Contributed By Legance – Avvocati Associati
The Italian Constitution does not contain any express provisions relating to environmental protection.
However, the Constitutional Court – the highest court in the Italian legal system – has consistently held that a general principle of environmental protection can be acknowledged by means of interpretation of the constitutional principles on the protection of landscape (Article 9.2) and human health (Article 32.1).
As a member of the European Union, Italy has implemented many principles from the European Regulatory Framework. According to Article 4 of the Treaty on the Functioning of the European Union, environmental law is indeed a shared competence between the member states and the European Union. Legislative Decree No 152 of 3 April 2006 (the Environmental Code) is the main Italian legislation on the matter, setting out the legislative framework applicable to several matters concerning environmental protection, such as air emissions, waste water discharge, waste disposal, hazardous substances and soil contamination.
More specifically, Article 3-ter of the Environmental Code establishes the most relevant principles governing environmental protection, as follows:
In Italy, the environmental policy, its implementation and the related control activities are assigned to a plurality of central and local bodies.
More specifically, the key regulatory authorities and bodies in environmental matters are as follows:
The regulatory authorities and bodies responsible for environmental policy (see 2.1 Key Regulatory Authorities) frequently use the ARPA's technical support to carry out inspections at plants and verify any breaches of law and permits.
More specifically, Article 14.7 of Law No 132 of 28 June 2016 states that the ARPA shall identify among its staff the officers in charge of inspections and periodic audits. These officers may access the facilities and plants subject to inspection and obtain all the data, information and documents necessary to carry out their activities. Such data and documents cannot be covered by industrial secrecy.
In any case, inspection activities on companies are subject to the following principles:
As a general rule, any undertaking of a new activity or change to an existing activity that has a potential impact on an environmental compartment (soil, air, water) requires a permit.
The main environmental permits in Italy are as follows:
In Italy, breaches of environmental law are punished with administrative fines or criminal penalties, depending on the importance of the offences, according to a classification established by law. Generally, criminal liability is personal; companies may only be held liable from an administrative point of view.
In the case of environmental damage, the polluter-pays principle states that only the polluter is liable to pay for the environmental remediation of the area. In any case, the polluter must be identified based on an unambiguous direct link. The causal-link criterion aims to establish a clear relationship between the person/company's behaviour and the environmental damage that has occurred. Environmental damage liability can be excluded if the person/company can prove the lack of such link.
A landowner that is not responsible for the environmental damage is not required to carry out remediation activities. Nonetheless, they are free to decide to take care of the remediation at their own expense and then claim compensation from the polluter – see 11 Contaminated Land.
With reference to corporate/personal liability, see 6 Corporate Liability and 7 Personal Liability.
As explained in 4.1 Key Types of Liability, the polluter-pays principle states that only the polluter is liable for the costs of the environmental remediation of the area. The duty of environmental remediation also applies to contaminations that took place before the entry into force of the Environmental Code (4 March 2006), but even in this case the polluter must be identified on the basis of a clear factual link. For further information on this matter, see 11 Contaminated Land.
Furthermore, in the event of historical contamination that may still lead to soil degradation, the landowner – even if not responsible for the contamination – shall send a communication to the relevant local authorities and implement preventative measures (Article 242.1 of the Environmental Code).
For administrative/regulatory liability, see 4.1 Key Types of Liability.
For civil law and tort liability, see 6 Corporate Liability, 7 Personal Liability, 8 Lender Liability and 9 Civil Liability.
Corporate liability that arises from environmental damage or breaches of environmental law may be of a civil, criminal or administrative nature.
Article 3-bis of the Environmental Code (Legislative Decree No 152/2006) makes express reference to the European principles that, pursuant to Article 174, paragraph 2, of the Treaty on European Union, regulate the European environmental policy. Under the "polluter pays" principle, in particular, those who produce pollution – or, more generally, deterioration of the environment – should bear the costs necessary to prevent, reduce or repair the damage. This principle applies to all companies, regardless of size and industrial processes, and should induce them to take preventative measures to minimise the risk of environmental damage and thus exposure to responsibility.
