Contributed By Foley Hoag LLP
In France, the main provisions regarding environmental protection are included in the French Environmental Code, which contains a legislative part and a regulatory part. However, there are additional implementation provisions that have not been codified in the French Environmental Code. Please note that the mining regulation is provided in a separate code: the French Mining Code, which is not covered in this guide. Some fundamental principles are also included in the French Environmental Charter.
A main aspect of the French environmental law relates to the classified facilities regulation. An industrial or agricultural facility that has the potentialto have an impact on the environment is usually subject to the classified facilities regulation. French law lists the activities that are subject to regulation (“nomenclature”) and establishes thresholds for declaration, registration, or authorisation of those activities (declaration, registration or authorisation are discussed further in section 3.1 Requirement for an Environmental Permit and section 3.3 Obtaining Permits and Rights to Appeal). The regulatory authorities may impose requirements on regulated facilities or activities.
A regulation similar to the classified facilities regulation provides that an activity affecting waters (surface waters and groundwater) can be subject to declaration or authorisation from the relevant authorities. Those authorities may impose some requirements on regulated activities.
Another main aspect of environmental regulation regards waste management. The governing principle is that waste producers or owners are legally responsible for collection, elimination and recycling. Waste producers or holders must be able to document the final destination of the waste as well as the method of disposal.
The French Environmental Charter enshrines the fundamental principles of environmental protection at a constitutional level. The precautionary principle states that, if an activity is likely to cause harm to the environment, measures to avoid it must be taken prior to that activity being taken. The right to live in a healthy environment, the right to environmental information, and the duty not to harm the environment, to preserve it and repair the damage are also contained in the Charter. The 'polluter pays' principle proclaims that the costs resulting from pollution must be borne by the polluter. The prevention principle serves as a basis for regimes of declaration, registration, or authorisation of potentially polluting activities. The Charter also sets out the principle of sustainable development as a central objective of public policies. Finally, there is currently a draft of a constitutional bill to include the State’s duty to protect the environment and to fight global warming within the Constitution itself.
Additional principles are defined in the French Environmental Code and embody legal concepts such as the principle of participation, which allows affected people to express their opinion on a project with potential environmental impacts. Since 2016, another new key principle is the one of non-regression, which implies that measures protecting the environment can only be improved with regard to constant scientific progress, and shall not be reduced.
The French environmental regulation is changing very regularly on a great variety of topics. The government is currently enforcing the objective to simplify administrative processes. Environmental law is benefiting from those efforts.
Recently, classified facilities and water regulations have been simplified. Since 1 March 2017, all the procedures necessary for projects subject to authorisation under the classified facilities regulation or the water regulation have been merged into a single environmental authorisation.
Furthermore, the environmental assessment mechanism was modified in both 2016 and 2018. With the new procedure, projects with a potential impact on the environment must undergo either a systematic environmental assessment or an assessment after a case-by-case review depending on certain thresholds. This issue is discussed further in the response to question 9.
Regarding the protection of the environment, the Biodiversity Law of 2016 includes some new principles aiming at ensuring an effective and non-regressive protection. It also contains rehabilitation and preservation mechanisms for biodiversity and for reparation of environmental damage.
Finally, along with the classified facility and the waste regulations, since 2014 the French Environmental Code deals with a particular liability for contaminated land, which is discussed later in this summary.
The main developments foreseen in France concern waste regulation, the protection of biodiversity and the fight against climate change.
Several changes are to be expected in the upcoming months regarding waste regulation and its application to the new concept of “circular economy”, which encourages the repairing and recycling of consumer products. In 2018 the government published a roadmap with fifty measures to favour more sustainable use and conception of consumer goods. Those measures will notably aim for an extension of warranties and to differences in taxes based on the environmental impact of the products. The measures will also aim to make recycling more profitable than landfilling through an increased taxation on polluting activities and a decreased value added tax ("VAT") for recycling activities. A new law on the circular economy should be enacted in the first half of 2019.
In addition, in 2018 the government announced that the protection of the biodiversity and the fight against climate change were its top priorities.
The role of environmental NGOs is highly significant in France. Although the French environmental regulation is already quite strict, the lobbying for its enforcement and strengthening by environmental NGOs and organisations is very strong.
Since the “Grenelle de l’environnement” (set of political meetings organised in 2007 aimed at taking long-term decisions on the environment) NGOs are more involved at every stage of the environmental decision-making process.
The French Environmental Code gives environmental NGOs a specific status. Some of them receive a special authorisation giving them particular powers. This administrative process enables them to participate in the action of public bodies related to the environment, to bring claims in the context of their organisational purpose or to receive a mandate. Those prerogatives allow them to oppose or challenge actual or potential damages to the environment.
Some NGOs are very active. Environmental groups regularly challenge projects with an environmental impact (such as industrial projects or infrastructure projects) before the courts.
Under French law, the environmental authorities have investigative and access powers with respect to environmental incidents and breaches of law/permits. They have both administrative and criminal enforcement rights. Since 2012 inspections and investigations by regulatory authorities have been harmonised and simplified.
