Environmental Law 2019 Second Edition

Last Updated November 13, 2019

France

Law and Practice

Authors



Foley Hoag LLP has offices in Boston, New York, Washington, DC and Paris, and 300 lawyers worldwide, including 20 who specialise in environmental law. In Paris, the environment team’s expertise mainly focuses on four areas: (i) the management of facilities, risks and pollution, which encompasses support and assistance in industrial projects, including securing administrative proceedings, compliance issues, environmental and health issues, and technological risk management; (ii) site redevelopment, including the development of strategies for the reconversion of industrial sites and the environmental aspects of corporate or real estate transactions; (iii) waste management, including waste recycling, waste-to-energy conversion and the restructuring of extended producer responsibility programmes; and (iv) the sustainable management of companies and their products, including environmental reporting, hazardous product management and the regulation of substances such as biocide and nanomaterial.

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.

Key Policies

A main aspect of French environmental law relates to the classified facilities regulation. An industrial or agricultural facility that has the potential  to 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 – all of which are discussed further in 3.2 Environmental Permits. 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 concerns 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 Parliament is currently discussing a bill on "circular economy", which aims at encouraging the repairing and recycling of consumer products, promoting waste recovery and thus reducing consumption; this is further discussed in 14.1 Key Laws and Regulatory Controls.

Key Principles

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 in the first article of the Constitution that the state promotes all actions in favour of climate and biodiversity protection.

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.

In France, the governmental body in charge of environmental policies is the Ministry for the Ecological and Solidary transition (Ministère de la transition écologique et solidaire). Its missions mostly involve the drafting of environmental regulatory provisions. 

The Ministry is directly represented throughout the country by the prefects of the departments (local subdivisions of the French regions), which are the main regulatory authorities. They are responsible for issuing orders or authorisations relating to the activity of regulated facilities, and for ensuring compliance with regulatory requirements. In carrying out these functions, the prefect relies on local administrative services, such as the Regional Directorates for the Environment, Planning and Housing (DREAL) in the region as well as the Departmental Direction of the Territories (DDT), which all come in support of those authorities and participate in the local implementation of the national policy.

The newly adopted legislation for energy and climate (of November 2019) specifies the role of the Environmental Authority (Autorité environnementale), which is the advisory body regarding projects that are likely to affect the environment. The Environmental Authority has two roles: the first is to examine case-by-case the projects that may be subject to environmental impact assessment; the second is to evaluate the quality of the environmental impact assessment (further discussed in 3.2 Environmental Permits).

French administrative courts recently stated that the Environmental Authority shall remain totally independent and be different from the authority in charge of delivering the permit. In this context, the French government intends to issue a decree making the prefect of a region the official authority in charge of case-by-case decisions.

Finally, other specific agencies play a role in some defined sectors – for example, the Nuclear Safety Authority (ASN) or the Regional Health Agency (ARS).

In 2019, one large agency has been created regarding all biodiversity matters: the Office Français de la Biodiversité (French Office for biodiversity), also known as OFB. This new law of July 2019 aims at better protection of biodiversity by merging under a single agency all the competent services for the preservation of French ecosystems.

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.

Administrative Inspections

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.The new law creating the Office Français de la Biodiversité” (commonly referred to as Loi OFB) of July 2019 gives additional powers to environmental inspectors. They now have competence to take samples and place them under seal, which can be used as proof.

If irregularities are found during the inspection, the administrative authority can impose sanctions. However, 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.

The Loi OFB of July 2019 introduces a new criminal offence in the Environmental Code: in the specific case where an operator, who has conducted his or her activity without an authorisation or a certification, is being ordered by the regulatory authority to take remediation measures in the context of the cessation of his or her activity and does not respect this order, the sanction might result in a two-year prison sentence and a maximum fine of up to EUR100,000 for the operator.

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.

Criminal Investigations

Criminal investigations are accomplished by regulatory authorities in case of a breach of environmental law, in a manner that must be conducted 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 he 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. Since the law OFB, environmental inspectors will also be able to collaborate with other police services for a given case, but they will remain entirely autonomous in their investigations.

