1. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 1 Environmental Liability and Financial Provision Finola McCarthy, Partner, 29 June 2016

2. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 2 Scope of Liability Legal liability for environmental damage Statute and common law Criminal and civil Wide scope for liability Waste Management Acts Water Pollution Acts Licensing regimes - Industrial Emissions, IPPC, Waste (EPA Act) Environmental Liability Directive Regulations 2008 (“ELD”)

3. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 3 Criminal Liability Sample of offences EPA Act: s. 86(6) – offence to breach a condition of a licence s. 8 – offence to breach any provision of the Act including the requirement to hold a licence WMA Act s.32(1) – holding, transporting, recovery or disposal of waste in a manner that causes or is likely to cause environmental pollution s 32(2) – offence to transfer waste to an unauthorised person s. 39(1) – disposal or recovery of waste at a facility unless it is in accordance with the licence/permit Strict liability Potential liability of directors, managers, secretary or any other officer: “consent, connivance or approval or facilitating neglect”

4. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 4 Civil Liability EPA Act: s.99H (inserted by s.15 POE Act 2003) confers powers on “any person” to apply to High Court or Circuit Court “where an activity is being carried out in contravention of the requirement of this Act” no requirement to prove environmental pollution court has broad jurisdiction to grant reliefs WMA: s57 & 58 application by “any person” Court has power to grant orders restrict activity “which has caused or is likely to cause environmental pollution” may order mitigation measures

5. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 5 Financial Provision - Background ELD requires Member States to encourage financial mechanisms in case of insolvency Ireland’s position: “Risks to the environment are better addressed through strict licensing and enforcement systems and where appropriate private financial security mechanisms. IPPC and waste licences include financial provision requirements as a condition of the licence.” Financial security to meet liabilities in case of insolvency.

6. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 6 Relevant Powers re Financial Provision EPA has discretion: EPA Act 1992: “such financial provision as the EPA may specify (which may include the entering into a bond or other form of security) as will in the opinion of the EPA be adequate to discharge the financial commitments or liabilities” (S.83(6)(ii)) Waste Management Acts EPA may attach a condition requiring the making and maintenance of financial provisions as may be required (S.48) Minister has power to make regulations On the nature of the FP which EPA can require and Matters that EPA must have regard to when determining financial provision

7. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 7 EPA Guidance EPA Guidance on Costing and Assessment of Liabilities 2014 Risks of environmental liabilities (ELRA) Closure and restoration costs (CRAMP) EPA Guidance on Financial Provision for Environmental Liabilities 2015 ELRA and CRAMP is used as basis for making financial provision EPA Additional Guidance on environmental impairment liability insurance 2016

8. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 8 EPA Guidance – Types of Financial Provision Must be secure, sufficient, available when required Five instruments “individually, or in combination can be used to achieve an acceptable financial provision” EPA templates 1. Secured Fund “suitable for all liabilities including inevitable closure costs” Ranks as a fixed charge in favour of EPA 2. On demand bonds “suitable for all liabilities including inevitable closure costs” As good as cash

9. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 9 Types of Financial Provision 3. Parent company guarantee “Generally suitable, … for liabilities but not suitable for inevitable closure” Financial strength of guarantor must be approved by EPA. Legal opinion if parent is outside the jurisdiction Template provides if surety breaches the guarantee, the licensee is required to suspend all activities on receipt of written notice…

10. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 10 Types of Financial Provision 4. Charge on Property Suitable for all liabilities First ranking charge Only accepted as partial fulfilment Only 30% of property’s value may be utilised

11. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 11 Types of Financial Provision 5. Environmental Impairment Insurance Not suitable for known liabilities Potentially acceptable for unknown liabilities, i.e. liabilities from incidents Cover for the licenced facility/activity (to the amount determined by the ELRA) must be ring-fenced from the cover for the other elements of the business Must extend to liability under ELD – must be ring- fenced from cover for other liabilities (eg personal injuries, damage to private property, business interruption) Section 62 Civil Liability Act

12. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 12 Cases EPA v Behans Land Restoration Limited (Naas District Court January 2013) Pleaded guilty to various failures to comply with waste licence Failed to make financial provision to the satisfaction of the Agency to cover any liabilities identified Fine €2,000 and EPA costs of €2,000

13. CORK DUBLIN GALWAY LONDON WWW.RDJ.IE 13 Cases EPA and CLM v Greenstar Holdings & Others (High Court 8 April 2014) landfills operated by Greenstar claim by EPA to €12m in accounts of Greenstar which the receiver had transferred to lenders argued monies collected as gate fees were required to be used solely for remediation, restoration and aftercare and should not be available to the bank as security held that the legislation (section 53A of the Waste Management Act) did not restrict the use of the monies by the operator and noted that the EPA had the power to impose a condition to provide financial security in the waste licence

14. Finola McCarthy Ronan Daly Jermyn 2 Park Place City Gate Park Mahon Point Cork Tel.: 021 480 2700 Email: finola.mccarthy@rdj.ie