The French Environmental Code provides that administrative inspections can be performed under certain conditions. When the administrative authority conducts such inspections, it has several powers regarding access to the facility and the documents it may request.
If irregularities are found during the inspection, the authority issues a report to the operator and the prefect. The latter may then issue a formal notice requesting the facility to correct any deficiencies or deviations.
Criminal investigations are accomplished by regulatory authorities accordingly to the French Environmental Code. In the event of a criminal investigation, the inspection performed is similar to the administrative procedure but the prerogatives of the inspector are extended as the inspector may, for example, conduct identity checks. Similarly, the inspector issues a report to the prosecutor and remains, with the prefect, at the prosecutor’s disposal for further investigations. The inspector may, for instance, interview the operator on behalf of the prosecutor.
The approach of the regulatory authorities in relation to enforcement of environmental law still leaves room for a dialogue.
Such authorities cannot impose administrative sanctions without a due process and formal notice. After the visit of the inspector, the operator receives a copy of the report and thus becomes aware of the case against him and can respond to the Prefect. The operator may then receive a formal notice requesting it to comply with the law.
Before actual sanctions are taken, the operator is given the chance to comply. If nothing is done, the regulatory authority will proceed with the sanctions (see section 3.7 Penalties/Sanctions for Breach).
Negotiated settlements are not allowed under French law. In fact, the authorities cannot agree to either reduce sanctions or decline to bring an enforcement action in their role as administrative police. In concrete terms, authorities neither contractually agree nor settle on a limitation of their powers in this field.
Under French law, an environmental permit may be required, depending on the project. The classified facilities nomenclature and the water activities nomenclature provide categories and thresholds that determine the legal framework applying to the project (declaration, registration and authorisation for classified facilities; declaration and authorisation for water activities). This is discussed further in the response to section 3.3 Obtaining Permits and Rights to Appeal.
An environmental authorisation (ie, a permit) is required for activities that materially affect protected interests listed in the French Environmental Code (nature and the environment, water, health, safety, agriculture, historical monuments and archaeological heritage).
The environmental authorisation also covers other specific authorisations when they are needed for the project, subject to classified facilities or water activities regulations (eg, land-clearing activities, derogation for destruction of protected species, greenhouse gas emissions allowances). However, the building permits are not included in this broad authorisation and instead are issued separately.
The French Environmental Code states that construction projects or any intervention in the natural environment that are likely to have significant effects on the environment or human health must undergo an environmental impact assessment. The EU Law sets criteria and thresholds integrated in French law and determining whether the projects are likely to have notable consequences.
The main obligation for operators is the environmental assessment. This assessment is a process, and the “environmental impact assessment” is the report prepared by the operator as part of this process. Depending on their expected impact, not all projects have to fulfil the same assessment obligations.
Projects subject to declaration and registration are only required to provide a description of the future activities and, where required, expected impacts. Nevertheless for the registration regime, depending on this document, the authorities may order an environmental assessment if they determine that it is necessary.
Some projects submitted to authorisation are automatically subject to an environmental assessment. The other projects submitted to authorisation are subject to a case-by-case review by the environmental authority, which determines if the project requires a full environmental assessment or a more summary assessment.
The main provisions on the granting of an environmental permit relate to the framework of the classified facilities regulation. This paragraph is therefore limited to this regulation. As described in the previous question, the classified facilities regulation provides three different levels of environmental permits. Firstly, the declaration regime only requires to report the facility to the regulatory authorities before the implementation of the activity. Secondly, above the declaration threshold, some facilities must submit an application in order to be registered by the regulatory authorities. Under those two regimes, the administrative authority can order some additional prescriptions on the projects if deemed necessary.
Thirdly, some facilities are required to file an authorisation application, which will be reviewed by the regulatory authorities. After a public enquiry, they issue the authorisation with prescriptions or refuse it with justifications.
In order to appeal permitting decisions, it is mandatory to lodge a claim before the administrative court within two months after the permitting decision for the operator, and four months for interested third parties.
The French permitting regime has always used the integrated approach. The classified facilities permit covers all the environmental aspects (eg, water releases, air emissions, waste management, safety measures, etc). As explained in section 3.1 Requirement for an Environmental Permit, the new permit called “environmental authorisation” strengthens this integrated approach by combining the classified facilities authorisation with other specific permits related to the project.
Under French Law, an environmental permit can generally be transferred. The change in the permittee is contingent upon the declaration by the new permittee to the regulatory authority within three months after the transfer.
While most permits can be transferred through a simple declaration, the transfer of the environmental authorisation for facilities requiring financial guarantees (landfilling, quarries or some other polluting activities) must be authorised by the relevant prefect. The new operator must file an application for the transfer in order for the regulatory authorities to review the financial guarantees. If the authority authorises the transfer, it may impose additional prescriptions or requirements.
There is usually no time limit in a French environmental permit.