Since the enactment of this new law, one can notice an overall harmonisation of prerogatives among judicial and environmental inspectors, where the latter have been given much more power to investigate and punish environmental offences.

Requirements for Environmental Permits

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). Facilities with the highest risks for the environment fall under a special category, determined by The Seveso Directive (high or low rank) and require specific controls and prescriptions.

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).

Recently, classified facilities and water regulations have been simplified. Since 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.

This environmental authorisation thus covers other specific authorisations when they are required 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.

In order to improve the efficiency and the rapidness of the process, the procedure has been standardised in 2019 for every project application. From now on, prospective operators must fill an appropriate form called CERFA. This new system is part of an overall tendency supported by public authorities to dematerialise administrative procedures.

For each level of environmental permit, the French Environmental Code provides the criteria and procedures to obtain the permit.

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 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. 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. Depending on their expected impact, not all projects have to fulfil the same assessment obligations. 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.

After a public enquiry, regulatory authorities 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.

Finally, a law of 2019 has introduced the concept of "industrial platform" (Plateforme industrielle) in the Environmental Code. This legal innovation does not create a new category of permits, but rather provides a new legal frame for a concentration of facilities within the same restricted geographical area, which exercise similar activities and thus can pool the administration of some goods and services required for their activity. This concept aims at simplifying the day-to-day operations of those sites. From an environmental point of view, the pooling of their devices enables the facilities to reduce their waste production and their energy consumption, and to optimise their safety checks.

Transferring Environmental Permits

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.

Penalties/Sanctions for Breach

Regarding the sanctions for the breach of permitting requirements, the French Environmental Code includes both criminal and administrative sanctions to punish the breach of permitting requirements.

Firstly, if one runs a facility without an environmental authorisation, the criminal sanctions include a one-year prison sentence and a maximum fine of EUR75,000, which is multiplied by five when the offender is a corporate entity.

Secondly, independently and cumulatively, the regulatory authority may (i) require, by issuing a formal notice, compliance with the regulation within a time limit, and then (ii) impose administrative sanctions on the offender. In addition to the suspension of the facility’s activity, the regulatory authority may hold a deposit until the required work is completed. The authority can also have the prescribed measures carried out automatically, in place of the person summoned, and at his or her own expense. In order to ensure that the measures will be fully implemented, the regulatory authority can impose a maximum fine of up to EUR15,000, or the payment of a daily penalty payment of up to EUR1,500 until the compliance is achieved.

The fines and penalty payments must be proportionate to the seriousness of the breaches and shall take into account, in particular, the importance of the harm caused to the environment.

In French law, three types of liability can be imposed on operators and polluters.

Firstly, 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 to determine liability.

Secondly, civil liability in environmental matters 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 9 Civil Liability). Additionally, it is possible to be held liable for environmental damage under contractual liability. Such liability would likely arise in lands purchases, when a seller retains important information regarding the facility and the industrial history of the land (see 16 Transactions).

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 one 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 or she was not the operator at the time the pollution originated (for instance, the transfer of a gas station to one operator from another). 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 specific situations. In that regard, if none of the above-mentioned former stakeholders can be identified, the owner of the contaminated land may be liable if his negligence or participation in the pollution can be proven. It means that the Code does not impose strict liability on an owner of land if he did not cause the pollution and was not negligent.

Administrative Liabilities

Operator’s 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.

State’s liability

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. Such illustration arises, for instance, when the prefect does not exercise sufficient control over a classified facility’s activity, which consequently generates pollution. Public authorities can elude liability if they demonstrate that they have conducted the necessary checks to ensure the given facility’s safety.

On a more general note, one shall take into account the overall tendency to make the state liable for its inaction or the insufficiency of its actions regarding environmental protection. For instance, the liability of the state has recently been recognised by administrative courts regarding the insufficiency of the measures enshrined in the Protective Atmospheric Plan, which was originally taken to prevent air pollution.

Civil Liability

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).

Under these concepts, which are similar to the concepts of nuisance and strict liability under most US 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 was 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 9 Civil Liability) and providing that any person who causes an ecological prejudice must repair it in kind.

