A business does not always have to pay for pollution
It may be released not only by the passage of time, but also, for example, if the pollution was caused by another entity or resulted from compliance with an order by public authorities.
Environmental regulations have a significant impact on business. Entities that violate the regulations face civil, criminal and administrative liability. Under environmental law, administrative liability is particularly important, and entails various legal sanctions that may be imposed on a business that causes harm to the environment.
These sanctions include primarily various types of administrative decisions that can bring operations to a stop (such as withdrawal or limitation of environmental permits), administrative fines, administrative damages, as well as a duty to prevent or remediate harm to the environment. These sanctions may be imposed on individuals as well as corporate entities, typically by administrative authorities. Unlike under criminal or civil law, environmental liability generally does not depend on a showing of fault on the part of the business. A causal relationship between the action of the business and harm to the environment is sufficient.
Of the tools indicated above, probably the most important for assuring a high level of environmental protection is the duty to prevent and remediate environmental harm. This is also one of the most burdensome measures for a business that has caused environmental harm. The cost of preventive and remedial measures may be high.
Under Polish law, the rules for prevention and remediation of harm to the environment are primarily set forth in the Act on Prevention and Remediation of Environmental Harm dated 13 April 2007 (also known as the “Remediation Act”). The Remediation Act enables enforcement of liability for most types of actions by businesses whose operations may have an impact on the environment and which have caused environmental harm or present a direct threat of environmental harm.
The act provides a comprehensive system for prevention and remediation. To a large extent, it codifies the “polluter pays” principle, under which the party causing harm to the environment (such as soil or water contamination) should bear the costs of preventing and remediating the environmental injury. Nonetheless, in certain circumstances the liability of a business for harm to the environment may be lessened or excluded.
First, the duty to prevent or remediate harm as governed by the act does not apply if more than 30 years have passed since the release or other event causing harm or an immediate threat of harm to the environment.
Second, a business that does contribute to pollution may be released from liability for the costs of preventing or remediating environmental harm if it can demonstrate that the harm was caused by another entity and occurred despite its own compliance with appropriate safety measures. The situation is similar if the harm was caused by the company’s compliance with an order issued by the public authorities, but in that case the exclusion does not apply if the order resulted from a release or other event caused by the business in question.
Third, the environmental protection authority may decide not to seek reimbursement of all or part of the costs of conducting preventive or remedial measures if it is unable to identify the business that caused the environmental harm, or if it cannot execute against the business in question (e.g. because of bankruptcy) or if it determines that execution will be unsuccessful or the costs will exceed the amount that can be recovered.
Fourth, if the environmental protection authority has conducted preventive or remedial measures, the statute of limitations on its claim against the perpetrator for reimbursement of the costs is 5 years from the date the measures are completed or the perpetrator of the environmental harm is identified. If neither of these events occurs, there is a kind of limitations period that will run out 30 years after the release or other event causing the harm. Polluters should not count on leniency from the environmental authorities, however. They act in furtherance of an important public interest (environmental protection), and any inaction on their part in failing to seek reimbursement of costs could be regarded as dereliction of duty, which is subject to criminal sanctions (up to 3 years’ imprisonment).
The examples discussed above are situations in which the liability of a business whose operations have an environmental impact is limited or excluded under the Remediation Act. It should be stressed, however, that limitation or exclusion of the liability of a business under the Remediation Act has no influence over potential civil or criminal liability. The civil and criminal liability regimes contain their own circumstances that may exclude or mitigate a polluter’s liability. Although in certain circumstances (such as running of the statute of limitations) such liability may be avoided, with respect to any environmental injury a careful analysis is required of the excluding or mitigating factors under each of the three liability regimes (civil, criminal and administrative). The regimes operate independently of one another, which means that a polluter may not only be required to remediate (administrative liability under the Remediation Act), but may also be subject to imprisonment (criminal liability) and required to pay damages to the injured party (civil liability). This is why each specific situation requires a comprehensive assessment under all three liability regimes.
Bartosz Kuraś, Environmental Law practice, Wardyński & Partners