However, for some specific activities, the French Environmental Code does require a time limit in the permit (quarries, landfills, water activities). In addition, the regulatory authority always has the authority to strengthen the conditions in the environmental permit when necessary, depending on the environmental sensitivity and the impact of the danger posed by the facility.
The French Environmental Code includes both criminal and administrative sanctions to punish the breach of permitting requirements.
First, if one runs a facility without an environmental authorisation, the criminal sanctions include a one-year prison sentence and a maximum fine of €75,000, which is multiplied by five when the offender is a corporate entity.
Second, independently and cumulatively, the regulatory authority may (i) require, by issuing a formal notice, the compliance with the regulation within a time limit; then (ii) impose administrative sanctions on the offender. Thus, the regulatory authority may hold a deposit until the required work is completed, have the works completed at the operator’s expense, suspend the facility’s activity, and impose a maximum €15,000 fine and/or a daily penalty until the compliance is achieved.
In French law, three types of liability can be imposed on operators and polluters.
First, there is an environmental liability attached to administrative obligations to protect the environment. Such liability is imposed by regulatory authorities on operators of facilities or activities subject to environmental laws and regulations. The regulatory authorities evaluate the damage and the measures taken to prevent or mitigate it.
Second, civil liability applied to the environment occurs for torts or negligence resulting in the pollution. The causal link between the harmful event and the damage has to be proven and may result in the award of compensatory damages (“dommages et intérêts”). Besides, the French Civil Code embodies the ecological prejudice reparation concept, codifying the Erika case resolution (see the “civil liability” section). Additionally, it is possible to be held liable for environmental damage under contractual liability.
Finally, criminal liability applies to both individuals and corporate entities. The head of a company may be criminally liable for the actions of the company. Sanctions can include imprisonment, a criminal fine, etc.
Administrative obligations and liability for historic incidents or damage may be transferred from an operator to another if the new operator is conducting the same activities. Therefore the new operator will be liable for the pollution relating to the continued activity even if he is not the operator at the time the pollution originated (for instance, the transfer to an operator from another of a gas station). In other words, the new operator is responsible for damage caused after it purchases the assets but it is also liable for the activities of the prior operator, as long as the damage relates to the same types of operations that the new operator is conducting.
Liability for the pollution from the former operator that is unrelated to the continued activity is not transferred. The landowner cannot be liable for historic environmental incidents or damage, except under the specific situations described in 11.4 Liability for Remediating Contaminated Land and 11.5 Apportioning Liability.
In relation with the administrative obligations, the French Environmental Code provides that, when the classified facilities regulation applies, the prefect may order any measure necessary to address a threat to the environment. Similar provisions are applicable under the water regulation or to any type of environmental damage supervised by a regulatory authority.
Besides, interested third parties (eg, neighbours of a classified facility) may seek the State’s legal responsibility for the lack of action taken to protect the environment.
The key concepts of civil liability include “disturbances of the neighbourhood” and “control over the things under one’s guard” (see 9.1 Civil Claims for Compensation).
Under these concepts, which are similar to the concepts of nuisance and strict liability under most United States laws, an operator can be held liable in civil terms for harms caused to another in the context of an environmental incident or damage even if he has complied with all the requirements provided in his environmental permit. The plaintiff must demonstrate that one of his interests were affected by the operator’s actions.
What is more, the French Civil Code sets out the ecological prejudice reparation concept, codifying the Erika case solution (see section 9 on Civil Liability) and providing that any person who causes an ecological prejudice must repair it in kind.
In relation to civil liability, please refer to 9.4 Landmark Cases.
Regarding criminal liability, the Erika case of 2012 of the French Supreme Court (“Cour de cassation”) is exemplary. In 1992 a Total tanker, Erika, sank and caused an oil spill, which led to the massive pollution of the French Coast of Bretagne. The court's reasoning on Total’s criminal liability is notable. After having characterised the parent company’s control over the tanker despite several contracts with other entities (the charter parties), the court referred to the company’s corporate social responsibility engagement. It held that Total’s negligence in the checking of the tanker, which it had voluntarily agreed to conduct, caused the oil spill. This led the court to impose criminal liability on Total under the provisions of the French Environmental Code and the French Criminal Code.
In 2001 the explosion of a facility in Toulouse caused the death of 31 people and injured many (about 8,500). This case is known as the AZF case. It is still pending and should be tried before the French Supreme Court (“Cour de cassation”) soon. It is very likely to become another French landmark environmental case. Before the Appeal Court, the CEO of the facility was found guilty and condemned to a 15-month prison sentence and a €10,000 fine on the ground of manslaughter and involuntary injuries. The company is facing the maximum fine of €225,000.
Regarding the State’s administrative liability, two important cases illustrated the conditions under which such liability can or cannot be established. First, in the AZF matter mentioned above, there was also a claim brought against the State. The State was found not liable since the authorities conducted the necessary checks to ensure the facility’s safety. In the Mines de Potasse d’Alsace ("MDPA") case, the French Administrative Supreme Court (“Conseil d’Etat”) stated that, while the State may be held liable for the pollution resulting from authorisations granted by the regulatory authorities, there must be a strict causal link between the damage and the activity of the facility. Therefore the State was not responsible for the deterioration of the pipes in Amsterdam.
