prevention of environmental damage in case of imminent threat of damage and remediation of environmental damage if it has already occurred. Environmental damage continues to create significant losses in natural resources in the EU every year. Some of these losses are due to major accidents (for example Doñana/Spain, Baia Mare/Romania, Kolontár/Hungary, Moordijk/Netherlands) or big scale pollution events. Other incidents are smaller but still significant. The purpose of the ELD is thus to contribute to the halting of biodiversity loss in the EU by 2020 and to the improvement of the water quality of European freshwaters under the Water Framework Directive. This aim is pursued first by incentivising operators who typically carry out those hazardous activities which most frequently cause environmental damage, to take a more effective precautionary approach by e.g. establishing an environmental management system, environmental safety measures, carrying out risk assessments, investing in risk abatement technology and taking out sufficient financial security. Second, in case of imminent threat of damage or actual damage, operators are liable to take the necessary preventive or remedial action and to bear all costs, i.e. to internalise the external environmental costs so that neither the public pays for the damage nor the damage remains un-remedied. The liable operator must take the necessary preventive or remedial measures and bear the costs thereof. Operators should therefore have sufficient financial capacity to cover the costs which may arise due to their potential liability for environmental damage. The ELD does however not establish a system of mandatory financial security at EU level but leaves this decision to the Member States. Around one third of the MS have established or are about to establish such mandatory financial security schemes at national level and two thirds of the Member States rely on voluntary instruments and market developments. The ELD targets only pollution which is significant, measurable and can be traced back to an identifiable polluter. A liability instrument would face challenges in tackling so called diffuse pollution, caused by multiple polluters whose share cannot be calculated or estimated, as e.g. is the case with air pollution due to car traffic or household heating. For the latter type of pollution, other instruments are available, as e.g. environmental taxes or charges.

2.2.3.The Polluter-Pays Principle The ELD establishes a framework based on the polluter pays principle (PPP) to prevent and remedy damages on certain environmental media. Article 191(2) TFEU provides that the Union policy on environment shall be based on the principle that the polluter should pay. The PPP is one of the main principles guiding EU environmental law and policy. Economic activities often create emissions discharged into air, soil or water and having a detrimental effect on flora and fauna or human health; this is what is often referred as 'external effects' of an activity. On a macroeconomic level, the question arises whether the public or a specific person or group of persons have to bear the costs of preventing and remedying the costs of such environmental damages. If the costs are attributed to the person responsible, the 'external effects' are considered to be internalized. This is what the 'polluter-pays principle' is aiming for. If the costs are, however, born by the public, a 'community-pays' system is implemented. More background information on the economic principles of cost allocation for environmental damage can be found in the Annex on the 'polluter-pays principle'. The ELD implements not only the polluter-pays principle expressly invoked by its Article 1, but also the other environmental principles enshrined in Article 191(2) TFEU, namely the precautionary principle, the preventive principle and the principle that environmental damage should as a priority be rectified at source (primary remediation). 2.2.4.The Liability Scope and Standard of the ELD The material, personal, temporal and territorial scope of application is crucial for the degree of internalization of external effects and thereby for the effectiveness and efficiency of the ELD. The scope of application of the ELD answers the questions who can be held liable (personal scope), for what type of damage (material scope: environmental or traditional damage), within which geographical ambit or area (territorial scope), and within which time (temporal scope). The standard of liability (strict or fault-based) and the treatment of multi-party liability are also basic elements of each liability system which will be briefly presented below for the ELD. Material scope – Environmental damage vs. traditional damage: Traditional damage or third-party damage is caused to persons as victims resulting from an activity. This old concept of tort law consists in three categories: damage to property, bodily injury (health damage) including loss of life, and economic loss (comprehending consequential or even pure economic loss). In contrast, the pure environmental or ecological damage, which is the subject of the ELD, concerns the environment as such without any person needed to have suffered damage or losses. This rather novel legal concept makes the owned as well as the un-owned environment (the 'common good') the victim of damaging activities. As 'the environment' cannot raise claims, it needs a 'trustee' to act on its behalf. Under the ELD, this is the public authority responsible for the protection of environment, with civil society (affected persons including entitled environmental NGOs) enabled to request decisions by the competent authorities on remedial actions in case of observed environmental damage. The material scope of the ELD is defined by the three categories of 'environmental damage': 'protected species and natural habitats', 'water' and 'land' (called altogether 'natural resources'). As regards protected species and natural habitats, the legal definitions of the ELD refer to the Birds Directive (2009/147/EC) and the Habitats Directive (92/43/EEC). For water damage, the ELD refers to the waters covered by the Water Framework Directive (2000/60/EC), including groundwater, surface water, transitional waters and coastal waters, as well as marine waters covered by the Marine Strategy Framework Directive (2008/56/EC). The term "land" in contrast is not further defined in the ELD, neither explicitly nor indirectly via reference to EU legislation. The application of the ELD is not triggered by just any impairment of these three natural resources, but only if certain thresholds are exceeded. Article 2, letter (a) ELD specifies damage to protected species and natural habitats, letter (b) specifies water damage and letter (c) land damage. Also, the obligation to take preventive measures pursuant to the ELD is only triggered when it is likely that a non-action would result in a significant environmental damage. However, in application of the precautionary principle, scientific certainty that the potential damage will exceed the significance threshold is not required, a reasonable belief would be sufficient. Box 2: ELD case example how the Directive is applied On or about 2 July 2009, crude sewage was discharged for several hours into the "Three Pools" waterway at Crossens (United Kingdom), following the failure of foul water pumps at the Crowland Street pumping station. This resulted in a release of raw sewage effluent into surface water which impacted the biological quality of the water. The spill caused the death of over 6,000 fish in a 5 km stretch of the river. Based on the reasonable grounds that an environmental damage may have been caused, the competent authority assessed the damage under the Environmental Damage (Prevention and Remediation) Regulations 2009 (hereinafter "the EDR"), the ELD transposing legislation. The authority determined that environmental damage to surface water had occurred pursuant to Regulation 4 of the EDR because the biological quality element for fish had dropped from good to poor, changing sufficiently to lower the status of the water body within the meaning of the Water Framework Directive (2000/60/EC). Therefore, on 2 December 2009, the authority served a Notification of Liability on the operator, requiring him to propose measures for the remediation of the damage by 5 February 2010. The operator agreed to let the authority propose remediation measures on its behalf. Subsequently, the authority developed and consulted on options for remediation of the damage in accordance with the requirements of the EDR which are more stringent than those set forth under the Water Resources Act 1991. Pursuant to Regulation 20 of the EDR, the operator has to carry out primary as well as compensatory remediation to compensate for the interim loss of resources or services pending full recovery. On 7 October 2011, the authority served a Remediation Notice under the EDR on the Operator, ordering it to restock the river with fish (primary remediation) and to carry out habitat and access improvements to compensate for the loss of angling services due to the damaged aquatic environment (compensatory remediation). Source: ELD Implementation Study, Annex 1, p. 13, slightly adapted and shortened Personal scope – Liable person: The persons liable to prevent and to remedy environmental damage and to bear the costs for it under the ELD are those who have caused the imminent threat or the actual damage through their occupational activities (first level-channelling of liability to occupational/professional activities). An activity is "occupational" when it is carried out in the course of an economic activity, a business or undertaking, irrespectively of its private or public, profit or non-profit character. On a secondary basis, a third party who has caused the damage despite appropriate safety measures of the strictly liable operator have been in place, or a public authority who has given a compulsory order which led to the damage are financially liable for the preventive or remedial action to be taken by the liable operator in case the latter has successfully invoked a defence under Article 8(3) of the ELD. A further secondary liability of additional responsible parties (e.g. landowners, successor in rights) is possible under Article 16(1) ELD if a Member State so decides and it is compatible with the Treaties, in particular if the ELD requirements are complied with (causality, no liable operator). Standard of liability – Strict and fault-based:

The ELD contains two standards of liability. The liability standard is strict (faster to establish) for environmental damage (damage to biodiversity, water and land) if caused by one or more of the dangerous activities listed in its Annex III. Article 3(1)(b) ELD establishes in addition a fault-based standard of liability for an imminent threat or damage to protected species or natural habitats for operators pursuing an occupational activity which is not listed in Annex III ELD. The legal design of the liability rules and the standard of liability in particular is crucial for the extent of internalization, hence for efficiency. A strict liability system (which does not require any form of culpability) represents the polluter-pays principle more adequately and is commonly regarded as highly effective to its aims if it is strictly enforced and not undermined by too many exceptions and defences. Multi-party liability – joint & several vs. proportionate liability: The liability scope in case of multi-party causation of environmental damage (i.e. if more than one person contributes to the damage) could range from joint and several liability, where each polluter, who has contributed to causing the damage, is liable for the prevention or remediation of the full damage to a proportionate system of liability where the judge or the authority determines the share of liability of each polluter. The ELD does not take a decision but leaves it up to the Member States. Joint and several liability is commonly regarded more effective while a proportionate system has the fairness argument on its side. Most Member States apply joint and several liability or a mitigated/combined joint and several liability. Temporal scope: Unlike some other liability laws, the Environmental Liability Directive does not establish retroactive liability. The Directive does neither apply to damages caused by an emission, event or incident that took place before the 30th of April 2007, nor to an emission, event or incident subsequent to this date when they derive from an activity that took place and finished before the deadline for the transposition in the Member States (30th of April 2007), nor to a damage caused by an emission, event or incident that took place more than 30 years ago. This limitation of the temporal scope of the ELD implicates that remediation of pollution stemming from the time before the entry into application of the ELD may be treated under any previously existing national regime. Territorial scope: The territorial application of ELD applies to the geographical extent where Member States exercise jurisdiction (land territories, water damage not only in the coastal and territorial waters but also in the exclusive economic zone and the continental shelf where Member States apply jurisdiction). According to Article 52 TEU, EU law applies to the European territories of the Member States and to certain overseas territories and islands as specified in Article 355 TFEU. Environmental damages occurring, for example, on the Saint-Martin, the Azores or Madeira Islands, have to be remedied according to the ELD, but for those occurring at the Faeroe Islands, the genuine national law is decisive. 3.EVALUATION QUESTIONS The key evaluation questions for this exercise can be summarised as: Relevance: ·Are the objectives of the Directive still relevant (i.e. do they still match current needs) and are key problems still properly addressed? Effectiveness: ·What progress have Member States made over time towards achieving the objectives set out in the Directive? And does the Directive lead to a level playing field in terms of preventing and remedying environmental damage across the EU? ·Has the current scope of the Directive worked out to be right in meeting practical demands? Efficiency: ·What are the costs and benefits (monetary and non-monetary) associated with compliance with the Directive in the Member States and in the EU?

·Is there evidence that the Directive has caused unnecessary administrative burden? Can any costs be identified that are out of proportion with the benefits achieved? Coherence: ·To what extent is the Directive satisfactorily integrated and coherent with other parts of EU environmental law/policy? ·Are there overlaps, gaps and/or inconsistencies that significantly hamper the achievements of the objectives and to what extent is the Directive consistent with the Habitats Directive? Complementarity: ·To what extent does the ELD support and usefully supplement other instruments or policies? EU-added value: ·What has been the EU added value?, i.e. what has been the practical significance of the Directive as compared to (pre-) existing national legislation and what would likely happen if EU action were repealed? 4.METHOD/PROCESS FOLLOWED 4.1.Process/Methodology The evaluation is mainly based on the information and data provided in the 27 national application reports of the Member States under Article 18(1) ELD. The studies are summarised horizontally according to the main trends and features and the reports are summarised vertically per Member State in two Annexes to this REFIT evaluation. They are also available in English translation of the originals on the Commission liability website: http://ec.europa.eu/environment/legal/liability/index.htm A major source of the evaluation provided the two implementation studies of 2012/2013 and the three evaluation studies of 2013/14. These studies are summarised in an Annex to this REFIT evaluation and are as well available at the aforementioned environmental liability website. The studies investigated the main questions guided by the evaluation criteria, in particular as regards effectiveness, coherence and EU-added value. Information drawn from experts and stakeholders complete the overall information sources. In addition, information from financial security providers, from industry, and from environmental NGOs or interest groups were taken into account. The permanent exchange with experts and stakeholders, including their consultation in all ELD studies and their involvement in the ELD information and training material, is an indispensable contribution to the development of the ELD implementation. There was no formal public internet consultation of twelve weeks, but stakeholders had the above mentioned opportunities to consider the implementation and evaluation of the ELD and to express views. 4.2.Limitations – robustness of findings Information and data provided in the MS reports 2013 varies considerably. While some Member States submitted detailed and well-structured information, others provided much less information. The length of the reports differed between half a page and more than 60 pages. Several Member States provided only narrative reports, some MS only tables, and others a combination of a written report and a table.

Overall the Commission did not receive from all MS all the information sought or needed for a complete assessment and while some MS have supplemented the data upon extra request from the Commission, the situation remains partly incomplete for others. However, the obtained information appears in general sufficient to provide an overview, as is shown in the chapter on implementation. One of the significant information shortcomings concern data on costs, in particular on administrative costs. Only a few MS have provided seemingly reliable data in this respect, some more have provided at least illustrative information but the majority nothing. This part of the information was to be submitted by Member States however only on a voluntary basis according to Annex VI ELD. The robustness of the findings may be challenged in some respects: First, despite the common interpretative guidance on the reporting, MS may have had a different understanding of some terms, or use from the outset different systems e.g. for the calculation of costs. While for example Hungary provided that the Directive did not cause additional administrative costs for their total 573 ELD cases, the United Kingdom found that the Directive could become onerous if it exceeded the number of cases they have experienced (which is 19 in the reporting period), based on the national interpretation of the 'significance threshold'. Most of the MS remained quiet in this respect. The overall finding from the submitted information and data confirmed the conclusion from the previous Commission report on the ELD of October 2010 of a significant variance between Member States. Despite the efforts undertaken so far by the Commission and the stakeholder groups to create a better level field by non-legislative measures, not only the transposition of this framework directive but also the implementation still varies greatly. This is the reason why the topic of the remaining 'patchwork' situation as regards environmental liability was broadly discussed in several of the ELD implementation and evaluation studies. Therefore, despite more efforts to step up implementation and create a better level playing field, more transparency and complete data about ELD instances, as well as on environmental damage instances which are