In the same way as individual subjects, corporate entities are liable under tort law for the environmental damage they cause, and may be subject to claims for compensation for damage due to pollution. Liability and damage compensation obligations are governed by the general principles of law of the Civil Code.
Legislative Decree No 231 of 8 June 2001 (the 231 Decree) regulates the corporate liability of legal persons, companies and associations for crimes committed or attempted by their directors or employees in the interest or to the advantage of the entity. Corporate liability for environmental crimes has been introduced into Italian law by Legislative Decree No 121/2011, implementing European Directive No 2008/99/EC on the protection of the environment through criminal law. In particular, it inserted Article 25-undecies into the Criminal Code and sanctioned a set of environmental crimes under Decree 231. Corporate liability for environmental crimes was further regulated by Law No 68/2015 on eco crimes, which introduced into the Criminal Code several new criminal offences, such as “environmental pollution” in Article 452-bis and “environmental disaster” in Article 452-ter, and increased the sanctions for environmental crimes carried out by criminal associations (Article 452-octies).
The liability of the entity is to be distinguished from the liability of its directors and officers. If an environmental offence is ascertained in court, the directors/officers would still be personally responsible for its commission. The criminal/administrative liability of the entity is only triggered when the offence is committed in the interest or to the advantage of the company by individuals who are part of the corporate structure. In addition, the environmental offence must be an expression of the company policy or must at least derive from an organisational failure.
The company, as clarified by case law, may be exempted from liability if it is able to prove that it had previously taken all the necessary measures to prevent the offence, also through the adoption and implementation of an Organisational Model. Adoption of the Model after the offence was committed allows a reduction of the pecuniary sanction for the corporate entity and, in certain cases, forestalls interdictory sanctions.
With specific reference to environmental crimes, the environmental management systems UNI EN ISO14001 and the Regulation (EC) No 1221/2009 (EMAS) constitute an important element of facilitation of the organisational model due to the complexity and the high level of detail of the obligations provided for by environmental law. However, the Organisational Model cannot solely include the environmental management system, having to provide for further obligations (appointment of the Supervisory Body and adoption of a disciplinary system) to complement the management system. The purpose of the Model is, indeed, to cover in advance all the organisational aspects of the company and, at the same time, to constitute an important ex post judicial level test.
In principle, under Italian law shareholders are not subject to liability for environmental damage or breaches of environmental legislation.
With regard to parent companies, case law is moving in the direction of accepting the European-derived substantive conception of a company. According to this interpretation, responsibility for offences committed by the subsidiary shall be extended to parent companies if their shares in the latter are such as to substantially exclude any decision-making autonomy of the subsidiary. In this case, in order to exclude responsibility, the parent company shall prove to have correctly managed its own site from an environmental point of view, so as to exclude a causal link between the activity carried out and the environmental damage occurred.
According to general principles, corporate directors and other officers may be held personally liable for environmental crimes or breaches of environmental law committed by the company if they were acting in the capacity of the company’s legal representative. This responsibility has a criminal or administrative nature, depending on the relevant provision of law that is being violated.
The delegation of functions within the company may be effectively used to shield the company’s officials from criminal and administrative liability. This tool, provided for by the law with regard to workplace health and safety matters, has been extended by case law with regard to environmental issues. Companies, therefore, may delegate, through a power of attorney, powers and functions on environmental matters to specialised individuals, who will consequently take on the responsibility that would otherwise fall upon the company’s legal representatives.
In order to be effective, the delegation must have the requirements identified by case law, which can be summarised as follows:
Environmental liability may be of a civil, administrative or criminal nature.
In principle, the Italian legal system does not allow for insurance against criminal and administrative liability. Therefore, insurance policies do not cover criminal and administrative sanctions, although they may cover legal expenses for the related judicial proceedings.