In another case, in 2017 the French Administrative Supreme Court (“Conseil d’Etat”) held the State liable for the authorities’ negligence in failing to address air pollution.
A corporate entity may be liable for environmental damage or breaches of environmental law when acts of negligence or faults are demonstrated. Under French criminal law, the liability of the individual does not exclude the liability of the corporate entity. The main difference is in relation to the potential penalties. The French Environmental Code provides that the maximum fine for a corporate entity is five times the sanction for an individual.
In addition, the French Environmental Code refers to the French Penal Code for the sentencing of corporate entities. Even though it provides for complementary sanctions that are specific to corporate entities, the implementation of those provisions is rarely observed in the environmental field.
Since 2010 the French Environmental Code provides that a parent company may be held financially liable for the remediation measures when it wrongfully contributes to its subsidiary’s bankruptcy.
Directors and other officers can be held personally liable for environmental damage or breaches of environmental law committed by the company if the offence was the result of their personal conduct (neglect or fault in causing the offense) or if it can be shown they had personal knowledge of the offence and did not act accordingly. This standard is not specific to the environmental area.
The level of authority of a director, officer or executive is not taken into account when finding an individual liable, but rather the fact that they were acting in the capacity of a company’s representative or acting on the company representative’s instruction or delegation. In the latter situation, the judge will carefully examine the scope and regularity of the delegation or representative’s instruction.
The penalties range from a fine of up to €100.000 to a prison sentence of up to two years. Additional penalties, such as (but not limited to) prohibition to do business in a similar area for a time period of up to five years, may also be imposed.
Global liability insurances for company directors can cover defence expenses and damages arising from civil procedures, thus including environmental matters, and can sometimes benefit the spouse and/or inheritors or legal representatives. Criminal fines are not covered by liability insurances. The company will be the signatory of the insurance contract for the benefit of all natural persons likely to be held personally responsible and therefore who had, have or will have an executive or representative position in the company or in its subsidiaries.
Financial institutions and/or lenders can be held liable for damages arising from projects they fund, depending on their level of involvement and their awareness of the risks. The same liability regime applies to financial institutions as to any corporate entity.
Since financial institutions and/or lenders’ liability is not specific to environmental project funding, these entities should be aware, just like any other corporate entity, of the risks taken in becoming involved in their borrower’s projects and of the level of involvement. The more involved a lender or financial institution is, the more likely it could be held liable for a damage or breach, including environmental damage or breach. This is why thorough due diligence is necessary (see 16.1 Environmental Due Diligence on M&A, Finance and Property Transactions).
Some of the key concepts of civil liability applied to the environment are “disturbances of the neighbourhood” and the “control over the things under one’s guard”. The former refers to the neighbour principle and provides that no one should cause excessive damage to his neighbour. However, in the context of environmental harm, the theory of “prior occupation” applies under certain conditions: one could not bring claims over a nuisance that already existed prior to his or her occupation of the neighbouring site. The second concept provides that a person may be held liable for the harms caused by the things under his or her effective control. Moreover, the French Cvil Code provides for the tortious liability, which may impose an obligation to repair the damage resulting from wrongful acts or negligence.
Finally, since 2016 the French Civil Code states that anyone whocauses environmental damage can be held liable and be made to repair it in kind.This provision incorporates what is referred to as a 'pure' environmental damage, meaning that it is no longer necessary to prove the violation of a “human interest” (for instance, financial loss, physical injury, property damage).
Under French law, exemplary or punitive damages cannot be awarded. This category of damages would be a violation of the principle of full compensation of prejudices. Indeed, under French law, the French judge must contribute to the repair of the full extent of prejudice caused, nothing more.
Recently there have been some attempts to introduce punitive damages in French law, but without success.
A 2016 law created the possibility for groups protecting collective interests to go to court in the event they have suffered the same damage. Indeed, the French Environmental Code states that a group action is possible before a civil or an administrative Court when several people in a similar situation suffer from an environmental damage, caused by the same person and having for common origin a breach in legal or contract-based duties. Such legal action may seek the cessation of the violation and/or the reparation of the damage.
Regarding environmental class actions, environmental groups that are “approved associations” (which is a specific status) can lead a group action. Approved associations working for the defence of those who suffered physical injury damage or who are defending an economic interest may also do so.
The landmark case establishing the civil liability for environmental damage was the Erika case of 2012 regarding the oil spill caused by Total’s tanker, Erika. In this case, in addition to the criminal liability (see 5.3 Landmark/Significant Cases), the civil liability has been recognised. In its ruling, the court recognised for the first time the legal concept of an ecological prejudice, which means any significant impact on the natural environment, without the need to establish any damage to a particular human interest.
It is possible to transfer or apportion liability for incidental damage or breaches of law through a contract between two private parties. However, except as discussed below in response to 11.7 Ability to Transfer Liability to a Purchaser, this type of private contract does not affect private parties’ potential liability to regulatory authorities.