not treated under the ELD transposing legislation in the Member States but by other national legislation, would be necessary to assess the effectiveness of the Directive in an unbiased manner (as such other national legislation is often used instead of the ELD). As the above comparison between the United Kingdom and Hungary shows, the approach towards the use of the ELD varies greatly. The factors of the different use are multiple but as the most important ones could be identified the use of other national legislation instead of the ELD, based on the justification that the damage remains below the significance threshold. This significant data gap brings a potential bias into the evaluation and in order to improve the quality of the next REFIT evaluation, the aforementioned additional data would be necessary to examine the overall effect of the Directive in relation to the total environmental damage caused. This would however require a long term planning and an agreement by all Member States and stakeholders to jointly work on it for the benefit of regulatory monitoring and better implementation and regulation. The costs of such monitoring must be carefully weighed against the environmental benefits. It follows from the ELD studies, in particular from the ELD implementation Study and the Legal analysis Study, that a complete and transparent ELD case register, as is already established by at least one third of the Member States, could enhance significantly the necessary information platform for the exchange of ELD-relevant data. Not only the Commission, but all Member States and the insurance sector, industrial operators and environmental NGOs could benefit from such an EU data base for private and public decisions. 5.TRANSPOSITION AND IMPLEMENTATION OF THE ENVIRONMENTAL LIABILITY DIRECTIVE (STATE OF PLAY) There is a difference between transposition and implementation. Transposition is the formal act of translating Directives addressed to Member States into national law, i.e. integrating the Directive into the national legal system in order to render the Directive effective. A Directive is binding as to the result to be achieved but leaves the form and methods to the Member States (Article 288 TFEU). Implementation describes all the measures giving practical effect to the transposed legislation (application, enforcement, inspections, awareness raising, information, guidance, training, etc.). It is sometimes also used as broad term covering transposition and all application aspects. 5.1. Transposition of the ELD Communication of transposition: The Directive was to be transposed by 30 April 2007 but only four Member States met the deadline (Italy, Latvia, Lithuania and Hungary). Consequently, the Commission opened infringement procedures against 23 Member States, issued 16 Reasoned Opinions and referred nine Member States to the Court of Justice of the European Union (CJEU). The CJEU decided in 2008 and 2009 that seven Member States had not communicated on time the measures to transpose the Directive into national law. The last piece of transposing legislation was communicated in 2010. The Directive does not contain specific measures to be implemented by certain deadlines except the designation of the competent authorities by the date of transposition, which does not mean that the Directive was completely implemented by that time, as its full effectiveness depends on several conditions and factors. The most important are: ·Designation of competent authorities by the time of the transposition (Article 11(1) ELD): All Member States have designated competent authorities which are in charge of determining significant environmental damage, establishing the causal link, identifying the liable operators, deciding in cooperation with the liable operators the remedial measures and approving the remediation plan of the operator, as well as executing and overseeing the required application of the prevention and remedial action and the cost reimbursement provisions. ·Establishment of financial security instruments and markets (Article 14(1) ELD): While the Directive acknowledges that liability without appropriate financial security is doomed to be ineffective, it did not choose to set up the establishment of mandatory financial security at EU level. It required Member States instead to "take measures to encourage the development of financial security instruments and markets" including the decision as to whether mandatory financial security should be established at national level. One third of them have either so far established mandatory financial security on a legal basis or are working on it. The other two thirds decided to let the market itself develop adequate instruments. ·Member States have to provide since the entry into application of the Directive for the economic valuation of a damage which occurred, and have to apply the remediation types and techniques as required by Annex II ELD. The extent to which the Member States implemented these provisions depended also on the existing administrative structures and resources, on the already achieved practical experience, and on the respective arrangements between authorities, stakeholders and practitioners. This is one of the core elements and probably the biggest novelty brought by the ELD. Without functioning instruments and available resources, the remediation measures cannot properly be determined, designed and implemented.

Conformity of transposition: The conformity of the transposed legislation means that the national law is correctly and completely covering the requirements addressed to the Member States in the Directive. For example, rights conveyed to citizens or business, as well as obligations imposed on them have to be clearly transformed into domestic law in compliance with the provisions in the Directive. Noncompliant legal transposition risks that the objectives of the Directive will not be achieved. It is therefore with priority that the Commission examines the conformity of the transposition in order to ensure at an early time a level playing field and the functionality and effectiveness of a Directive. The Commission has in the last years assessed the conformity of the transposing legislation of the 27 Member States covered by the report. It has opened further investigations in several cases, some still ongoing. In six Member States, legislation was completely conform, while more than 20 Member States had some non-conformities, 15 of which have been solved so far. The aforementioned (potential) non-conformities related to virtually all provisions in the ELD which needed to be transposed (not all must be transposed). The provisions of the ELD which were most often invoked by the Commission in the bilateral meetings as a result of the conformity assessments concern: Articles 2 (Definitions), 4 (Exceptions), 8 (Prevention and remediation costs) and 12 (Request for action) as well as Annexes II (Remedying of environmental damage) and III (Activities referred to in Article 3.1). In all cases so far, Member States' authorities could either satisfactorily answer and explain or have rectified the ELD non-conformities, but the exercise is not yet completed. The Commission pursued the method of a bilateral dialogue with the Member State, discussing the potential non-conformities including points for clarification together with other implementation-relevant topics, such as on general implementation (challenges and obstacles, numbers of cases, awareness of and communication with stakeholders, etc.) on remediation of environmental damage (methods and categories, information/guidance/training tools or needs, etc.), and on financial security (available financial security instruments and options, development and experience, risk assessment, etc.). Where the problems could not be clarified within this framework bilateral investigations were opened. It would appear in general that identified problems regarding the effective application of the Directive are often not related with the transposition. There are examples where Member States with better implementation of the ELD have also more non-conformity issues. However, the opposite correlation (higher non-conformities related with better implementation record) can also not be verified. Only few complaints regarding bad application of the Directive have reached the Commission. Apart from some initial inquiries, the Commission has so far not opened any formal investigations regarding the bad application of the Directive on the basis of citizen's complaints. Quality of transposition: The quality of the transposition varies widely, as well as the type and method: Single laws, sometimes reproducing the ELD, are the most common, but in several instances such specific national ELD transposing laws are supplemented by legislative amendments to existing material laws, mainly regarding nature protection, water management and soil protection. The integration of the transposition into the existing national frameworks is in any case crucial for the transposition and effectiveness of the Directive. Therefore, the Legal Analysis studies mentioned above and summarised in the Annex on ELD studies investigated this question extensively. As overall conclusion can be drawn that most Member States transposed the ELD fairly faithfully, sometimes even in a "copy/paste"-style, which may entail risks of not fitting well into the existing legal frameworks, hence suffering more in the application under the competition of similar pre-existing national legislation than well integrated transposing provisions. There are also Member States with well-considered integration of the Directive into a multitude of existing material laws. And nearly all Member States have transposed large parts of the Directive, such as technical annexes, in quite a literal manner.

