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Newsletter | November 2015, Issue 3
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ENVIRONMENT
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Environmental Pollution Claims & Compulsory Liability Insurance – Why Companies Should Routinely Undertake Systematic Information Management and Classification
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In December 2015, we expect the proposed legislation of the Enforcement Decree, and the Enforcement Rules to the Environmental Pollution Damage Compensation and Recovery Act (the “Act”) to be promulgated (collectively, the “Lower Regulations”).
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Generally, we would like to draw your attention to the following main points:
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| 1) |
Given that the deadline for the obligatory insurance subscription period is June 30, 2016, a company should review whether it operates facilities which require subscription to the compulsory environmental liability insurance.
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| 2) |
In addition, the Lower Regulations stipulate that a company must answer to the victims’ information requests within a specified time period.
| A. |
In principle, the company has 10 days to provide the requested information. If the company has valid reasons for extension, it can extend the period (up to a maximum of 20 days).
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| B. |
In an effort to comply with the statutory period, if a company does not routinely systemize and manage its business information, the company may inadvertently disseminate confidential business information.
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| C. |
To best cope with potential information requests, we believe it would be prudent for a company to routinely and systematically classify and manage company information.
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Specifically, the Lower Regulations set out details of the following provisions prescribed under the Act:
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| 1) |
Imposition of strict liability upon businesses causing environmental pollution;
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| 2) |
Presumption of causation of damages;
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| 3) |
Victims’ rights to request for information; and
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| 4) |
Obligation to subscribe to environmental liability insurance.
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Detailed explanations of the Lower Regulations are found below.
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Relevant Provisions
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Key Details
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Defining facilities subject to environmental liability insurance subscription1
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Article 8 limits the scope of those facilities subject to compulsory environmental liability insurance subscription as follows:
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Facilities subject to management of specific soil contamination: Petroleum storage facility with over 1,000 kL in storage capacity; hazardous chemical substance manufacturing and storage facilities subject to the filing and submission of risk management plan (pursuant to Article 41 of the Chemicals Control Act (“CCA”)).
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Hazardous chemical substance handling facilities: Hazardous chemical substance manufacturing and storage facilities subject to the filing and submission of risk management plan (pursuant to Article 41 of the Chemicals Control Act (“CCA”)).
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Other facilities: Air pollutant emission facilities of Class 1 business premise (under Article 25 of the Clean Air Conservation Act); wastewater generating facilities or wastewater generating facilities with zero discharge for Class 1 business premise (under Article 44 to the Enforcement Decree to the Water Quality and Aquatic Ecosystem Conservation Act).
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Setting damages cap for businesses2
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Group A (high-level risk group): KRW 200 billion (statutory cap).
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Group B (mid-level risk group): KRW 100 billion.
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Group C (low-level risk group): KRW 50 billion.
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Criteria for distinguishing Groups A, B, and C is determined by reviewing past cases of environmental pollution accidents, court precedents, and damage patterns per business type.3
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Defining minimum guaranteed insurance award for compulsory environmental liability insurance per one environmental pollution damage4
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Group A (high-level risk group): KRW 30 billion.
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Group B (mid-level risk group): KRW 10 billion.
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Group C (low-level risk group): KRW 5 billion.
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Defining method to request for information and period to provide information5
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Forms and methods of information requests are prescribed to ensure effectiveness of rights to an information request.
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A business that receives an information request shall provide the information or make the information accessible within 10 days of receiving such a request.
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If valid reasons exist, a one-time extension not exceeding 10 days can be made to the foregoing period. If the business refuses to provide, postpones the information provision, or provides insufficient information, victims may request that the Minister of Environment compel the business to provide the requested information, or access to the information.
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Setting obligatory insurance subscription period6
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The business shall subscribe to the compulsory environmental liability insurance no later than June 30, 2016.
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The business must then submit the Insurance Subscription Certificate or the Certificate of Guarantee Contract with KEITI to the permitting authority of the facility.
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The insurer shall enter the insurance subscription matters into the Environmental Liability Insurance Electronic Database, and notify the insurance subscription to the permitting authority no later than June 30, 2016.
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The table below lists the facilities that are subject to the compulsory environmental liability insurance subscription requirement set forth under the Act, and the facilities that are required to subscribe to the compulsory environmental liability insurance under the Lower Regulations.
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Classification
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(Proposed) Facilities That Must Be Insured
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Air
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Specific hazardous air pollutant emission facility
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Class 1 air pollutant emission facility
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Water
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Specific hazardous water pollutant discharge facility
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Class 1 water pollutant discharge facility
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Wastes
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Designated waste disposal facility
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Construction wastes
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Livestock manure
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Soil
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Petroleum storage facility with over 1,000 kL in storage capacity
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Facilities subject to the filing of risk management plan
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Oil pipeline facility
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Hazardous chemical substances
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Facilities subject to the filing of risk management plan
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Noise and vibration
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Persistent organic pollutants
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Marine
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Oil and hazardous liquid substance storage facility
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Pollutant storage facility
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Wastes storage facility
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| 1 |
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Article 8 of the Enforcement Decree, and Annex 3 to the Enforcement Decree
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Article 4 of the Enforcement Decree, and Annex 2 to the Enforcement Decree
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See Annex 2 to the Proposed Enforcement Decree for further details on the facilities subject to the application of the criteria.
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Article 10 of the Enforcement Decree, and Annex 4 to the Enforcement Decree
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Article 5 of the Enforcement Rules
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| 6 |
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Article 2 of the Supplementary Provisions to the Enforcement Rules
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Back to Main Page
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If you have any questions regarding this article, please contact below:
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For more information, please visit our website:
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