Environmental insurance contracts are available for events that can occur in the course of the operation of an activity, including events causing ecological prejudice. There is also a special insurance for historic pollution, but it only covers currently unidentified pollution, and is yet to be further developed in France. Depending on the contract, the insurance may cover, for example, clean-up costs, operating losses and legal costs.
One of the key laws governing contaminated land in France is the classified facilities regulation. This regulation addresses the contaminated land obligations in the context of the cessation of activity.
Moreover, a specific chapter in the French Environmental Code deals with contaminated land (see 11.3 Legal Requirements for Remediation). It is also notable that the waste regulation (see 11.7 Ability to Transfer Liability to a Purchaser and following) does not apply to contaminated land anymore, except for the provisions addressing the waste present on the site or the excavated soils.
The general approach taken by regulatory authorities is a risk versus use approach (“approche risque par rapport à l’usage”: the sanitary conditions of the site must be compatible with the use of the site through a Human Health Risk Assessment) and in respect of the protected interests under the French Environmental Code (which are public health and safety, agriculture, the protection of the nature, the environment and the landscapes, the rational use of energy, the historic sites and monuments conservation or the archaeological heritage).
There is no definition of contaminated land under French law. However, the French Methodology (2017) provides criteria in order to determine if and how the environmental condition of a site must be managed.
Regarding classified facilities, the French Environmental Code imposes a mandatory remediation at the end of the facility operations. Remediation goals are made in a manner consistent with the expected future use of the site, which is determined in accordance with the French Environmental Code and is most frequently an industrial use.
More broadly, the French Environmental Code provides a “contaminated land” section that describes the remediation mechanism and the obligations of each stakeholder (the content of the obligations for classified facilities operators is described in a specific section of the Code).
On sites where pollution occurs or might occur as a threat to the public health or safety, the regulatory authority may implement the necessary remediation works at the expense of the person responsible for the remediation (see next section). The regulatory authority may also charge a deposit until the remediation works are finalised.
On a site where a classified facility has operated and where remediation has properly been carried out, the person who changes the use must provide measures are taken to manage the pollution in order to ensure that the land is compatible with the public safety or health.
The French Environmental Code determines who is liable for remediating the contaminated land according to the site situation. For the lands polluted by a classified or a nuclear facility, the last operator of the facility that caused the pollution, the “interested third party” (see 11.7 Ability to Transfer Liability to a Purchaser) or the person who changes the use is liable for the remediation of the contaminated land. For the land polluted by another source, the waste producer or owner that contributed to the origin of the pollution is liable. If none of the former stakeholders can be identified, the owner of the contaminated land may be liable if his negligence or participation to the pollution can be proven. The Code does not impose strict liability on an owner of land if the owner did not cause the pollution and was not negligent.
In general, only one person can be liable for the remediation of contaminated land. In the French environmental Code (see previous section), the list of potentially liable persons is subject to the subsidiarity principle.
Under the classified facilities regulation, every operator is responsible for his own activities. Therefore several operators can be held responsible by the regulatory authority for parts of the remediation when several activities have generated pollution on the same site (for example, the gas station will be responsible for the fuel pollution and the industrial laundry will be responsible for the chemical pollution).
Finally, traditionally, the last operator of an industrial site would only be responsible for remediation necessary to allow safe operation of continued industrial uses, while a person seeking to change the use of the site would be responsible for the additional remediation necessary to permit the change of use.
There is no legal provision regarding the ability to seek recourse from a former owner or polluter. A person liable for remediating contaminated land may try to seek recourse from the original polluter. When there is a contractual relationship, it depends a lot on the contractual circumstances. For instance, the last operator may seek the liability of the former operator depending on the terms of the contract with the former operator. It is the same for a real estate transaction between the operator and the former owner.
In principle, until recently the liability of last operator of a classified facility could not be transferred to a purchaser. However, since 2014/2015 the French Environmental Code has provided a mechanism that allows an “interested third party” (“tiers demandeur”) to conduct remediation under the provisions issued by the regulatory authority. This results in the transfer of the last operator’s liability to the purchaser. This “tiers-demandeur” mechanism is quite new in France and to date has rarely been used.
France is involved in international climate negotiations in the framework of the United Nations Framework Convention on Climate Change ("UNFCCC"). In 2015 France hosted the 21st Conference of the Parties ("COP21"), which resulted in the adoption of the Paris Agreement. Key policies, principles and laws relating to climate change in France largely derive from this legal frame.
Reduction of atmospheric concentrations of greenhouse gases in order to prevent dangerous anthropogenic interference with Earth's climate system is considered as a national priority. This goal is implemented through global targets of reduction of greenhouse gas emissions and sectoral policies.
To meet the objectives of the Paris Agreement and the commitments of greenhouse gases reduction made by France through its Intended Nationally Determined Contribution ("INDC"), the French Climate Plan unveiled on 6 July 2018 sets the goal of carbon neutrality by 2050 in order to contain global warming below 2° C.
