Policy-brief on environmental liability

Each state shall have efficient mechanisms in the field of environmental protection and conservation encouraging compliance with legislation, preventing future violations, reimbursing the inflicted damage. One of the mechanisms of ensuring compliance with environmental norms is environmental liability that is real, proportionate and adequate to the damage inflicted on the environment. The ultimate goal of legal liability is to preserve or restore public good for the protection of which legal regulation was established, in this case – to protect the environment. Currently, legal liability in the field of environmental protection does not achieve its goal.

1. Challenges of the sector since 2014

Ukraine has been an independent state for a quarter of a century. However, the institute of environmental liability has not undergone any considerable changes since the Soviet times. As such it fails to ensure compliance with the requirements of the environmental legislation in the modern conditions of market economy and achieving its goal – conservation or restoration of the environment or some of its components.

The defining factor of environmental management in Ukraine is the lack of a sufficient level of environmental culture. As a result, average citizens do not share even basic ideas of the environmental laws and damages caused by violations of these laws to nature, economy and public health. Combined with the difficult economic situation, it contributes to the prosperity of illegal amber extraction, mining of other minerals, illegal logging and so on.

The politicians and officials are involved in big business and are rarely interested in a well-functioning environmental liability institute. On the other hand, the attempts to use stronger punishments for the most frequent environmental offences committed by physical persons are negatively perceived by the voters, therefore, politicians do not lobby them.

2. Successes of the reform since 2014

In 2014 Ukraine signed with the European Union the Association Agreement. This agreement emphasizes sustainable development, well-grounded and rational use of natural resources, priority reimbursement of environmental damage and payment of fines by those polluting the environment. In the field of environmental protection, the Agreement places on Ukraine a number of commitments, which include, in particular, institutional reform to ensure real fulfillment and implementation of environmental legislation, which should include the reform of the institutes of legal liability and environmental control. Unfortunately, certain political forces in the parliament and the government impede the implementation of European integration policy and legislation, and as of 2018 many of the obligations under the Environmental Protection Agreement remain unfulfilled or not properly implemented.

In 2018 the Ministry of Environment proposed a draft law which among other things increased fines for some environmental offences, jet this draft has not been heard by the Parliament yet.

3. Next steps in reformation of the sector

The reform of environmental liability aims, primarily, to provide the means and the opportunity for conserving or restoring the social welfare it is designed to protect, in this case – the environment or some of its components. With this in view it is suggested to amend the respective regulatory acts which would enshrine the requirement to direct all the money accumulated as the result of application of the mechanisms of legal liability in the field of environmental protection (fines, amounts of reimbursement for the damage inflicted on the environment and benefit gained illegally) at restoration of the components and improvement of the condition of the environment affected as the result of the illegal action.

All the three types of legal liability (criminal, administrative and civil law) will also apply to business. Bringing to administrative account will become possible due to adoption of a special law that will enshrine the corpus delicti of administrative offences in the field of environmental protection, for which corporate entities will be brought to account, as well as which will regulate the procedure of imposition of such liability. The possibility of applying measures of criminal law nature (fine, property seizure, liquidation of the legal entity) to legal entities for crimes against the environment committed by their officials will be provided by amending of the Criminal Code of Ukraine.

The activities within the reform also presuppose expansion of the list of illegal actions (offences and crimes) in the field of environmental protection for natural persons as well as considerable increase in the rates of sanctions for such offences for the whole range of entities. These activities intend to achieve another component of the goal of environmental liability, that lies in punishing the offender, correcting it, preventing similar offences from being committed by it and other entities.

Implementation of the reform presupposes improvement of the valid and development of some new legislative acts, holding consultations with stakeholders as well as training and awareness-raising activities, and that will not incur any substantial costs for the state or the donor. Nevertheless, the reform of environmental liability will result in increased level of compliance with the requirements of environmental legislation by private entities and businesses, as well as gradual improvement of the environmental condition. This will, in its turn, lead to reduced expenses of the state and local budgets, spent annually on environmental needs, reduced load on tax-payers and the need to involve credit facilities from international financial institutions into the field.

As the result of consultations with stakeholders it has been identified that expansion of criminal liability on to business currently will not yield the desirable effect due to the fact that ordinary business structures do not attach significant importance to corporate reputation. An opinion was expressed that when faced with the threat of criminal prosecution a legal entity not caring too much for long-term good reputation in the market will transfer its assets to another newly established entity, thus actually evading liability under the criminal law.

Also, it was decided to reject the idea of providing the controlling environmental authority with a right to terminate the activity conducted with violation of environmental requirements in the nearest future, following administrative procedure (without addressing court), due to current absence of a public institution capable of performing this function adequately and with minimum risks of corruption.

4. The cost of non-doing (non-implementation of the reform)

Currently, sectoral reforms in the field of environmental protection are actively being implemented in Ukraine. New laws on environmental impact assessment and strategic environmental assessment have been passed recently. A new legal framework for waste management is being currently developed. Nevertheless, no new legal regulation, no matter how progressive it is, will function adequately in the conditions of absence of an efficient system of state enforcement.

Maintaining environmental liability at its current state will further pollution and degradation of the environment as well as irreparable loss of its valuable components. This will impact lives and health of the population as well as financial situation of the state. According to the data of the World Health Organization for 2016, Ukraine ranks fourth in Europe by number of deaths per 100 thousand persons (137 deaths) resulting from air pollutionⁱ. To compare, in the neighboring Poland and Slovakia this figure makes respectively 76 and 59 cases, and in Austria – only 39 out of 100 thousand deaths. Analysis of drinkable water, made by private laboratories in Kyiv region, showed that out 15.6 thousand samples of water taken from the region’s supply wells and wells, respectively in 21% and 36 % of cases water was polluted. In Dnipropetrovsk region the results of analysis of about one hundred fifty supply wells showed that water was polluted in 71% out of themⁱⁱ.

5. Impact of the proposed changes on each citizen as “final consumer”

Both average citizens and perpetrators of environmental laws will benefit from the reformed environmental liability. In the long run, implementation of the reform will allow them to live in a healthies environment and enjoy multiple environmental services. Orienting economy towards sustainable development will offset any temporary loss of income, previously gained by the way of overlooking environmental regulations.