The Environmental Liability Directive,the Water Framework Directive and the Definition of ‘Water Damage’

The definition of water damage

The ELD divides the environment into three categories: protected species and natural habitats (in keeping with the HD), ³¹ water (marine and aquatic) and land (soil). ³² ‘Damage to the environment’ means a measurable, adverse change in a natural resource (that is, protected species and natural habitats, water, and land) or the measurable impairment of a natural resource service that may occur directly or indirectly. ³³ ‘Services and natural resource services’ refer to the functions performed by a natural resource for the benefit of another natural resource or the public. ³⁴ Except for its ‘natural resource service’ construct, the ELD uses WFD constructs to measure when water damage has occurred.

The construct of ‘water damage’ is established by combining the ELD and WFD and it refers to significant adverse effects on the ecological, chemical, and/or quantitative status and/or ecological potential of a the waters concerned. ³⁵ ‘Waters’ means all water covered by the WFD, based on its definition of a body of water. ^{36, 37} ‘Damage’ means a measurable, adverse change in the ‘ecological status’ of a body of water, which may also be assessed in terms of measurable impairment to a natural resource service. ³⁸ Here, ‘service’ refers to activity such as that of species communities, which results in functions that are beneficial to other natural resources or the public. ³⁹ The ELD does not define what ‘function’ includes with reference to ‘waters’. The WFD’s definition of ‘ecological status’ refers to the quality of the structure and functioning of aquatic ecosystems associated with surface waters, classified in accordance with Annex V. ⁴⁰ As the definition of ‘water damage’ is based on the WFD definition of ‘ecological status’ it is reasonable to conclude that the construct ‘function’, with regard to ‘waters’ in the ELD, refers to the definition of ‘functioning’ ecosystems in the WFD. Functioning aquatic ecosystems in the WFD are assessed through the quality elements found in Annex V, foremost the biological quality elements.

The water damage threshold

Ecologically, a threshold is the limit at which certain processes may start changing dramatically. It may be understood legally as a limit that, when crossed, necessitates certain legal requirements, such as measures that neutralise the deterioration and/or achieve baseline conditions. The WFD objective of ‘non-deterioration’ and the ELD construct of ‘water damage’ represent such legal thresholds. Whereas the threshold for ‘non-deterioration’ was clarified by the ECJ in Weser, ⁴¹ ‘water damage’ has not been similarly clarified. However, that damage to the environment has widespread effects was made clear in Case C-529/15, Folk, where the Advocate General and the ECJ concluded that damage arising from the ‘normal’ operation of an authorised activity may result in ‘water damage’ (especially if it occurred prior to the WFD). ⁴² However, the case revolved around access to justice with regard to ‘water damage’. The ECJ did, however, say that projects which have an adverse effect on ‘water’ must meet the conditions set out in Article 4(7) so they do not overstep the threshold of non-deterioration. Thereby, one way to determine when deterioration is significant is to determine when WFD Article 4(7) is not applicable to the adverse effects, which would also mean that a Member State is in breach of the WFD. ⁴³

The reference to Article 4(7) allows the ELD to determine when ‘water damage’ has not occurred. This is similar to the way in which ELD Annex I is constructed, which first describes which data should be used to determine significant adverse changes to protected species and natural habitats and then provides several examples of circumstances that do not have to be classified as significant (for example, negative variations that are smaller than normal natural fluctuations and damage from which the species or habitat in question will recover in a short time and without intervention). ⁴⁴ These examples speak of a low threshold for when the effects become significant. For example, negative variations that are larger than normal natural fluctuations could have a significant adverse effect on protected species and natural habitats.

The definition of ecological status

Even if the definition of ‘ecological status’ concerns the establishment of ‘good ecological status’, it is interlinked with the other ecological objectives of the WFD – ‘non-deterioration’ and ‘ecological potential’. It seems consistent to connect ‘water damage’ to the definition of ‘ecological status’ so it can be assessed consistently with the WFD. ⁴⁹

The WFD defines ‘ecological status’ as the expression of the quality of the structure and functioning of aquatic ecosystems associated with surface waters, classified in accordance with Annex V. ⁵⁰ Annex V’s normative definitions are reduced to three groups of quality elements: biological, hydromorphological and physico-chemical. Generally, the biological quality elements (phytoplankton, macrophytes and phytobenthos, benthic invertebrate fauna and fish fauna) are considered the most important, as they are the main elements that indicate the status of the structure ⁵¹ and functioning ⁵² of a body of water. The intention is that the biological quality elements should be able to indicate the stresses and effects of human activities, thereby making it possible to determine how far from ‘high ecological status’ a body of water is. The definitions of ‘good’ and ‘moderate’ status is cross-referenced with ‘high’; this establishes the expectations and conditions to which assessment, classification, and management must refer.