6.2. Implementation of the ELD The following overview of the implementation of the ELD, follows largely the national reports submitted by the Member States to the Commission on the experience gained in the application of the Directive between 30 April 2007 and 30 April 2013 according to Article 18(1) in conjunction with Annex VI(1) ELD. Member States were required to report on the type of environmental damage, the date of its occurrence and/or discovery and the date on which proceedings were initiated under the ELD. The requirements were specified in a non-binding guideline prepared with the government experts as follows: §"Type of environmental damage" refers to the three categories of environmental damage as specified in Article 2(1) ELD: damage to protected species and natural habitats; water damage; land damage. The Member States were asked to report on confirmed damage incidents, therefore on cases treated as environmental damage cases by the liable operators and/or competent authorities according to the requirements of the ELD. §"Date of its occurrence" refers to the date when the event, incident or emission causing the damage occurred. §"Date of its (…) discovery" refers to the date when the damage has been discovered by any person (private person, operator, authority, etc.). §"Date on which proceedings were initiated under the ELD" refers to the date when remedial action was commenced. The focus of the Member State reports is on environmental damages and the measures to remediate them. Incidences of imminent threat of environmental damage and the implementation of preventive measures remained formally outside of the reporting scope. This means that the numbers of imminent threat incidents as disclosed by the Member States in their Article 18(1) ELD-reports is not necessarily tantamount to the actual number of cases treated under the national law transposing the ELD. Thus, the exact number of incidents causing an imminent threat of an environmental damage is due to the narrow scope of the reporting duty not known by the Commission. The abovementioned guidelines were of non-binding character; the Member State reports contained therefore sometimes additional information. The Commission received hence partially also information on cases of imminent threat and on other details of the administrative procedure. Although just of indicative character, this information is also included as much as available, in the present ELD report. Number of cases handled under national law implementing the ELD: Within the reporting period April 2007 to April 2013 around 1,245 confirmed incidents of environmental damage triggered the application of national rules transposing the ELD. At least 34 administrative procedures were pending at the time of reporting with the competent authorities or (administrative or judicial) instances and are therefore not considered confirmed ELD damage cases. 31 instances of imminent threat were reported voluntarily by Member States, excluding Italy; Italy communicated that it had identified almost 150 liability cases and that "most of these" concerned imminent threats of environmental damage. As mentioned before, the real number of 'imminent threat incidents' might be substantially higher since the Member States were only obliged to report cases of natural resource damage pursuant to the ELD. Case numbers vary considerably between the 27 reporting Member States. Three basic scenarios can be distinguished: §Member States without any confirmed environmental damage incidents (11): Czech Republic, Denmark, France, Luxembourg, the Netherlands, Slovenia and Slovakia reported that no incidence of environmental damage as defined by the ELD occurred in the reporting period. Austria, Bulgaria, Ireland and Malta initiated proceedings under national law transposing the ELD but these cases are either pending or they concerned only incidents of imminent threat of environmental damage. §Member States with 1 to 60 confirmed environmental damage incidents (14): Belgium, Cyprus, Estonia, Finland, Germany, Greece, Italy, Latvia, Lithuania, Portugal, Romania, Spain, Sweden and United Kingdom. §Member States with more than 500 confirmed environmental damage incidents (2): Hungary and Poland.

Table 1: Confirmed or pending cases of environmental damage or imminent threat Member State Confirmed Damage Cases Confirmed Threat Cases Total of Confirmed Cases Pending Cases Dismissed Cases In Total Austria 0 no info 0 3 1 4 Belgium 1 0 1 0 0 1 Bulgaria 0 4 4 1 0 5 Cyprus 1 0 1 0 1 2 Czech Republic 0 0 0 0 15 15 Denmark 0 0 0 0 0 0 Estonia 2 2 4 4 8 16 Finland 2 no info 2 0 0 2 France 0 0 0 0 0 0 Germany 60 no info 60 0 (estimation) no info 60 Greece 40 11 51 1 0 52 Hungary 563 no info 563 10 (estimation) no info 573 Ireland 0 0 0 4 6 10 Italy 17 (up to) 133 (up to) 150 approx. 1000 approx. 850 (150) Approx. 2,000 Latvia 13 no info 13 0 3 16 Lithuania 4 no info 4 0 no info 4 Luxembourg 0 0 0 0 no info 0 Malta 0 no info 0 1 1 2 The Netherlands 0 no info 0 0 0 0 Poland 506 (maximum) no info 506 8 (minimum) no clear info 514 Portugal 2 6 8 0 no info 8 Romania 4 1 5 0 no info 5 Slovenia 0 no info 0 0 no info 0 Slovakia 0 no info 0 0 no info 0 Spain 11 no info 11 1 no info 12 Sweden 4 0 4 1 0 5 UK 13 7 20 0 several cases 20 In total 1243 164 1407 (34) 1034 (35) 885 (1476) 3326 Please note that cases are only counted once in the above table, even if they concerned more than one damage category (biodiversity/water/land). Several Member States pointed out that the environmental damage posed also a risk for another environmental medium and constituted thereby a case of imminent threat as well (most often soil pollution constituted an imminent threat to water). The risk was usually neutralized in the course of the remediation measures. Also these cases were counted once only. Further to be born in mind is that Member States usually considered those incidents in their reports which were handled under the national ELD transposing legislation. Several Member States transposed the Directive quite some time after the ELD transposition deadline had expired on the 30th of April 2007 and consequently did not consider environmental damage that occurred between the date of application of the ELD and the entry into force of the national transposing legislation. The numbers of cases treated under national ELD regime varies substantially between the Member States. Especially Hungary and Poland have a very high number of confirmed environmental damage incidents. In contrast, several Member States did not report a single confirmed damage case, among them medium and large Member States. In the box below, two examples are given to display the diverting national approaches regarding reporting of incidents. The reasons for the disparities which will be discussed further below in the chapter on the effectiveness of the ELD could be linked with the following factors in particular: Moreover, the evaluation studies pointed to the following factors greatly influencing the number of ELD cases (if available/existent or not): ·publicly accessible registers of ELD cases, ·access of interested parties to submit comments and to cooperate with competent authorities, ·a secondary obligation of competent authorities to carry out preventive and remedial action if operators fail to do so, ·the repeal of overlapping national legislation, and ·the knowledge of the ELD by operators.

However, despite the fact that more frequent application of the Directive demonstrates the need to use it as an effective enforcement tool to remedy environmental damage in order to ensure the effectiveness of EU environmental legislation and better environmental protection, as it was highlighted by several Member States in the reports as well as by stakeholders from all sectors, one of the main achievements of the ELD is the preventive effect. The strict liability regime gives an incentive to implement better risk management and to take (further) precautionary measures and actions aiming at preventing gradual pollution growing into significant environmental damage. However, as mentioned before, there is no full set of data available on how often preventive measures pursuant to Article 5 ELD were taken by operators. The main reasons for the lack of data is that the operators must only report preventive measures to the competent authorities when the imminent threat of environmental damage is not dispelled despite the preventive actions taken immediately (Article 5(2) ELD) and because there is no duty of the Member States to collect and report information about incidents of imminent threat. However, some Member States have transposed Article 5(2) ELD in a more stringent manner, obliging reporting of any imminent threat. Further, several Member States have established in their transposing legislation registration and publication requirements of ELD incidents. Box 3: ELD case examples showing different approaches towards significance threshold Case example 1: Sinking of a ship in the Upper Tisza Region (Hungary) A 1.5 ton motorboat half sunk at the camping site and gas oil leaked from its tank into the river Tisza. The competent authorities considered this case as a relevant environmental damage falling under the national ELD transposition law. Case example 2: Fire at ChemiePack on the 5th of January 2011 in Moerdijk (Netherlands) Polluted fire extinction water at the company ChemiePack (presumably an Annex III(7)(a) activity) and stored chemicals penetrated the soil and polluted the surface waters and water beds of the surrounding ditches and those of De Roode Vaart and the Northern Dock and the groundwater. The cleaning up measures taken amounted to costs of 65.4 million EUR. The Dutch competent authorities applied national (especially water and soil) protection law rather than the ELD transposition law and therefore did not report it as an ELD case to the national reporting point (thus for example not applying the baseline remediation and the public participation requirements of the Directive). Consequently, it was not counted as an environmental damage incident in the Dutch report pursuant to Article 18(1) ELD, but the fire and its impact was indeed mentioned there. Source: Information drawn and verified from national reports and presentations Type of environmental damage/imminent threat according to the three damage categories The Member States were to report the cases of environmental damage handled under national ELD transposing legislation according to the damage categories 'protected species and natural habitats', 'water' and 'land'. In many cases, a single damaging event concerned more than one environmental damage category. That means that the total number of affected environmental