With regard to civil claims, insurance does not cover environmental damage caused by intentional conduct, but may cover environmental damage caused by negligence. With regard to gross negligence, if the insurance policy does not regulate this aspect, a provision of the Civil Code will apply to exclude the coverage (Article 1900). However, this rule may be derogated and the parties concerned may agree to extend insurance cover to cases of gross negligence.
In principle, financial institutions/lenders are not liable for environmental damage or breaches of environmental law committed by the subjects they funded, provided that their role is merely financial and there is not a direct involvement of the lender in the misconduct, nor an assumption of responsibility on the part of the lender.
No specific protection from environmental liability is envisaged for the lender as such. However, the lender may safeguard their loan by carrying out a due diligence procedure on the activities they invested in (for more detail, see 16 Transactions).
Pursuant to the general principles of tort law, which also apply to environmental damage, civil claims may be brought whenever damage is caused (Articles 2043 and 2740 of the Civil Code).
If environmental damage arises as a consequence of a crime, civil claims for damages may be exercised either before a civil court or, alternatively, before a criminal court within the same criminal proceedings concerning the environmental crime.
Specific action for compensation of environmental damages is granted to the Ministry of Environment by Article 311 of Legislative Decree No 152/2006. Such legal action may be filed to obtain the recovery of the original environmental conditions (compensation in kind) or, alternatively, to recover the costs of the remediation activities (monetary compensation).
The institution of punitive damages does not generally find much recognition in the Italian legal system. With reference to environmental matters, there appears to be no ruling in which a civil judge has awarded punitive damages.
Under the general rules of tort law, damages have a compensatory (and not a punitive) nature and are quantified by the judge according to pre-determined and objective criteria. If the amount of damages cannot be determined in their exact amount, they may be equitably liquidated by the court.
In the Italian legal system, the class action is a recently introduced legal instrument (2007) that has led to rather disappointing results as it has not been widely used. Thus far, there have been no class action cases for environmental damage.
Class actions are expected to gain popularity due to more recent legislation passed on the matter (Law No 31 of 12 April 2019, whose date of entry into force, originally scheduled for 19 April 2020, was postponed to 19 November 2020 due to the COVID-19 health emergency).
Constitutional Court No 85/2013 – "ILVA Case"
The Constitutional Court is the supreme Italian judicial body and has ruled on cases relating to the ILVA steelworks, the largest steelworks in Italy, which has been seized by order of criminal courts for environmental crimes and lack of workplace safety.
More specifically, the Court stated that the law by which the legislator authorised continuous operation of the plant during the seizure was constitutional, provided that the requirements of environmental protection, workplace health and economic activity had been reasonably balanced. The presence of such balance has been recognised by the Court as the continuation of the activity has been conditioned on compliance with the new IPPC permit (see 3.2 Environmental Permits) issued for the plant.
As a general rule, the Constitutional Court has stated that all the fundamental rights protected by the Constitution must be balanced amongst themselves, since it is not possible to single any of them out as having absolute pre-eminence over the others.
European Court of Justice, 4 March 2015 – C-534/13
The European Court of Justice pronounces here on the matters of remediation and landowner’s liability. In cases where it is impossible to identify the polluter of a plot of land or to have that person adopt remedial measures, the competent authority is not permitted to require the landowner (who is not responsible for the pollution) to adopt preventative and remedial measures; the landowner is required merely to reimburse the costs relating to the measures undertaken by the competent authority within the limit of the market value of the site, as determined after those measures have been carried out.
Council of State, Plenary Meeting, No 10/2019
This recent ruling by the Council of State, relating to remediation and landowner’s liability, is of particular importance.
The court ruled that a company that is not responsible for a contamination but that has taken over from the liable company as a result of a merger by incorporation can nevertheless be ordered to remediate the site. Furthermore, the court stated that remediation can also be ordered for activities carried out before the duty to remediate environmental damage was formally introduced into the legal system (1997), on the assumption that, even before 1997, environmental contamination was a tort sanctioned by the Italian rules on non-contractual liability (Article 2043 of the Civil Code).