Hydromorphological quality elements are consistent with the biological quality elements at ‘good ecological status’, whereas the physico-chemical elements also require that temperature, oxygen balance, pH, acid-neutralizing capacity and salinity do not reach levels outside the range established to ensure the functioning of type-specific ecosystems. If the physico-chemical elements have ‘good’ status and specific non-synthetic and synthetic pollutants are within their limit values, ⁵³ it is assumed that the aquatic ecosystems will not be affected to such extent that the biological quality elements cannot maintain themselves over the long term.

Even if Annex V 1.2 is only a starting point for Member States and does not specify in detail the actual assessment and management of ‘ecological status’, it is the binding point of departure for the Member States as specification of the objectives to be achieved. ⁵⁴ It explains what the ecological objectives in Article 4 refer to and provides a certain flexibility regarding the diversity and uniqueness of aquatic ecosystems. As emphasised in the WFD preamble, there are diverse conditions and needs in the EU that need different solutions. ⁵⁵

Compared to the specification of ‘good ecological status’, the non-deterioration obligation has no further specification in Annex V. That ‘non-deterioration’ still refers to the quality elements found is implicit, as the status of a body of water may be ascertained following an assessment based on Annex V. The generality of the obligation is restricted to bodies of water for which the ‘ecological status’ is known, as otherwise, an activity or project that might negatively affect the status cannot be evaluated. ⁵⁶ Thus, for the obligation to function properly, the relevant quality elements must have been assessed in accordance with the WFD Annex V and implemented in a river basin management plan. If these requirements have been met, the obligation of non-deterioration then applies. ⁵⁷

The non-deterioration threshold

The key question concerning ‘water damage’ is what counts as a significant adverse change in the ‘ecological status’ of a body of water. The WFD has its own threshold objective, ‘non-deterioration’ and in Case C-461/13, Weser, ⁵⁸ which concerned further deepening and developement of the river Weser to allow for larger vessels to reach ports of the river, the ECJ defined what counts as deterioration under the WFD. As ‘water damage’ and ‘non-deterioration’ are similar, in that both refer to a threshold situation where a certain amount of deterioration prompts certain legal responses and in the ELD, ‘waters’ is based on the WFD conception of ‘ecological status’, it seems reasonable to conclude that ‘non-deterioration’ and ‘water damage’ are interconnected and should be consistently interpreted.

In Weser, the ECJ stated that the WFD’s non-deterioration threshold, is overstepped as soon as the status of at least one of the quality elements falls by one class, even if that does not result in a fall in the classification of the body of surface water as a whole. ⁵⁹ However, if the individual quality element is already in the lowest class, any deterioration constitutes a ‘deterioration of the status’ of the body of water as a whole. ⁶⁰ The ECJ definition of non-deterioration does not constitute significant deterioration in the sense intended by the ELD, ⁶¹ so a ‘deterioration’ may have an adverse effect, but one which is not significant. ⁶² A starting point for defining the ELD threshold is to identify whether, under the WFD, it is possible to establish when there is a significant adverse effect on a body of water, and not just a ‘deterioration of the status’/’an adverse effect’ of a body of water, as defined by the ECJ.

Under Article 4(7) of the ELD, WFD is a reference for when ‘water damage’ has not taken place. It would therefore seem plausible that a deterioration that cannot be included under Article 4(7) could result in ‘water damage’, which also constitutes a breach of the WFD non-deterioration obligation. The general requirement for applying Article 4(7) is that deterioration is the result of new modifications to the physical characteristics of surface water. ⁶³ If the deterioration is not new, the only options for exempting the activity are to classify the body of water as heavily modified or artificial, ⁶⁴ or to exempt it through Article 4(5) if the activity fulfils the criteria of these two articles. However, this only changes the elements of assessment and the positive objective of the body of water, not the deterioration threshold itself. ⁶⁵ The other requisites of Article 4(7) do not concern the ecological threshold of deterioration under the WFD, but instead apply social elements to determine when the exemption is applicable, such as overriding the public interest. Article 4(7) thereby has a limited scope as it only applies to new modifications to the physical characteristics of a body of water. Deterioration that follows because of other modifications may be classified as both ‘water damage’, according to ELD and deterioration, according to WFD. It is noteworthy that the only accepted reason for the deterioration from ‘high’ to ‘good’ ecological status is ‘new, sustainable human development’ and not overriding public interest.

