Clarification on environmental liability – judgment of the court of justice of the European Union

On 9 July 2020, the Court of Justice of the European Union (the Court) provided for clarifications regarding Directive 2004/35/CE on environmental liability with regard to the prevention and remedying of environmental damage. When deciding on a reference for a preliminary ruling by the Federal Administrative Court of Germany, the Court had to interpret Directive 2004/35/CE and the German laws transposing it, in particular the law on the prevention and remedying of environmental damage and the law on nature conservation and care of the countryside. In the German system of environmental liability, the law on the prevention and remedying of environmental damage forms part of the redress under public law. The redress under public law is complemented by liabilities under private law that may arise for damages sustained by individuals.

On 9 July 2020, the Court decided that public law entities also may be liable for environmental damage caused by tasks performed in the public interest by virtue of a statutory mandate, such as the operation of a pumping station for draining agricultural land. The Court also emphasized the meaning of the “polluter-pays” principle for the interpretation of Directive 2004/35/CE.

Background: The underlying case

The Court’s judgment concerns a case pending before German courts: In the years 2006 to 2009, part of the Eiderstedt peninsula in the western part of Schleswig-Holstein, Germany, was designated as a “protected area” partly because of the presence of the black tern, a protected water bird. According to the management plan, the protected area for this species is still predominantly managed traditionally as a grassland area on a large scale. The Eiderstedt peninsula requires drainage for habitation and agricultural use. For this purpose, a public law entity operates a pumping station that drains the entire association area. A plaintiff held the operator liable for environmental damage to the detriment of the black tern through the operation of this pumping station. Germany’s Federal Administrative Court submitted the question of how “normal management of sites” in Annex I to Directive 2004/35/CE is to be understood. Negative variations resulting from normal management do not have to be classified as significant damage under Member States’ laws. The significance forms part of the definition of environmental damage under Article 2 (1) of Directive 2004/35/CE.

Interpretation of the court

In the German language version, “normal” seems to correspond to management of sites as defined in habitat records or target documents only and not to management of sites as carried on previously by owners or operators. The English language version, for instance, refers to “normal management of sites, as defined in habitat records or target documents or as carried on previously by owners or operators.”

In its judgment on 9 July 2020, the Court reiterated some general principles relating to interpretation: As to Directive 2004/35/CE, the Court emphasized, in line with “settled case-law of the Court,” that the wording used in one language version of a provision of EU law cannot serve as the sole basis for the interpretation of that provision, or be made to override the other language versions in that regard. The reason for this reminder is a deviation of the German language version in Annex I to Directive 2004/35/EC with the other language versions. According to the Court, it follows that the German language version of the second indent of the third paragraph of Annex I to Directive 2004/35 must be read as meaning that, as in the other language versions, the word “normal” must relate directly to the word “management” and that the term “normal management” must relate to both alternatives of the second case provided for in that indent.

Also, on the scope of exceptions that would follow from the German language deviation, the Court emphasized that the Member States would have the power to exempt operators and owners from all liability merely because damage has been caused by previous management measures and, therefore, irrespective of whether those measures are normal would compromise both the principles and the objectives underlying that directive. The Court reminds of the requirements following from precautionary principle and the “polluter-pays” principle.

Therefore, normal management of a site may result from a previous practice that is carried out by the owners or operators. That second alternative thus covers management measures which, because they have been carried out for a certain period of time, may be regarded as usual for the site concerned, provided that they do not call into question compliance with the objectives and obligations laid down in the Habitats Directive and the Birds Directive.

Concept of “occupational activity”

Another noteworthy point is that the Court held that the concept of “occupational activity” under Article 2 (7) of Directive 2004/35/EC is not restricted to activities that are market-related or competitive in nature. Instead of taking a purely economic, commercial, or industrial view, the Court applies a broad meaning and also includes non-profit-making public activities carried out by public legal persons in the scope of “occupational activity.”

Outlook

The judgment is noteworthy in its notion regarding interpretation of the language versions of Directive 2004/35/EC. Furthermore, the Court emphasized the meaning of the “polluter -pays” principle for the interpretation of the Directive. For public law entities the judgment means that they can be subject to environmental liability under the laws and regulations transposing the Directive in national law.

 

 

Authored by Matthias Schweiger and Stefan Mayr

 

 

 

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