Why environmental liability regimes in the United States, the European Community, and Japan have grown synonymous with the polluter pays principle.

• Author: Larson, Eric Thomas

ABSTRACT

Significant concern about the harm to the environment caused by the disposal of hazardous wastes and detrimental materials abounds. In response, regulators around the globe have struggled to develop environmental liability regimes that effectively remediate contaminated sites. Regulators in the United States, the European Community, and Japan have addressed environmental contamination concerns by adopting the polluter pays principle as a core component of their domestic environmental liability regimes. The polluter pays principle demands that the polluter bear the burden of remediating the waste it generates. The impetus for adoption of the polluter pays principle in the United States, the European Community, and Japan is somewhat unclear. Certain sources and trends, however, have likely contributed to and informed the principle's adoption. These sources include the prevalence of international treaties, the increasing availability of information concerning the environment, domestic and foreign laws that influence the conduct of other countries, nongovernmental organizations that exert pressure on regulatory bodies, bilateral and multilateral development institutions that condition their lending practices on the friendly treatment of the environment, and the growing standardization of environmental policies worldwide. This Note addresses these sources, and explores the manner in which they have influenced and encouraged the United States, the European Community, and Japan to embrace the polluter pays principle as an effective tool to achieve environmental waste remediation.

TABLE OF CONTENTS I. INTRODUCTION II. THE POLLUTER PAYS PRINCIPLE A. History of the Polluter Pays Principle B. Interpretations of the Principle 1. Equitable Side of the Principle 2. Extensions of the Principle in the Multiple Polluter Context III. THE FRAMEWORK AND DEVELOPMENT OF THE POLLUTER PAYS PRINCIPLE IN THE UNITED STATES, THE EUROPEAN COMMUNITY, AND JAPAN A. The United States and CERCLA Regulation 1. Administration of the Polluter Pays Principle by the EPA 2. Functional Application of the Polluter Pays Principle 3. Cleaning Up Superfund Sites Under the Polluter Pays Principle 4. The Bottom Line on the United States' Environmental Liability Regime and the Polluter Pays Principle B. The European Community: Embracing a Framework for Polluter Liability 1. Developing the Polluter Pays Principle in European Environmental Liability Regimes 2. The Polluter Pays Principle in the European Union's Environmental Liability Regime and Its Anticipated Effects 3. What Might the Polluter Pays Principle Cover Under the European Union's Environmental Liability Regime? 4. The Type of Liability Under the Polluter Pays Principle 5. The Bottom Line on the European Union's Environmental Liability Regime and the Polluter Pays Principle C. Japan's Environmental Liability Regime: The "Four Major Lawsuits" 1. The Japanese Environmental Liability Scheme 2. Flexible Negotiating Process 3. The Polluter Pays Principle and the Four Major Lawsuits 4. Injunctive Relief 5. The Bottom Line on Japan's Environmental Liability Regime and the Polluter Pays Principle IV. WHY HAVE ENVIRONMENTAL LIABILITY REGIMES IN THE UNITED STATES, THE EUROPEAN COMMUNITY, AND JAPAN CONVERGED UNDER THE POLLUTER PAYS PRINCIPLE? A. International Treaties, Agreements, and Conventions 1. The Agreement Between the United States of America and the United Mexican States on Cooperation for the Protection and Improvement of the Environment in the Border Area (La Paz Agreement) 2. Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (Basel Convention) 3. The Rio Declaration on Environment and Development (Rio Declaration) B. Availability of Information C. Extraterritorial Application of U.S. Environmental Laws 1. U.S. Environmental Laws 2. Securities and Exchange Commission Environmental Disclosures D. Nongovernmental Organizations (NGOs) E. Bilateral and Multilateral Development Institutions 1. The World Bank 2. The Overseas Private Investment Corporation F. Standardization of Environmental Policies Worldwide 1. ISO 9000/14000 V. CONCLUSION I. INTRODUCTION

Linked by a global communication system, political participants, advocacy groups, and electorates in economically advanced democracies are increasingly expressing concern about the same environmental harms. (1) Amidst this concern, regulatory officials, scientists, legal scholars, and environmental activists are traveling across borders, in person and electronically, talking about the risks and policy concerns associated with cleaning up the environment. (2) At the center of much of their concern is the harm to the environment that arises from the disposal of hazardous wastes and detrimental material. Specifically, regulators around the world are contemplating how contaminated sites should be remediated.