Article 4(6) of the WFD, which exempts temporary deterioration from the non-deterioration prohibition, could also help to determine when a significant adverse effect occurs, even if it is not mentioned in the ELD. Temporary deterioration in ‘ecological status’ is allowed if this is the result of circumstances of natural origins or force majeure, which are exceptional or could not reasonably have been foreseen. There are several other conditions connected to this exemption, but it is vital that all practicable steps be taken to prevent further deterioration of impacted and adjacent bodies of water. The deterioration must be reviewed annually and the body of water should be restored to its status prior to the deterioration, as soon as reasonably possible. Article 4(6) is thereby constructed similarly to Article 4(7) but has one element which might indicate when deterioration is significant. When an unforeseeable accident occurs, all practicable steps must be taken to prevent further deterioration in status to avoid compromising the WFD objectives for other bodies of water unaffected by those circumstances. ⁶⁶ When deterioration compromises the achievement of the WFD objectives for other bodies of water, it would seem to be significant, since the exemption of Article 4(6) is not applicable. Since Article 4(7) does not apply to temporary deterioration, it would be a breach of the WFD if deterioration in one body of water compromises the achievement of the WFD objectives for others. Article 4(8) specifies that the actualisation of exemptions, referring to Article 4(3)(4)(5)(6)(7), should not compromise the achievement of the WFD environmental objectives in other bodies of water.

In Weser, the Advocate General discussed various theories of ‘deterioration’ and later chose to understand non-deterioration in terms of each quality element class. The ECJ and the Advocate General rejected the deterioration result when classifying a body of water into a lower class (the status classes theory). ⁶⁷ They rejected the ‘classes’ construct, because classification of a body of water follows the lowest value of the applicable elements, in conjunction with the ‘one out, all out’ rule, which would allow for deterioration of all elements with higher values. ⁶⁸ The choice was between two clear thresholds and the ECJ preferred the more stringent one. The less stringent threshold, the ‘classes’ construct, definitely seems significant. Since, an adverse effect on a body of water refers to the deterioration of a body of water, according to Weser, it would not be out of place to use the ‘classes’ construct as a reference for the ‘water damage’ threshold.

The Definition

In Article 2(1)(b)(i) ‘water damage’ is defined as damage that significantly and adversely affects the ecological, chemical, quantitative status or ecological potential, as defined in WFD. In Weser, the ECJ clarified that the WFD’s assessment and monitoring regimes are important parts of the non-deterioration obligation, when it emphasised that deterioration is not a question of class, but that each quality element used to classify a body of water, in accordance with Annex V, is important when determining the ‘ecological status’ secured by non-deterioration. ⁶⁹ One of the outcomes of Weser is that not only did the ECJ define the assessment resolution on deterioration for the WFD, but it also defined the resolution of ‘water damage’ where the WFD is applicable. Therefore, the normative definitions of Annex V explain how aquatic biodiversity should be simplified and assessed under both the WFD and ELD.

It is worth noting that due to the links between the WFD and ELD, the ELD system of liability includes aquatic ecosystem structures and functioning. If the operations of an activity listed under Annex III have a significant adverse effect on the functioning of the ecosystem of a body of water, the party responsible may be responsible for restoring the ecosystem. In Case C 529/15, it appeared that fish fauna that could not maintain ‘good ecological status’ because of the water regime imposed by a hydropower station; achieving ‘good’ fish fauna status seemed to demand hydromorphological changes to the body of water. Under these conditions, necessary measures involve re-establishing the condition of the body of water before the water regime was altered by the hydropower station, to achieve baseline conditions and to ensure that the ecosystem of the body of water can resume functioning (for example by assessing through age the structure of the fish communities). The obligation to implement this type of measure depends on whether the threshold of ‘water damage’ is overstepped.

The Threshold

A clear threshold for ‘water damage’ is necessary for clarifying when measures must be implemented to achieve baseline conditions for bodies of water. This should include a clear differentiation from the threshold for ‘non-deterioration’.

In Weser, the ECJ developed the non-deterioration threshold for bodies of water and the deterioration threshold is the status class change of a quality element used to assess a body of water. ⁷⁰ This means that Member States may, at their discretion, allow for deterioration in each class and, in some instances, apply various exemptions, ⁷¹ which makes the threshold seem a reasonable baseline for the more ambitious objective of ‘good ecological status’. If translating the systematisation of the non-deterioration threshold to ‘water damage’, a certain level of impact would be accepted before it became necessary to compensate for the impact.