media exceeds the total number of cases. Overall, land damage incidents dominate with about 51.5% of all reported cases. Water damage incidents account for around 28.5% and biodiversity damage incidents for around 20% of all reported cases. Table 2: Confirmed cases of environmental damage or imminent threat pursuant to damage category Member State Protected species and natural habitats Water Land Austria 2 2 0 Belgium 0 1 0 Bulgaria 2 4 3 Cyprus 1 1 0 Czech Republic 0 0 0 Denmark 0 0 0 Estonia 2 0 2 Finland 1 1 0 France 0 0 0 Germany 27 42 10 Greece 7 29 47 Hungary 124 244 243 Ireland 8 2 0 Italy 6 8 7 Latvia 7 4 5 Lithuania 0 1 4 Luxembourg 0 0 0 Malta 2 0 0 The Netherlands 0 0 0 Poland 92 49 392 Portugal 0 6 7 Romania 0 1 4 Slovenia 0 0 0 Slovakia 0 0 0 Spain 0 11 11 Sweden 2 5 1 UK 7 2 11 In total 290 413 747 Protected species and natural habitats Protected species and natural habitats were damaged or under imminent threat to get damaged 290 times. However, it should be noted that Hungary and Poland count for more than two thirds of all biodiversity cases (216 of 290 incidents, followed by Germany with 27 incidents). Biodiversity cases are with around one fifth of all damage cases the least numerous. This is not surprising as this damage category was since its introduction at EU-level one of the most challenging novelties brought by the ELD. It still stands out for the EU-added value of the Directive, together with complementary and compensatory remediation as well as public participation and access to justice. Some Member States apply damage to protected species and natural habitats to the same or even to a higher extent as other damage categories, other Member States have experienced much less biodiversity cases. Three of the four pending cases in Ireland concern damage to protected habitats and species; in almost half of the German cases reported a damage of biodiversity was involved. In contrast for example, none of the eight cases reported by Portugal included such a damage or imminent threat thereof. Besides Portugal, eleven other Member States have not recorded any biodiversity incidents. Water 413 instances of water damage or imminent threat thereof were reported by Member States, making this category of damage less numerous than land damage but more numerous than biodiversity damage. However, Hungary alone counts for 59% (244 incidences) and Germany, Greece and Poland for 29% (120 incidents) and the remaining 12% (49 water cases) are spread between fourteen Member States. Eight Member States notified no water damage cases. In a considerable number of cases, damage to land was also accompanied by damage to water or imminent threat thereof. Land

Land damage and imminent threat thereof are more than half of all incidences reported by the Member States; in 747 instances soil has been damaged or threatened to be damaged. This result does not come unexpected because this damage category requires a lower remediation standard and demands less remedial action (as compared with water and biodiversity damage: there is no requirement for economic valuation and for complementary and compensatory remediation for soil damage). These reasons may contribute to the higher number of cases. However, the result is on the other hand not coherent with the fact that land damage under the ELD sets a significantly higher damage threshold than under pre-existing national legislation as it requires 'significant risk of human health' being significantly affected but not also a similar risk to the environment. The ELD Effectiveness Study does not recommend establishing EU-wide limit values for land damage as Member States currently use quite varying protection levels and number and types of substances upon which such levels have been established. A harmonised, EU-wide limit without replacing national regulations may lead to a very complex situation across the EU, sitting on top of varying national regulations. Replacement of national regulations on the other hand seems to be very difficult, as the failed adoption of the former proposed Soil Framework Directive has shown. However, as mentioned above, the ELD would probably be simpler for operators and national authorities in application if streamlined with national law, as land damage under the ELD is only triggered in case of 'significant risk of human health being adversely affected' and cannot alternatively also be triggered in case of 'significant risk of the environment being adversely affected', like in the majority of Member States. Other environmental media Some Member States include damage to air (e.g. Italy, Hungary) or damage to protected landscapes (e.g. Lithuania, Estonia). Other countries broadened the scope of biodiversity damage by including damage to flora and fauna that depend on an aquatic environment (Ireland and UK). However, just a few cases regarding these additionally protected environmental media have been reported by the Member States. Hungary reported 18 cases of air contamination; Italy stated that two instances of damage to the atmosphere occurred. The numbers are based on the scope of damage in accordance with the respective national laws transposing the ELD. Classification of damaging activities: Annex VI of the ELD requires Member States to provide an activity classification code for the liable persons. Annex VI does not require the use of a specific code but clarifies explicitly that the NACE code according to Council Regulation (EEC) No 3037/90 of 9 October 1990 on the statistical classification of economic activities in the European Community can be used. However, in the guideline prepared at the 11th ELD government expert group meeting in view of the national reporting exercise, it was emphasized that a classification of the activities pursuant to Annex III to the ELD would be very useful in order to evaluate better the effectiveness of the ELD at EU level. The classification done by the Member States is unfortunately not uniform, and hence not comparable. Fifteen Member States classified the liable activities according to Annex III to the ELD. Eight Member States used the NACE code of 1970 in either one of its revisions 1, 1.1 or 2, and four Member States used (also) a national code which would be equivalent to the NACE code while one MS described the activities in general terms without referring to a standardised code or to Annex III of the ELD. Some MS provided more than one classification in regard of damaging activities, some none. More detailed information on the economic classification systems used by the Member States can be found below under 'Member States using only a NACE code notification or no classification system'. Table 3: Classification system used by MS regarding confirmed or pending cases of environmental damage or imminent threat Member State Annex III NACE code National NACE code equivalent No classification system Austria x Belgium x Bulgaria x Cyprus x Czech Republic Denmark Estonia x x Finland x France Germany x Greece x x Hungary x Ireland x x Italy x Latvia x x Lithuania x x Luxembourg Malta x The Netherlands Poland x Portugal x Romania x x Slovenia Slovakia Spain x x Sweden x UK x x In total 15 8 4 1 Member States using Annex III classification Austria, Belgium, Bulgaria, Cyprus, Estonia, Finland, Greece, Ireland, Italy, Latvia, Lithuania, Portugal, Romania and Spain specified the liable activities according to Annex III in their reports and provided some indication as to whether biodiversity cases were treated under fault-based liability in accordance with Article 3(1)(b) ELD. The by far most frequently mentioned activity are "waste management operations" (Annex III(2) ELD) and "manufacture, use, storage, processing, filling, release into the environment and onsite transport of dangerous substances" according to Annex III(7) ELD with 44 and respectively 35 incidents caused. The "operation of IPPC installations" (Annex III(1) ELD) and "transport by road, rail, inland waterways, sea or air of dangerous or polluting goods" (Annex III(8) ELD) follow suit with 18 and respectively 15 incidents. Between five and eight incidents could be attributed to the following water-related Annex III activities: discharges of substances into groundwater subject to authorisation according to Council Directive 80/68/EEC (Annex III(4) ELD); discharges or injections of pollutants into surface water or groundwater which require a permit, authorisation or registration in pursuance of Directive 2000/60/EC (Annex III(5) ELD); water abstraction and impoundment of water subject to prior authorisation in pursuance of Directive 2000/60/EC (Annex III(6) ELD. Fault- or negligence-based liability pursuant to Article 3(1)(b) ELD for damages of species and natural habitats was established in 31 cases and is thus the activity with the third highest frequency in causing environmental damage. In some instances, the occupational activity responsible for the damage or for the imminent threat could be subsumed under more than one Annex III category. For example, in the Finnish Talivaara mine case, mining operations and metal industry was involved which falling under point 1, 3 and 5 of Annex III. In Italy, in total 5 cases concerned the activities mentioned in point 4, 5 and 6 of Annex III to the ELD. This should be taken into account when reading table 4 on the detailed Annex III-activities. Table 4: Number of activities under Annex III and Article 3(1)(b) liable for remediation or prevention of environmental damage