Regulators in the United States, the European Community, and Japan have responded to this concern by merging the polluter pays principle into their domestic environmental liability regimes. This principle suggests that the polluter should bear the cost of abating waste and restoring the environment to an acceptable condition. By compelling the polluter to bear the expense, the cost of these clean up measures is reflected in the cost of the goods and services that generate the pollution through their production or consumption. When the price of goods and services reflects their environmental costs, consumers are not challenged to gather and consider information concerning a good's or service's effect on the environment. Rather, because consumers prefer the least expensive goods and services, the consumer generally makes a decision based on price alone, in which the social and environmental costs of contamination are already embedded. Consequently, the polluter pays principle ensures that the choices made in the self-interest of the consumer further environmental responsibility.

It is unclear what has encouraged the adoption of the polluter pays principle in the United States, the European Community, and Japan. This Note identifies certain of the principal sources that have contributed to the development and harmonization of environmental liability regimes in these countries under the polluter pays principle. These principal sources include the prevalence of international treaties, the increasing availability of information concerning the environment, domestic and foreign laws that influence other countries, nongovernmental organizations (NGOs) that exert pressure on regulatory bodies, bilateral and multilateral development institutions that condition their lending on the friendly treatment of the environment, and the growing standardization of environmental policies worldwide.

This Note examines the global convergence of the polluter pays principle by emphasizing the experiences of the United States, the European Community, and Japan. Part II provides a background of the polluter pays principle as a normative doctrine of environmental policy; it also outlines its history and its current interpretation. Part III outlines the development of the principle in the United States, the European Community, and Japan, as well as the framework in which the principle arose in each country. Part IV highlights the sources which have arguably been the most influential in encouraging the United States, the European Community, and Japan to adopt the polluter pays principle as an effective tool to achieve environmental waste remediation.

2. THE POLLUTER PAYS PRINCIPLE

   "The Polluter Pays principle is a normative doctrine of environmental law." (3) Although the principle's precise legal definition remains difficult to ascertain, the core of the principle derives from the fundamental, fair, and logical proposition that the parties who generate pollution, not the government, should bear the cost of abatement. (4)

   1. History of the Polluter Pays Principle

      The principle first appeared in a legal context in a document prepared by the international Organization for Economic Cooperation and Development (OECD). (5) The document included the following recommendation:

      The principle to be used for allocating costs of pollution prevention and control measures to encourage rational use of scarce environmental resources and to avoid distortions in international trade and investment is the so-called "Polluter Pays principle." This principle means that the polluter should bear the expenses of carrying out the above mentioned measures decided by public authorities to ensure that the environment is in an acceptable state. In other words, the cost of these measures should be reflected in the costs of goods and services which cause pollution in production and/or consumption. Such measures should not be accompanied by subsidies that would create significant distortions in international trade and investment. (6) For years, only the OECD recommendation formally documented the principle. (7) More recently, however, the principle has appeared in a number of international legal documents addressing issues surrounding environmental law. (8) For instance, the principle played a significant role in the formation of law and policy in the European Community. (9) In 1992, as described hereinafter, the United Nations Conference on Environment and Development included the principle in its Rio Declaration on Environment and Development, (10) an "instrument of international jurisprudence [that] articulates policies and prescriptions directed at the achievement of worldwide sustainable development." (11) Principle 16 of the Rio Declaration provides that "[n]ational authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without...