If ‘adverse change’ refers to deterioration as defined in Weser, ⁷² deterioration corresponding to the ‘classes’ theory seems significant and still builds on the WFD conceptualization of ‘non-deterioration’. However, since in some instances the ‘classes’ construct is comparable to non-deterioration, when the poorest quality element drops one class, it seems reasonable to equate the construct of ‘water damage’ with the deterioration of each quality element by one class, in keeping with Annex V, for the deterioration to be significant. This would clearly differentiate ‘non-deterioration’ from ‘water damage’.

If deterioration by a full class corresponds to ‘water damage’, two classes of bodies of water that may need a different threshold: bodies of water with high status and those with the lowest status. In Weser, the Advocate General observed that, concerning bodies of water in the lowest class, both the deterioration of the status of a body of water and the deterioration of one quality element exclude the lowest class from the scope of deterioration. ⁷³ At some level, the deterioration of a body of water in the lowest class must not only breach the WFD non-deterioration objective, but also count as water damage according to the ELD. The ELD threshold could refer to deterioration where all the quality elements of a body of water not having ‘bad status’ deteriorate by one class and the quality element with ‘bad status’ deteriorates measurably. If all the quality elements have ‘bad status’, then measurable deterioration of all the quality elements could equate to ‘water damage’. This differs from the description in the WFD, where change in each quality element counts as deterioration. ⁷⁴ Still, it may be difficult to define the difference between the thresholds for ‘non-deterioration’ and ‘water damage’ for bodies of water where all the quality elements are in the lowest class. Here, it may be necessary to use nearby bodies of water as indicators of ‘water damage’ and when the objectives of these nearby bodies of water are compromised, according to the WFD, those directly affected by the deterioration reach the threshold of ‘water damage’.

If the threshold developed for ‘water damage’ is accepted and ‘water damage’ occurs, and neighbouring bodies of water also deteriorate, but not to such an extent that the threshold of ‘water damage’ is overstepped, under what directive should this be managed? Since the ELD scheme for achieving baseline conditions is more advanced, the ELD framework seems more appropriate for remedying ‘water damage’ than the WFD. ⁷⁵

Also, not applying the ELD to managing the ‘water damage’ incident would seem to be a strange exception. It would be more consistent to suggest that ‘water damage’ deterioration be managed under the ELD to achieve baseline conditions, including other bodies of water where the deterioration is ‘non-deterioration’ only within the framework the WFD. Likewise, bodies of water where the ‘non-deterioration’ threshold is not overstepped by the ‘water damage’ incident, but some other WFD environmental objective is compromised should also be part of the ‘water damage’ area. This allows for consistency and a coherent approach to ‘water damage’ within river basins where there are both small and larger water areas.

Should bodies of water with ‘high status’ have a different threshold, compared to those with lower status? Only Article 4(7) requires them to receive greater protection from deterioration. In the WFD, only bodies of water from which drinking water is abstracted – not those with ‘high status’ – are required to ensure that there is necessary protection. ⁷⁶ Therefore, the WFD does not indicate that the construct of ‘water damage’ should be applied differently to ‘high status’ bodies of water, compared to those with lower status. Should bodies of water that hold drinking water have a different threshold for ‘water damage’? The WFD does not indicate this; instead, these should be protected so that a ‘water damage’ incident becomes extremely unlikely.

Applying these conceptualizations of ‘water damage’ and ‘threshold’ would give Member States an area of discretion in which to address deterioration of bodies of water according to the WFD; if deterioration is significant, they may then turn to the ELD framework. So, the analysis suggests that, under the ELD, ‘water damage’ is significant and results in measures for achieving baseline conditions under the following circumstances:

When all the quality elements used to classify a body of water, according to Annex V, deteriorate by one class.

Overstepping any of these three thresholds for ‘water damage’ would risk an irreversible deterioration in the populations, communities, and taxa affected, and disturb the ecosystem functioning of the site. Using this type of threshold to determine compensation measures would treat the overarching construct of ‘environmental damage’ as a serious incident, while differentiating it from ‘non-deterioration’, which, because of its regulatory nature, should be more stringent. If these are not the circumstances surrounding the deterioration, there is no ‘water damage’ and measures to improve the status of the body of water should take place according to the WFD.