Liability for incidental damage or breaches of environmental law may be transferred or apportioned through contractual agreements or indemnities. Contractual clauses regulating environmental rights and duties have fully binding effects between the parties, but are not binding on the authorities or third parties.
It is common in contracts, such as those regarding a sale, company lease or company takeover, to include specific contractual clauses on environmental warranties, under which the parties provide for the seller’s indemnity for any environmental claims by third parties, or provide for representations and warranties by the seller on the conformity of the goods and the absence of any environmental-related judicial charges.
Environmental insurance is available in Italy and consists, more precisely, of liability insurance for environmental damage. Such policies grant protection to companies from the risks of negative impacts on the environment caused by their activity. Liability policies for environmental damage may cover environmental pollution (both accidental/unexpected and gradual/progressive pollution), clean-up and remediation costs, and legal and technical consulting costs.
The Italian legislative regime on contaminated land is governed by EU principles, with particular reference to the "polluter pays" principle.
The relevant provisions of law are found in Title V "Remediation of contaminated sites" of Part IV of the Environmental Code (Legislative Decree No 152/06), which regulates the remediation and restoration activities of contaminated sites and defines procedures, criteria and methods to remove the sources of pollution or reduce the concentrations of pollutants, and determines the liabilities and duties of those held responsible for the contamination.
The criteria to establish whether a site is contaminated consist of threshold values of pollutants that, when exceeded, trigger the obligation to carry out a risk analysis to identify whether there is a real and actual threat to human health and the environment. Should this be the case, the subject identified as responsible shall submit to the competent authorities a project plan to eliminate the contamination and return the pollutant thresholds to the levels set out by the law.
There are two relevant sets of thresholds to ascertain the contamination (or risk of contamination) of a site and to identify the procedures of environmental remediation to be carried out as a consequence. When the concentration of one or more polluting substances, in a site exceeds the contaminating concentration thresholds (Concentrazioni Soglia di Contaminazione – CSC), a health and environmental risk analysis procedure shall be carried out to determine whether the related risk concentration thresholds (Concentrazioni Soglia di Rischio – CSR) are exceeded. In such event, the site will be subject to safety measures and environmental remediation.
By ratifying the Kyoto Protocol in May 2002, EU member states committed to reducing greenhouse gas emissions. The European Union and Italy are also parties to the Paris Agreement on climate change, which entered into force in Italy on 11 December 2016.
The main instrument for achieving the CO₂ reduction goals is the European Emission Trading System (EU ETS), introduced with Directive No 2003/87/EC (implemented in Italy with Legislative Decree No 216 of 4 April 2006) and amended by Directive 2009/29/EC (implemented with Legislative Decrees No 30 of 13 March 2013 and No 111 of 2 July 2015). The operation of the ETS system in phase IV – ie, covering the period 2021–30 – and is regulated by Directive 2018/410/EU.
The EU ETS applies to all large greenhouse gas emitters in the industry, power and aviation sectors, and consists in a cap-and-trade mechanism; it sets out an overall cap on the emissions allowed on European territory in the sectors concerned, which corresponds to an equivalent number of allowances (each corresponding to 1 ton of CO₂) that may be traded on a specific market. The total quantity of allowances available to operators decreases over time, thus requiring a reduction in greenhouse gas emissions in the ETS sectors.
For emissions relating to sectors falling outside the scope of the ETS – which include agriculture, transport, residential, commercial, waste, and non-energy intensive industry – member states have binding national greenhouse gas emission targets under the Effort Sharing legislation.
The EU targets are to reduce greenhouse gas emissions, when compared to 1990, by 20% by 2020 and by at least 40% by 2030. As a long-term target, the EU aims to reduce its emissions by 80–95% by 2050, as part of the efforts required by the developed countries as a group.
By 2020, Italy’s national target under the EU Effort Sharing Decision is to reduce emissions by 13%, compared to 2005. By 2030, Italy’s national target under the Effort Sharing legislation will be to reduce emissions by 33%, compared to 2005.