Member State 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Article 3(1)(b) Austria 2 1 1 Belgium 0 Bulgaria 4 Cyprus 1 Estonia 1 2 1 Finland 1 1 1 2 Greece 6 32 16 7 Ireland 2 1 7 Italy 3 8 5 5 5 1 4 Latvia 9 7 Lithuania 3 1 Portugal 2 1 5 Romania 1 4 Spain 2 7 2 In total 18 44 2 5 6 8 35 15 - - - - - - 31 It can be concluded that all numbers were used except for the activities mentioned at the end of Annex III. While number III(9) ELD ("operation of installations subject to authorisation in pursuance of Council Directive 84/360/EEC") became obsolete as it was integrated into the IED activity, now III(1), the two GMO-related activities listed in Annex III.10 and III.11 as well as "transboundary shipment of waste" (III(12) ELD), "management of extractive waste" (III(13) ELD) and operation of CCS-storage sites (III(14) ELD) have not been notified by those MS having provided data under Annex III. This may not necessarily mean that there was absolutely no case under these numbers as altogether only 167 cases of the total of 1,243 cases were classified according to Annex III and Article 3(1)(b) ELD, but it appears to at least reflect with a high likelihood a clear trend. On the other hand, it is known for example that MS had water related activities involved in environmental damage despite the receipt of a very low number of such notified activities. Member States using only a NACE code notification or no classification system The most relevant data for those Member States having notified activities either on the basis of the NACE code or a national equivalent to the NACE code or having not used a classification system within their notification is briefly summarised as follows: The classification done in the Polish report shows a considerable high number of incidents resulting from retail sale of automotive fuel (NACE code 50.5; 68 cases); wholesale of fuels (NACE code 46.71; 17 cases); manufacture of chemical products (NACE code 20.; 45 cases); land transport and pipelines transport (NACE code 45.; 61 cases, from which 33 concerned transport on roads); collection of waste (NACE code 38.1; 28 cases); electric distribution (NACE code 35.1; 36 cases); waste water treatment (NACE code 38.2; 11 cases). 64 times the perpetrator could not been identified. Other Member States using the NACE code to classify the activities mentioned among others, road construction; waste collection, treatment and disposal activities; wholesale of petroleum and petroleum products; freight transport by road; fuel distribution and fuel storage; manufacture of bio fuels; trade with fuels; food processing industry; and manufacture of chemicals. A rough analysis of the data provided by Hungary shows that in many cases (around 150) no classification was possible due to the fact that the perpetrator was unknown or a private individual. The following TEAOR'08 codes (which are equivalent to the NACE rev. 2 code) were mentioned frequently: 35.13- distribution of electricity (mentioned 85 times); 37.00 – sewerage (mentioned 26 times); 24. – manufacture of basic metals (mentioned 20 times; 11 of them concerned the production of aluminium); 38.11 – collection of non-hazardous waste (mentioned 13 times); 19.20 – manufacture of refined petroleum products (mentioned 14 times); 20. – manufacture of chemicals and chemical products (mentioned 9 times); 49.41 – freight transport by road (mentioned 12 times). Only Germany did not use a classification system for the liable activities nor categorize them according to Annex III ELD. Instead it described the activities responsible for the environmental damages. The analysis of the liable activities as outlined by Germany shows that most instances (18) were caused by biogas installations; around 14 cases were connected with some kind of manufacture, use or storage of dangerous substances; a lower number concerned the transportation of dangerous or polluting goods and discharges of pollutants into waters. Standard of remediation: The Directive provides for three different categories of remediation which complement each other, depending on the individual case: primary remediation, complementary remediation and compensatory remediation (explanation see above under 'Baseline'). As complementary remediation, where the same damaged natural resources and services cannot be simply re-introduced or re-produced, and compensatory remediation for interim losses between damage and full restoration, belong to the EU-added value of the Directive, the application of these high remediation standards is core to the quality of the ELD implementation. Member States were not required under the reporting obligation of the ELD to precisely report on the application of the three remediation categories and only very few have indeed included some indications. Therefore, the available data and information is haphazard and scarce, but the following conclusions can be drawn from the information sources to this evaluation. First, that there was much less application of 'complementary' and 'compensatory' remediation than of 'primary' remediation; and, second, that remediation is increasing while the absolute number of complementary and compensatory remediation cases appear to remain still very low. This finding does not indicate a highly qualitative implementation due to the low number of complementary and compensatory remediation cases. Judicial review: Only in few instances the confirmed ELD damage cases went into judicial review, with one notable exception (Poland: 44). The total judicial review cases in the EU without Poland would according to the notified data amount to about 20 cases. Table 5: Judicial review cases Member State Judicial Review Italy 0 Austria 2 Latvia 1 Belgium 0 Lithuania 0 Bulgaria 1 Luxembourg 0 Cyprus 0 Malta 1 Czech Republic 0 The Netherlands 0 Denmark 0 Poland 44 Estonia 0 Portugal 0 Finland 1 Romania 0 France 0 Slovenia 0 Germany 0 Slovakia 0 Greece 1 Spain 1-3 Hungary 5 (minimum) Sweden 1 Ireland 0 UK 1 Requests for action from citizens and NGOs according to Article 12 ELD: Only a small number of requests for action (above 30) was reported by the Member States - with the exception of Italy, which reported 93 such requests. The low number is not further surprising because the Member States communicated only a few cases in total. However, for Member States which have a higher number of cases, also a higher number of citizen's requests could have been expected can be presumed (as for example known for Poland, without a specification in the Polish report). Table 6: Requests for action under Article 12(1)

Member State Request for action Italy 93 Austria 4 Latvia 0 Belgium 0 Lithuania 0 Bulgaria 0 Luxembourg 0 Cyprus 0 Malta 1 Czech Republic 0 The Netherlands 0 Denmark 0 Poland 0 Estonia 2 Portugal 0 Finland 1 Romania 0 France 0 Slovenia 0 Germany 20 Slovakia 0 Greece 2 Spain 5 Hungary 0 Sweden 2 Ireland 9 UK 6 Duration of remedial action: The information on the duration and the average time of remediation is not fully representative as not all Member States provided complete and comparable data. On the basis of the available information gained from MS, it would seem that the average time from the initiation of the remediation process (as far as this date could be distinguished from the date only of detection or notification of the damage) until full remediation is about 12 months. This is based on a total of 484 cases across 15 MS that indicated the duration of remedial action. Given the high number of cases where the duration of remedial action is provided for by Hungary (153) and Poland (246), the average duration would increase to about 14 months if those two countries are excluded. The shortest duration of reported remediation was in several cases only one day and the longest duration lasted in some cases nearly for the whole reporting period (not counting even the many cases where remediation could not be completed until the end of the reporting period). The disparate duration of ELD remediation is not surprising, as primary remediation can be sometimes fixed in simple damage instances within relatively short time while in complex or large damage instances this could take longer than three, four or five years, with even some cases taking the whole duration of the six years-reporting period (large scale remediation cases are known to last sometimes for decades). Table 7: Duration of remedial action Country Average in months Lithuania 10 Bulgaria 7 Malta 1 Cyprus 12 Poland 10 Estonia 9 Portugal 18 Germany 6 Romania 9 Greece 12 Spain 10 Hungary 16 Sweden 7 Latvia 4 UK 4 Nota bene: this average is for some MS quite biased where a high percentage of remediation procedures could not be terminated until the end of the reporting period (for example 75% of the Lithuanian cases). Costs of remedial action: 12 MS reported on the costs of their cases, resulting in a total of 140 cases with information on the costs of remedial action. This means that the Commission obtained data about costs of environmental restoration on roughly 10% of all reported cases. This would seem representative by number but of these 140 cases 98 were reported by only one Member State (Hungary). The costs of remedial action would be on average at around €350,000 when the very few large scale damage cases are deducted (e.g. Kolontár/Hungary, Moerdijk/Netherlands). If furthermore all cases exceeding more than €1 million were disregarded (one Swedish case, one Greek case and one Spanish case), the average cost of remedial action would be around €42,000. This corresponds with a representative and accurate estimate (arithmetic mean value) for example available for Greece with €60,000 per ELD case. The provided figures seem to be reliable and to correspond also with similar data end experience of environmental damage in other areas. The range of costs is between €600 and several million of remediation costs for one case, showing also that several Member States do not regard only 'severe' instances of environmental damage to be covered by the ELD, but the arithmetic average turns as presented above around €42,000 per case if the few cases with excessively high costs are disregarded. Some Member States provide however the impression that they apply the Directive only on instances entailing excessive damage. This finding would again underline the need for a reasonable and coherent interpretation and application of the significance threshold. The average remediation costs per MS are presented in the chapter on efficiency further below. Immediately below are shown the total costs of remedial action in the EU within the reporting period, calculated for three different scenarios. Table 8: Costs of remedial action Total costs of remedial action Number of cases with indication of costs Average costs in Euro All reported cases (including Kolontár/Hungary, Moerdijk/Netherlands) 179,533,079 142 1,264,317 All reported cases excluding Kolontár/Hungary, Moerdijk/Netherlands 49,533,079 140 353,807 All cases below €1 million 5,821,238 137 41,490 6.ANSWERS TO THE EVALUATION QUESTIONS 6.1.Relevance Are the objectives of the Directive still relevant (i.e. do they still match current needs)? In the light of the recently published European Environment State and Outlook 2015 Report (SOER 2015), the objectives of the Directive remain highly relevant. The SOER 2015 points out that despite environmental improvements of recent decades, challenges that Europe faces with respect to protecting, conserving and enhancing the natural resources today are considerable. A key area according to this is "protecting the natural capital that supports economic prosperity and human well-being". The objectives of the Directive are still relevant and match the current needs. Environmental damage is occurring as a fact of life across the EU and will ever continue so, even if the ELD has contributed to a decrease of environmental damage through better precaution and prevention of damage, as stakeholders and Member States witnessed.