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.

Concerning the interaction between corporate law and environmental law, a new piece of legislation, Loi PACTE, was voted in May 2019 and creates new obligations for companies. It imposes that any decision related to the company management shall take into account corporate social responsibility (CSR) and environmental considerations (which were not a compulsory obligation before). This law also enables voluntary firms to expose their “reason to exist” (raison d’être) to justify what they can bring to customers on a competitive market. Additionally, a company’s board of directors, when setting the annual guidelines, shall take into account all the environmental and social stakes.

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 offence) or if it can be shown that 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 EUR100,000 to a prison sentence of up to two years. Additional penalties, such as 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.

Furthermore, investing in environmental protection is a tremendous opportunity for banks and private investors to improve their reputation. The French government has demonstrated its will to promote green finance by launching Greenfin, a label that aspires to be the first state certification for green finance. This certification aims at ensuring transparency and the environmental involvement of financial products. This could help individuals and corporates to invest their savings in a product that finances energy transition and the fight against climate change.

Since financial institutions and/or lenders’ liability is not specific to environmental project funding, these entities should be aware, 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).

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 or her neighbour, even if an environmental permit authorises the industrial activity. 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 Civil 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 who causes environmental damage can be held liable and be made to repair it in kind. If impossible, the reparation ought to be pecuniary. 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, 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. This type of private contract does not affect private parties’ potential liability to regulatory authorities.

There is also one possibility allowing the last operator to transfer its administrative liability. Indeed, regarding liability for pollution caused by a classified facility, the French Environmental Code has provided since 2014 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. The operator has a residual liability if the third party cannot fulfil his new obligations.

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.

First, 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.

There is no definition of contaminated land under French law. However, a 2017 French methodology provides criteria in order to determine the environmental condition according to which a site must be managed, if need be.

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 landscape, the rational use of energy, the historic sites and monuments conservation or the archaeological heritage).

The remediation is mandatory 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. If the future use is most frequently an industrial use, a different use can be suggested by the operator, regarding the planning regulation. Usually, the mayor (le maire) and the landowner, when different from the operator, are consulted on the use suggested by the operator to the prefect within the determination of the future use of the site. 

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.

Second, the French Environmental Code provides a “contaminated land” section that describes the specificities of the remediation mechanism and the obligations of each stakeholder. 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. The regulatory authority may also charge a deposit until the remediation works are finalised.

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. Therefore, when remediation has properly been carried out, the person who changes the use must provide measures to manage the pollution in order to ensure that the land is compatible with public safety or health.

Finally, it is also notable that the waste regulation does not apply to contaminated land any more, except for the provisions addressing the waste present on the site or the excavated soils.

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 framework.

Key Policies

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.

Key Principles

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 Climate 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 (CO₂) 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 the least developed countries.

Key Laws

Key laws relating to climate change are Law No 2009-967 dated 3 August 2009 (Grenelle II) and Law nNo 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. In 2019, the new Energie-Climat law (discussed in 2.1 Key Regulatory Authorities) introduced into the French Energy Code the concept of “ecological and climate emergency” so that every climate policies must be conducted with high environmental standards accordingly to this objective.

As indicated in 12.1 Key Policies, Principles and Laws, in order 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 four between 1990 and 2050. For 2021-30, the Ministry for the Ecological and Solidary Transition has issued a series of objectives aiming at reducing greenhouse gas emissions by 43% (by comparison to 2005 levels), with a particular focus on aviation and industry.

The Environment Code provides for a series of reduction objectives contributing to the overall objective of reducing greenhouse gas emissions (especially regarding energy consumption). In respect of the ambition to emancipate the country from fossil energy, the Energie-Climat law of 2019 sets a reduction by 40% of the consumption of fossil energy by 2030, and has anticipated the shutdown of the four remaining coal-fired power plants.

Historically, asbestos was a frequently used substance in construction in France. Therefore, exposure to asbestos is widespread and is the most common cause of workplace death.

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 Social 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 Code also 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).

Physical harm or injury does not have to be established for a claim in damages. Since 2010, French 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.