The impetus on regulating the matter in question was first driven by European Directive No 83/477/CEE, which established the principle of reducing and preventing pollution caused by asbestos for the protection of human health and the environment.
In Italy, the issue was addressed with Law No 257 of 27 March 1992, representing the main piece of national legislation on asbestos, which dealt with the dangerous nature of asbestos on the one hand by introducing a complete ban on asbestos on the national territory (the first country in Europe to do so), prohibiting the extraction, import, export, sale and manufacture of products containing asbestos and, on the other hand, by regulating decontamination and the environmental remediation of areas affected by asbestos pollution.
The matter is regulated in detail by secondary legislation. Ministerial Decree of 6 September 1994 should be noted as it provides technical methodologies and procedures relating to the risk assessment, supervision, maintenance and remediation of asbestos-containing materials found in buildings.
At a local level, by express provision of Law No 257/1992, each region has implemented a regional asbestos plan, which sets down in greater detail – within the framework of the principles established by state law – how asbestos shall be disposed of and removed.
The protection of workers from the risks connected with on-the-job exposure to asbestos is regulated by Legislative Decree No 81 of 9 April 2008 (Consolidated Act on health and safety at work).
As for the removal of asbestos, a close examination of buildings to detect the presence of such material is only mandatory for public buildings, while it is optional for privately owned real estate. In the latter case, should owners find the presence of asbestos, they shall notify the local health authorities only if the asbestos found is friable. If it deems it appropriate to do so, the public administration may order the removal of the asbestos at the owner’s expense.
The management of asbestos waste is regulated by Legislative Decree No 152/2006, as well as special legislation. Specific regulations apply with regard to temporary storage and waste treatment, and to companies operating in the disposal and removal of asbestos and the remediation of contaminated areas.
The legislation in force in Italy on waste management is largely of EU derivation. The main piece of the regulatory framework is Legislative Decree No 152/2006 (Environmental Code), Part Four of which contains the main regulations relating to waste management. Additional laws – complementary to the Environmental Code – are adopted on specific matters, often in the implementation of EU directives governing the management of certain categories of waste. Specific types of waste of this kind include waste electrical and electronic equipment (WEEE), waste batteries and accumulators (WBA) and asbestos.
The Environmental Code has recently been reformed due to the transposition into national legislation of the Directives of the EU Circular Economy Package, by means of Legislative Decrees No 116, 118, 119 and 121/2020. These Decrees, which entered into force in September 2020, amended the Environmental Code as well as other existing legislation with the overall aim of progressively increasing waste recycling and significantly reducing the use of landfills.
With regard to the competences in this subject, Chapter II of Part Four of the Environmental Code is dedicated to the allocation of state, regional, provincial and municipal functions. The main regulatory authority in the waste sector is the State, but several provisions of the Environmental Code allow regions to introduce stricter protective measures.
Provisions on waste management are generally enforced through criminal and/or administrative sanctions.
In addition to the state and local authorities, the Italian Regulatory Authority for Energy, Networks and Environment (Autorità di Regolazione per Energia Reti e Ambiente – "the Authority"; Italian acronym: ARERA) carries out regulatory and supervisory activities in several environmental sectors, such as electricity, natural gas and water services. Since January 2018, according to Law No 205 of 27 December 2017, the Authority also has regulatory and control functions over the waste cycle, including sorted and urban waste. The Authority regulates its areas of competence through binding resolutions.
With regard to waste management, a general principle provides that all parties involved in the waste management process are liable for the correct disposal of waste. This principle is stated in Article 188 of the Environmental Code, according to which the waste producer can either directly treat waste, or hand it over to a subject who professionally deals with waste treatment activities, which can be either a public entity or a private subject registered in the National Register of Environmental Operators. Handing over the waste to said subjects, however, does not automatically exclude the consignor’s responsibility with regard to the waste treatment operations.