The Plan is divided into several focus areas: thermal renovation, clean mobility development, encouragement and promotion of a circular economy. It also aims to achieve carbon neutrality by 2050 through banning new hydrocarbon exploration projects and reinforcing ecological taxation (increase in the price per ton of carbon dioxide used as a basis for the calculation of internal consumption taxes).
Some other objectives include the transformation of agricultural systems to adapt to climate change, the strengthening of international mobilisation, and the respect of the financial commitments of the Paris Agreement, notably towards Southern countries.
Key laws in relating to climate change are Law n°2009-967 dated 3 August 2009 (Grenelle II) and Law n°2015-992 of 17 August 2015 on the Energy Transition for Green Growth, both are codified in the French Environmental Code and the French Energy Code.
As indicated in 12.1 Key Policies, Principles and Laws Relating to Climate Change, to meet the objectives of the Paris Agreement the French Climate Plan sets the goal of carbon neutrality by 2050.
However, currently, legal goals are determined by the French Environmental Code, which contains a legal target for greenhouse gas emissions reduction of 40% between 1990 and 2030 and a reduction of emissions by a factor of 4 between 1990 and 2050.
The same Code provides for a series of reduction objectives contributing to the overall objective of reducing greenhouse gas emissions (especially regarding energy consumption).
The main regulations in relation to energy efficiency come from the Energy Transition Law of 2015. It provides regulatory limitations and economic incentives. The regulatory measures set obligations such as limitation for the energy consumption in new buildings.
Some other measures provide incentives to improve the energy efficiency of existing construction or offices through taxation schemes or state aids or loans.
The French Energy Code requires large companies with more than 250 employees to perform energy audits and to implement an energy efficiency strategy for their activities.
France has ratified the Kyoto Protocol and applies the European Union Emission Trading System ("EU ETS") scheme. The system for trading greenhouse gas emissions quotas is described in the French Environmental Code.
EU ETS system works as a “cap and trade” system, where operators emitting greenhouse gases (listed in the EU Directive) can acquire, hold and trade emissions quotas for their emissions whenever they have been granted quotas rights by a EU Member State. The allocated quota is determined by a plan approved by the EU (Quotas National Allocation Plan, or "PNAQ" in French). The current plan covers the allocation of quotas for the period 2013–2020.
A directive from the European Union adopted in 2018 aims at reducing the annual amount of available quotas in order to increase their prices. This directive will theoretically be transposed in Members States’ legal systems by the end of October 2019.
Use of asbestos and all products containing asbestos is strictly forbidden in France subsequent to a decree issued in 1996 (enforceable in 1997) on the basis of reports from the Labour and sSocial Affairs Department, the Housing Department and the Health Department, among others.
Protection measures for the general public against asbestos are provided for in the Public Health Code and the Construction Code and range from organising research and monitoring of the state of conservation of buildings containing asbestos to setting out the rules in connection with responsibility of building/apartment owners and organising the communication of technical documentation between participants (landlords, construction companies, lessors, etc).
The Labour Codealso provides a set of rules to protect workers from inhaling asbestos in the course of their normal work activities in direct connection with asbestos products (dismantling or handling).
The responsibility for conducting research, managing and keeping asbestos-specific documentation up to date and conducting dust measurements or interior works usually falls on the building owner. The type of researches to be conducted and the specifics of the documentation depend on the type of ownership. Obligations for the owner of a shared building are more stringent than the obligations of a private house owner.
Building operators may sometimes bear the responsibility that would normally fall upon the owner if the latter does not comply with his obligations. A tenant, however, has the right to be informed but does not have any obligation relating to asbestos.
Depending on the results of the research conducted and the type of asbestos found, removal works can be imposed on the owners or operators.
Asbestos was historically commonly used in construction in France. Therefore, exposure to asbestos is widespread and is the most common cause of workplace death.
Since illnesses caused by asbestos exposure developed between 20 and 40 years following the exposure, it is expected to be the cause of 100,000 new deaths by 2025. It is likely that the number of litigations related to illnesses resulting from asbestos exposure will grow accordingly.
Physical harm or injury does not have to be established for a claim in damages. Since 2010 the courts recognise the existence of a specific anxiety prejudice for workers who have been exposed to asbestos during the time of their past work activities and who are expecting a possible diagnosis of an asbestos-related illness.
Courts are very protective of victims in these cases. In 2014 it was judged that any work activity in the presence of asbestos would be considered sufficient evidence to determine the existence ofa prejudice of anxiety.
Significant asbestos cases in France concern the presence of asbestos in representative sites such as a university in the centre of Paris, shipyards in the north of France, factories in Normandy. Legal actions involving senior officials from the Ministry of Health and other high-profile civil servants were filed and conducted in parallel with the considerable work necessary in connection with the dismantling of these sites. These actions lasted for more than a decade.
The key laws governing waste come from the EU Directive 2008/98/EC on waste management, which was incorporated in the French Environmental Code. The main principles and objectives of those regulations are to limit the production and the toxicity of the future waste at their source, to organise a waste management respectful of the self-sufficiency and proximity principles, to add value to the waste through recycling and to proceed to the disposal of the waste as a last recourse solution.