Are the key problems and concerns about preventing and remedying environmental damage still properly addressed by the ELD legislation? The key problems and concerns about preventing and remedying environmental damage appear to be in principle properly addressed by the national legislation transposing the ELD. However, as the implementation and evaluation studies have shown, deficits in the implementation of the Directive remain considerable due to lacking awareness of the Directive with practitioners and stakeholders, misunderstandings or unclarity, insufficient resources and expertise and partly inexistent registration of cases and missing accessibility of data on ELD cases (depending on the MS). Further, it appears that in some cases preventive action instead of primary remediation is used due to a wrong understanding of the difference. This together with the under-use of and complementary and compensatory remediation measures is a factor hindering the achievement of halting biodiversity loss by 2020 and cleaner freshwater resources in the EU. How relevant is the Directive to achieving high level of environmental protection and preventing/remedying environmental damage in the EU? Therefore, the Directive contributes to achieving a high level of environmental protection and preventing/remedying environmental damage in the EU. However, as the evaluation has revealed, the potential to achieve the objective is hampered by underdeveloped capacities and expertise, insufficient communication between the main stakeholders (operators, competent authorities, insurers, environmental NGOs), key concepts remaining unclear to practitioners and stakeholders ('significance threshold', 'preventive action', 'favourable conservation status') and lacking EU register of ELD cases, and similar practical measures and tools. 6.2.Effectiveness What progress have Member States made over time towards achieving the objectives set out in the Directive? Comments on possible measurement tool and benchmark as well as the related fundamental complexity (is more or less damage indicating effectiveness?) Progress made towards achieving the two main objectives under the ELD, prevention and remediation of environmental damage, needs to be assessed against the background of divergent ways of ELD application by MS, in particular regarding frequency and intensity. Those Member States which apply the ELD more often or regularly, make use of it at a fairly constant level. Moreover, as the evaluation studies, in particular the study on analysis of integrating the ELD into national legal frameworks, suggested that the following factors greatly influence the extent of practical application (number of ELD cases): publicly accessible registers of ELD cases; access of interested parties to submit comments and to cooperate with competent authorities; a secondary obligation of competent authorities to carry out preventive and remedial action if operators fail to do so; the repeal of overlapping national legislation; and the knowledge of the ELD by operators. Figure 4: Sources of obstacles and challenges to implementing the ELD regime

Legend for the term 'Conditions' used in the ELD Implementation Study: Complexity of the national transposing legislation; 'Difficulty to demonstrate that the significance threshold of the ELD is met; Difficulty resulting from the broad but non-exhaustive scope of the ELD; Need to demonstrate the liability of an operator; Inclusion of financial obligations for operators' Does the Directive lead to a level playing field in terms of preventing and remedying environmental damage across the EU? Is the scope of the Directive correct with regards to strict liability? Is the current scope working effectively pursuant to gained experience? The effectiveness of the ELD depends to a great extent on its scope, in particular on the strict liability standard. The Directive makes operators strictly liable who carry out dangerous activities listed in Annex III, i.e. if it can be established that they have caused the environmental damage without it being necessary to proof fault. In the process of the investigation of the causes of weak implementation (ELD Implementation Study 2012), the importance of the scope of strict liability became obvious, as particularly witnessed by the results of the ELD Effectiveness Study and the Biodiversity Damage Study. From the examination resulted, on the one hand, that a broadening of the strict liability standard to cover all economic activities (not only dangerous activities listed in Annex III ELD) will encompass more environmental damage being treated under the ELD. This will thus increase the level of environmental protection and the effectiveness of the Directive in particular with respect to biodiversity damage by replacing completely the fault-based liability standard. On the other hand, the ELD Effectiveness Study emphasized also that the significant draw-backs in terms of additional financial burdens on operators and an increase in insurance premiums or else financial security payments would need to be considered. Specific data are not available. It can be concluded that the principle decision (in line with the theory) to reserve strict liability to dangerous occupational activities while other occupational activities should remain being subject to a fault-based liability standard could be verified. Is extending strict liability beyond the current list in Annex III for preventing and remediating environmental damage by including certain activities (e.g. pipeline transport of dangerous substances, mining activities, shale gas operations) in the light of gathered experience (e.g. Coussouls de Crau-case in France) necessary or even beyond listed activities (as in certain MS)? It needed to be investigated whether the scope of strict liability as delineated in Annex III of the Directive is right by looking into practical experience showing a need to fill gaps in this list: For pipeline transport of dangerous substances outside of industrial establishments the Coussouls de Crau event in France has shown such a possible need. Further, in view of the objective to halt biodiversity loss, an extension of strict liability by activities concerning the introduction of invasive alien species could potentially assist this aim and prevent harm to human health due to some invasive alien species being vectors of diseases of directly causing health problems such as asthma, dermatitis and allergies. However, activities concerning invasive alien species fall often outside of occupational activities and the practical experience has in addition not shown sufficient evidence and finally human health damage remains as traditional damage also outside of the scope of the environmental damage. An extension of Annex III to cover shale gas/oil extraction or hydraulic fracturing was also considered, but as related activities are already covered by the current ELD scope under Annex III and as MS are currently called to fill potential gaps under subsidiarity action, other options will be examined (e.g. guidance) to address identified uncertainties. An extension to mining activities in general, beyond Annex III.13 (see for example the big accidents in Doñana/Spain in 1998 or in Baia Mare/Romania in 2000) would require additional financial security coverage by a sector which is according to the ELD Effectiveness Study considered to being already sufficiently regulated. Therefore, with the possible exception of pipeline transport of dangerous substances outside of industrial establishments the case for an inclusion of another Annex III activity is not compelling enough. However, CEFIC (the European Chemical Industry Council) raised some arguments against such extension: the majority of pipeline incidents (ruptures) would be caused by third parties and despite the availability of the third party defence under the ELD, this would be inconvenient and could be costly and may "incorrectly internalize socio-economic costs at the level of pipeline operators", taking account also of the high number of parties involved (pipeline operator, pipeline owner, materials owners using the same pipeline, land owners). Within biodiversity damage: Which conclusions can be drawn from a wider biodiversity scope covering also nationally protected species and habitats and a narrower biodiversity scope restricted to the Union scope (current split is half/half by MS)? Is it relevant with regard to effectiveness? The study looking into biodiversity damage recommended an extension of strict liability to cover all occupational activities which cause damage to protected species and natural habitats (instead of just the hazardous activities listed in Annex III). However, in general, the double liability standard of the ELD with strict liability for hazardous activities and fault-based liability for other activities appears to be right from an economic point of efficiency, as strict liability is more efficient in case of hazardous activities and a fault regime can suffice for situations not involving dangerous activities. Therefore, suggestions to extend the strict liability standard to all activities, in particular under biodiversity damage are not consistent with efficiency considerations. Furthermore, the additional financial burden of such an extension of the scope of strict