The above principle has been interpreted in case law so as to impose a duty on every subject of the chain, on one hand, to ascertain the conformity of the waste with what is declared by the consignor (producer or transporter) by verifying the related administrative documentation, and, on the other hand, to verify that the consignee is duly authorised to carry out the treatment operations in relation to the type of waste to be conferred.
According to Article 188, paragraph 4 of the Environmental Code, the responsibility of the producer or waste holder is excluded in case of waste delivered i) to the public collection service and ii) to duly authorised subjects, under the condition that the formalities required for providing documentary evidence of correct transport and/or disposal are complied with.
The Environmental Code has provided for the principle of extended producer responsibility (EPR), according to which the responsibility reverts to the producer of the product. In application of the EPR principle, in certain sectors producers, importers and distributors of the products – or of their raw materials – are required to contribute to or provide for their disposal or recycling.
Specific legislation in this regard already exists – for instance, in relation to packaging, electronic equipment (WEEE) and batteries. Following the transposition of Directive No 2018/851 by means of Legislative Decree No 116/2020, more sectors are bound to be regulated under the EPR principle soon. The Environmental Code, as recently reformed, provides that the Minister for the Environment shall institute EPR schemes with regard to other products (Articles 178-bis and ter), either on its own initiative or upon the request of the interested parties.
According to Articles 242–245 of the Environmental Code, any individual or landowner who is aware of the occurrence of an event of potential contamination of a site must send a notification to the relevant local authorities, even if they are not responsible for the event of pollution in question. Failure to notify authorities renders an individual or landowner subject to criminal penalties.
In addition, environmental permits (see 3.2 Environmental Permits) usually require the competent authorities to be notified of any environmental incidents occurring at the plant.
Provisions on environmental information are mainly contained in Legislative Decree No 195 of 19 August 2005, according to Article 3 of which public bodies must disclose the environmental information to anyone who requests it. The right of access to environmental information is not conditional on the proof of any specific interest on the applicant’s part. Environmental information is provided within 30 days, or within 60 days if particularly complex information is requested. However, Article 5 of the decree lists that access to environmental information may be denied when:
Companies are not required to disclose environmental information in their annual reports. However, environmental permits often require annual reports to be submitted to the relevant public entities regarding the environmental status of the plants and compliance with the provisions included in the permit.
According to the usual practice, environmental matters are included in the scope of due diligence conducted in M&A, and finance and property transactions. Understanding environmental issues related to a site or other company’s assets is of great importance for potential investors, as the presence of environmental costs, liabilities or risks can have a significant impact on the value of the assets subject to the transaction.
The type of due diligence varies according to the characteristics and object of the transaction, as well as the scope of the instructions received from the investor. The possible impact of environmental issues on the activity of a company depends on a range of factors, such as the sector in which the target company operates, its size and presence in the territory, the activity carried out and the production cycle.
In general, the main areas of analysis include:
In general, a seller is not required by law to disclose environmental information. The obligation of a seller to disclose environmental information, therefore, may depend upon what the parties have discussed and agreed in the acquisition agreement. Moreover, under the general principle of good faith set out in the Civil Code, a seller should inform the purchaser of any environmental issues of which they are aware, so as to avoid subsequent claims for damages.
Ecotaxation in Italy generates one of the highest revenues in Europe in relation to GDP (3.27% in 2018), according to the latest update to the Eurostat report published in January 2020.
Italy began to address the issue of ecotaxation with the 1998 Finance Law (Legislation No 449 of 27 December 1997), by introducing a tax on SO₂ (sulphur dioxide) and NOx (nitric oxide) emissions. Currently, there are several types of environmental taxes. Among those on emissions, the most important is carbon tax, aimed at reducing CO₂ emissions according to the obligations undertaken at an international level. It operates by taxing the units of pollutants, thus making air purification more convenient than the payment of taxes. Taxes on products are applied to discourage the production and/or consumption of goods that generate pollution during their entire life cycle (such as taxes on plastic products or on the purchase of polluting cars). Taxation on environmental services aims to compensate them for their costs, such as the TARI tax applied to finance the costs of collection and disposal of waste.