Recently, the French Cour de Cassation has broadened the scope of the anxiety prejudice to substances other than asbestos. As a result, any employee that has been exposed to a toxic substance that can lead to a serious pathology can obtain damages on the ground of the anxiety prejudice.

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. Therefore, there is a hierarchy in waste management.

The person responsible for waste management is traditionally either the waste producer or the waste-holder.

In regard to the regulatory inspections, the mayor is the regulatory authority for the application of the waste regulation, except if the waste is subject to the classified facilities regulation. In that case, the prefect will be the competent authority to take action.

In 2019, circular economy has become a priority for the French government, as a bill is currently being discussed at the Parliament. The intent of the legislation is to reduce waste by improving their recovery and recycling, and undermining planned obsolescence. This law also provides further duties for producers: under this new legislation, there will be a global prohibition of the destruction of unsold products in order to preserve resources. This law also introduces a deposit return scheme in order to increase recycling and to drop significantly the amount of waste.

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 or she 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.

A recent decision from the European Union Court of Justice is likely to affect the French waste disposal sector, since it has been ruled that in accordance with the precaution principle, when the hazardousness of a waste cannot be determined, it must be classified and disposed as a dangerous waste.

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 20 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 all these sectors, producers usually have to pay an eco–contribution in order to fulfil their REP obligation.

The new bill for the circular economy plans to extend the REP mechanism to toys, sport and handiwork equipment and cigarettes. This new bill plans to launch a system of economic bonuses and maluses to encourage more environmentally friendly methods of production (the use of recycled materials, of renewable resources, the durability, reparability and reuse of products, as well as the reduction of hazardous substances in the process). This new system will have an impact, either positive or negative, on the final price of products, and will apply to every product that belongs to a REP sector. The bill for the circular economy also plans to extend the existing obligation of the manufacturer to take back an old device, free of charge, when the consumer buys a new one. This obligation will also apply to online commerce.

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.

When the state has knowledge regarding contaminated lands, it must design Informative Zones on Soils (Secteurs d’Information sur les Sols, SIS). This mechanism aims at providing the general public knowledge on the historic pollution of a given land, and at guaranteeing the absence of sanitary and environmental risks for future uses of the land. This device excludes facilities that are still operative as well as nuclear facilities.

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 kinds of companies: (i) 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; and (ii) 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.

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 on the facility. The Phase 2 report (site investigations) is not automatically performed, but is generally 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 land acquisition, 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 seller provided 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.

A seller who fails to provide the appropriate information by voluntary omission or negligence might retain environmental liability for historic environmental damage or breaches of environmental law in the following situations.

Hidden Defects Warranty (garantie des vices cachés)

In principle, the law provides for the responsibility of the seller in case of hidden defects. 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 or she 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.

Fraud (dol)

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.

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 CO₂ emissions generated by the production, thus favouring products with the lowest emissions. Initially the tax amounted to EUR7 per ton of CO₂. It has been reassessed each year, and in 2019 totals EUR44.60. The government decided not to increase the tax in 2020 after a year of social protests throughout the country, arguing for a fairer system geared towards climate justice.

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.

Foley Hoag LLP

153, rue du Faubourg Saint-Honoré
75008 Paris
France

+33 1 70 36 61 30

+33 1 70 36 61 31

cleroygleizes@foleyhoag.com www.foleyhoag.com
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Law and Practice

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Foley Hoag LLP has offices in Boston, New York, Washington, DC and Paris, and 300 lawyers worldwide, including 20 who specialise in environmental law. In Paris, the environment team’s expertise mainly focuses on four areas: (i) the management of facilities, risks and pollution, which encompasses support and assistance in industrial projects, including securing administrative proceedings, compliance issues, environmental and health issues, and technological risk management; (ii) site redevelopment, including the development of strategies for the reconversion of industrial sites and the environmental aspects of corporate or real estate transactions; (iii) waste management, including waste recycling, waste-to-energy conversion and the restructuring of extended producer responsibility programmes; and (iv) the sustainable management of companies and their products, including environmental reporting, hazardous product management and the regulation of substances such as biocide and nanomaterial.

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