liability on operators through a potential increase in insurance premiums or other financial securities should be taken into account. Therefore, an extended biodiversity damage scope does not appear to be the most effective result. Is the Scope of the Directive correct with regard to environmental damage? Has the current scope worked out to be right in meeting practical demands? Is an extension necessary/appropriate at EU level as in some MS? E.g. to include damage to air (as Hungary) or to protected cultural resources or to protected landscapes (some MS)? All categories of the scope as outlined in the liability scope-chapter above can be questioned. However, most often only the material scope is discussed (i.e. what kind of damage should be covered). Other questions are rarely addressed; in the 3rd ELD Stakeholder Workshop for example also the territorial scope was discussed in the context of extra-EU territorial issues (pollution from outside affecting the EU and vice versa). The initial decision to exclude for example health and property damage may not have been a good choice in terms of consistency with other regimes, in particular national liability systems, but it is stringent to exclude such categories of third-party damage because the ELD is aiming at remedying the pure ecological damage. Within the environment, the evaluation of the scope of the Directive indicated that extension to damage to air (which is sometimes covered at national level and was often raised within studies and meetings as an issue) may promote the polluter pays principle better and result in streamlining and harmonisation with national legislation. However, an extension towards inclusion of air may not only be technically challenging due to the nature of air pollution which may represent diffuse pollution, i.e. difficult to attribute to identifiable individual polluters, but may also have detrimental implications on insurance and other financial security instruments. It was also not considered appropriate to include cultural buildings, monuments, landscapes and seascapes as this would not lead to further simplification, streamlining and harmonisation due to the broad differences between these assets and the environmental damage under the ELD. To what extent is the significance threshold hampering the effectiveness of the Directive? In particular the significance threshold for imminent threat: can it hamper the Directive's trigger and thus effectiveness? The uneven application of the Directive in different Member States appears to be largely due to the different interpretation and implementation of the significance threshold of environmental damage. In addition, it should be noted that authorities, operators and insurers expressed the need for more clarity in this regard. It cannot be denied that the definition of the significance threshold can potentially hamper the effectiveness of the Directive and that it leads to an uneven implementation. The concern is particularly high with regard to the notion of 'imminent threat of damage' which triggers the requirement to prevent damage from occurring. Where MS require in a case of imminent threat of damage that it needs to be decided first whether the damage will be significant, it may be often too late to apply the Directive. Therefore an approach requiring a 'reasonable belief' instead of certainty that the damage may be significant, appears practical and increases the effectiveness of the Directive. This problem has been in particular addressed by the Biodiversity Damage Study. It is however useful to better clarify the notion of the significance threshold, or to be more precise about the three significance thresholds for biodiversity damage, water damage and land damage (see above chapter 2.2.4. on material scope); in particular, where there are wide differences due to the lack of a common understanding and uniform application. What is the relationship between the significance threshold for biodiversity damage, land damage and water damage? Are the significance thresholds appropriate? Which conclusions can be drawn from the divergent application of the significance thresholds for the effectiveness of the Directive?

While the ELD provides a list of helpful criteria in its Annex I for the determination of the significance of the biodiversity damage, such further criteria are lacking in the Directive for the determination of water damage and land damage. This may be worth an exercise within the relevant terms framing the definition of water damage under the Water Framework Directive (WFD) and Marine Strategy Framework Directive (MSFD). Research in the evaluation of the ELD explored the difference in the effectiveness between 'waters' or 'water bodies' as reference point for water damage. The Legal Analysis and the ELD Effectiveness studies pointed to the potential difference in application, as 'water bodies' often differ in size between Member States while 'waters' allows a more targeted use of the Directive in relation to its objective. The practice in Member States seems to be rather split in this respect. The current trigger seem to be higher for land damage pursuant to the wording of the Directive, but the numbers of relatively more notified land damage instances does not verify this assumption. There is no quick explanation for this result, it may be linked to the fact that authorities may be most familiar or find it simpler to use land decontamination standards they are used to than the remediation standards required by the ELD for biodiversity and water damage. The three categorical significance thresholds have to be determined on their own but should ensure a comparable level of application. Regarding land damage, the starting point for the determination of the significance of it is 'significant risk of human health' under the current ELD. Hence, there would not be much to be further specified as regards damage to land within the current legislation. Alternatively, the definition could be extended to include also 'significant risk to the environment', thus aligning it with most national systems, and lowering the relatively higher threshold compared with biodiversity damage and water damage. Apart from this, a more precise determination of land damage would need to refer to set limit values for certain pollutants in certain soil types etc., an exercise which may be very complex at EU level. While the task would be in principle feasible, the effort (costs) to be invested in the development of highly complex determination criteria for the significance threshold of land damage, varying from many different situations, regions and Member States appears to be disproportionate to the gain as an individual assessment may in the end be necessary even within a complex framework of determination criteria. It should be emphasized that even in the case of further determining and/or clarifying significance criteria, an individual assessment of the significance of the damage is always necessary. The complexity of it depends on various factors on the site, determined by the size and complexity (scope) of the damage, the type and size of the damaged natural resources, their regeneration capacity etc. but also on the availability of good data for the determination of the baseline condition and/or of risk analysis made before. Despite the progress made at EU level and in particular in certain MS in the last years, there seems to be overall a great further potential for the development of sectorial and individual risk analyses and data bases for the determination of the baseline condition. Summing up, the divergent application of the significance thresholds might hamper the level playing field for industries in the EU, hamper the development of adequate financial security instruments and markets and hamper overall the effectiveness of the Directive. Further clarification as regards the significance threshold could help all practitioners and stakeholders in the application and enhance the effectiveness of the Directive. 6.3.Efficiency What are the costs and benefits (monetary and non-monetary) associated with compliance with the Directive in the Member States and in the EU? Compliance costs of the ELD are pursuant to its main objective in the first place related to costs for measures to prevent and remedy environmental damage taken by the liable operators (internalisation of external effects). The total costs of the 137 cases where MS reported costs, amounted to €5,821,238 if five major losses are excluded (which amounted alone to a total of €173,711,841), as indicated above. These costs can be widened to costs of potential liable operators for taking precautionary measures in order to prevent any future environmental damage, most notably costs for taking out financial security in order to be able to bear potential liabilities related to the ELD. Further costs can be related to competent authorities for the setting up of the system, i.e. one-off costs at the beginning as well as some costs for the maintenance of the system and compliance promotion, such as awareness raising, information of stakeholders, training of officials, developing and providing of guidance and/or of supportive and capacity building tools for operators and officials (risk analysis tools, damage cost estimation tools etc.). Information on co