The person responsible for the management of the waste is traditionally either the waste producer or the waste holder.
In regard to the regulatory inspections, the Mayor (“Maire”) is the regulatory authority for the application of the waste regulation, except if the waste is subject to the classified facilities regulation.
Any waste producer or waste holder is responsible for the waste management until its final disposal or recycling, even if the waste is transferred for treatment to a third party. It begins as soon as the waste is produced and extends to the final disposal or recovery and treatment of the waste.
Indeed, the person responsible for the waste has a legal obligation to ensure that the person to whom he delivers it is authorised to take charge of it and will comply with the applicable regulations.
The waste producer or waste holder may not contractually exhaust his regulatory liability, but he can obtain an indemnity from the waste hauler or treatment facility.
The French Environmental Code has provided for the principle of extended producer responsibility (responsabilité élargie du producteur, or “REP”) since 1975. The responsibility reverts to the producer of the product, the manufacture of which ultimately results in the creation of the waste. In some sectors, producers, importers and distributors of the products, or of the materials used in their production, may be required to contribute or to provide for their disposal or recycling.
The first sector regulated was the one of domestic packaging. Now more than twenty sectors are regulated and the REP tends to multiply and be extended to new products (batteries, textiles, car industry, drugs and electronic equipment, for example). For these sectors, producers usually have to pay an eco–contribution in order to fulfil their REP obligation.
The operator of a classified facility must report to the regulatory authorities incidents or accidents that were caused by the facility’s operation and that may harm the protected interests listed in the French Environmental Code (which are public health and safety, agriculture, the protection of wildlife, the environment and the landscape, the rational use of energy, and the protection and conservation of historic sites and monuments, including the maintenance of archaeological heritage). The report must address the circumstances and causes of the incident or accident, its consequences on people and the measures taken to avoid a similar incident or accident and to neutralise its long and medium-term effects.
For activities which affect water, the mayor and the prefect must be informed as soon as possible by any person who knows about any incident or accident that endangers the public safety or the quality, the circulation or the conservation of the water. The person who caused the incident must, as soon as he or she is aware of it, take or have measures taken to stop the cause of the danger or the harm affecting the water, evaluate the consequences of the accident/incident and solve it.
Under French law the public has the right to obtain environmental information from public authorities and bodies. The French Environmental Code enshrines this principle, which applies to every interested person and to all public and private bodies with an endeavour of environmental public service, to the extent that it is not sensitive information (classified, public security, etc) and that it is related to environmental matters. The public authorities affected by such provision are the State, regional and other local authorities, the public bodies and the person in charge of a public service that relates to the environment, under the condition that the information requested falls under its jurisdiction. The French Environmental Code provides the procedure and the conditions to obtain environmental information. It is to be noted that specific activities (waste, high industrial risks, contaminated lands, etc) are regulated by particular provisions.
Under the French Commercial Code some corporate entities have the obligation to annually disclose to their shareholders information relating to the entity’s corporate and social responsibility ("CSR") engagements, which include management of the social and environmental consequences of its activity.
Furthermore, the Duty of Vigilance Law of 2017 creates for the parent company an obligation to implement a “Vigilance Plan”. It applies to two kind of companies: companies headquartered in France which employ, for two consecutive years, at least 5,000 employees in the parent company and in its direct and indirect subsidiaries headquartered in France; companies headquartered in France which employ, for two consecutive years, at least 10,000 employees in the parent company and in its direct and indirect subsidiaries headquartered in France and abroad. The plan aims at controlling the corporate entity’s activities and preventing significant breaches in environmental or human rights regulations.
Environmental due diligence is typically conducted on M&A, but is less frequent for financial and real estate transactions.
In general, environmental due diligence is highly recommended. It is particularly important when a classified facility is included in the deal as the environmental due diligence is the only way to identify the compliance issues regarding every environmental regulation and the liabilities issues in connection with contaminated lands.
A buyer might incur environmental liability for historic environmental damage or breaches of environmental law.
For a sale of shares, the corporate entity does not change and is still responsible for the environmental damages resulting from its activity. Therefore, while the new owner will not itself be directly liable, the underlying company that it now owns will remain responsible.
On the other hand, for a sale of assets including an operated classified facility, the owner and the operator of the asset alter and therefore it imposes a change of operator (see 3.5 Transferring Environmental Permits). Consequently, the new operator will only incur environmental liability concerning the continued activity (see 5.1 Liability for Historic Environmental Incidents and Damage). For a sale of assets which does not have any operated classified facility, the buyer might not incur liability for historic environmental damage as he will become the owner through a real estate transaction (see 11.4 Liability for Remediating Contaminated Land).
A seller might retain environmental liability for historic environmental damage or breaches of environmental law in the following situations:
Hidden defects warranty
In principle, the law provides for the responsibility of the seller in case of hidden defects (vices cachés). A hidden defect reduces or renders impossible the use of the property to the extent that the buyer would not have acquired it, or only at a lower price, had he known it.
The buyer may then cancel the sale partially or totally. However, many contracts contain a provision excluding the seller’s responsibility for hidden defects. Such clauses are not applicable if it is proven that the seller had the knowledge of the defect at the time of the sale.
For the sale of shares, only defects affecting the use of the share would be affected by the warranty and not the ones affecting the value of the share.
When the seller intentionally retains information in order to mislead the buyer, the buyer may then cancel the contract. A fraud can be applied to share or asset deals.
For classified facilities only
In the case of classified facilities operated on a site, the seller might incur environmental liability for activities prior to the sale, and the buyer may not assume such liabilities (see 16.2 Environmental Liability for Historic Environmental Damage).
An environmental due diligence performed by a purchaser typically ensures that the seller is in compliance with applicable environmental regulations. In the case of a classified facility, the environmental due diligence will also check the possession and validity of the permits and licences required for the activity, as well as the fulfilment of the conditions prescribed. The buyer will also check the legal implications of the different risks and contingencies identified.
Environmental due diligence would typically include at least a Phase 1 report that relates to compliance and historical activities at the facility. The Phase 2 report (site investigations) is not automatically performed, but will often be recommended. It would attempt to verify the environmental condition of the site based on actual testing of soil and/or groundwater.
When it comes to the purchase of land, the French Environmental Code provides that the seller must inform the purchaser by a written statement that a classified activity used to operate on the site. The landowner must also inform the potential buyer of any danger or harm resulting from the previous operation of the facility. When the seller is also the facility’s operator, the contract must demonstrate that the sellerprovided information regarding whether or not the facility’s operation led to the use or storage of hazardous substances.
Regarding M&A transactions, there is a general duty to provide information.
Environmental warranties are used to compensate the purchaser in case of environmental issues that may arise after purchase. At least, the purchaser will want environmental warranties covering all the information he does not have. In the event of a breach, the seller might have to cover all the damages caused to the purchaser as a result of the breach of the warranty.
With respect to information that has been disclosed, it is not typical for the seller to provide warranties, but the buyer may negotiate for such warranties in the contract. Of course, whether warranties are provided is a matter of negotiation between the buyer and seller. A seller may not insist on the buyer providing warranties if the price is low enough to reflect the absence of any warranties.
For a company under reorganisation proceedings which is going through a cessation of activity, the judicial representative becomes the person in charge of the compliance with environmental regulations. There is a specific guide regarding this matter, published in 2012 by the Ministry of Environment. This guide explains the duties and obligations of the judicial representative and the actions the regulatory authorities can take.
In addition, the French Commercial Code provides an obligation to carry out environmental accounting in case of reorganisation proceedings.
Finally, the French Environmental Code states that in the instance of gross negligence committed by the parent company that led to the insolvency of the subsidiary, the former entity may be held financially liable for the coverage of all or parts of the remediation (see 16.2 Shareholder or Parent Company Liability).
Environmental taxation aims to force a business whose operations have adverse environmental consequences to integrate the costs of those environmental harms into their business planning. It is based on the "polluter pays" principle, which has been included in the French Environmental Charter and has been part of the Constitution since 2005.
Taxes on energy
To tackle the emissions of greenhouse gas, in 2014 the government introduced a carbon tax. Its amount is proportional to the level of CO2 emitted by the combustion of fossil fuels. The price of final products increases in proportion to the carbon dioxide emissions generated by the production, thus favouring products with the lowest emissions. Initially the tax amounted to €7 per ton of CO2. It has been reassessed each year, and now totals €44.
Regarding the use of electricity, any electricity consumer (regardless whether the electricity was generated by clean energy or not) must pay a tax. This tax is actually called a “contribution to the electricity utility” (Contribution au Service Public de l’Electricité or “CSPE”). It contributes to the subsiding of renewable energies.
On the flip side, there are also tax credits available to certain activities that reduce energy consumption. The Energy Transition Tax Credit ("CITE") provides a subsidy to each household that reduces their energy consumption (insulation and/or improvement of the heating source of the habitat).
Taxes on air pollution
The bonus-malus on automobiles aims to change the fleet to the lowest emitters of CO2 vehicles by increasing the price of diesels and to a certain extent of oil motors, to encourage the production and number of electric cars. In addition, certain emissions of industrial origin (eg, polluting air emissions of classified facilities that exceed certain thresholds) are subject to the general tax on polluting activities (“Taxe sur les activités polluantes” or“TGAP”).
Taxes on water pollution
The tax policy on water pollution is implemented through the taxes of water agencies. It aims to limit water pollution, covering for example the emission of pesticides by taxing companies discharging polluting products in a watercourse (categories and thresholds listed in the French Environmental Code).
Taxes on waste
Finally, the “incentive pricing” of household waste was developed to reduce its quantity and to promote recycling. It is based on the “waste TGAP,” which taxes all waste stored or incinerated, by penalising the least effective methods of treatment in terms of pollution or recovery.