An Overview on Environment Law in Romania

Published in PLC Cross-border Environment Handbook, 2008-2009

Regulatory framework

1. Please briefly set out the key environmental legislation and regulatory authorities in your jurisdiction.
Romania has very extensive legislation dealing with environmental matters. Romania’s accession to the European Union on January 1, 2007 played a significant role in shaping this legislation. Thus, both before and after the accession date, Romania has taken measures to transpose all EU and European Communities’ law in the environmental field and to further implement them at national level. Transition periods were obtained for the implementation of specific environmental provisions set out by EU law through the 2005 Accession Treaty.

The environmental legislation is as diverse in form as it is extensive. The main rules and regulations in the field are usually set by laws, as well as government ordinances and decisions. These forms of enactments are used for the transposition of EU environmental directives. Their scope o ranges from general permitting and liability rules to specific provisions on matters such as the pollution of air, soil and water, integrated pollution prevention and control, asbestos, waste management, and end-of-life vehicles. EU regulations (directly applicable at national level) also play an important role, especially in respect of chemical laws and trans-border transportation of hazardous materials.

Romania is also part of and has ratified various bilateral, regional and international conventions and treaties on environmental matters, including the 1992 UN Framework Convention on Climate Change and its 1997 Kyoto Protocol, the 1982 UN Convention on the Law of the Sea, the 1973 International Convention for the Prevention of Pollution from Ships and its 1978 Protocol, etc. Secondary legislation was further enacted, usually in the form of ministerial orders issued by the Ministry of Environment and Sustainable Development (or its predecessors). These orders set out detailed procedural rules for the implementation of provisions of the primary legislation.

There are three main authorities having competencies in the environmental protection field, each covering a specific activity area:

Ministry of Environment and Sustainable Development (MESD) is currently the central environmental authority, having policy-making and coordinating attributions as well as supervisory attributions with respect to the other environmental authorities. The MESD also acts as liaison with the European Community for fulfilling Romania’s reporting obligations under various EU directives.
National Environmental Protection Agency (NEPA) is the authority having implementation-related attributions. It is mainly in charge with the coordination of various permitting procedures through its regional and local agencies. This authority has also taken over the attributions of the former National Agency for Dangerous Chemical Substances that was dissolved in December 2007.
National Environmental Guard (NEG) is the main enforcement authority, having competences mainly in respect of verifying compliance with environmental laws and regulations.

In certain areas, additional authorities or entities may play a role in the implementation of environmental law. For example, for the administration of certain natural protected areas special entities may be set up, such as the Administration of the Danube Delta Biosphere Reservation. These entities have a part in the determination and application of rules for activities carried out within or in the vicinity of the relevant natural protection areas. Time constrains that have sometimes characterised the transposition of the EU environmental law into Romanian law has lead to the adoption of enactments that are not fully corroborated with the existing legal provisions. The administrative support for ensuring an effective and immediate implementation of these regulations has also been lacking. The companies and public’s awareness about environmental-related rights and obligations is still rather low, this adding to the difficulties in implementing the new regulations in the field. For these reasons, while Romania has implemented most of the EU legislation, lack of certainty and clarity still needs to be addressed at all administrative levels.

2. To what extent are environmental requirements enforced by regulators in your jurisdiction?
The effective enforcement of Romanian environmental law has progressed as compared with previous years. NEG has been more active in the verification of companies’ general compliance with environmental obligations. This authority’s pro-active response to environmental incidents has also increased, including in terms of ordering the suspension of companies’ activities when it identified serious breaches of environmental legislation. However, measures are taken to improve NEG’s activity, including by the adoption in 2007 of new procedural guidelines on the performance of investigations. From the companies’ perspective, environmental compliance, fairly ignored in the past, is gaining more and more significance. This is due in part to the increase of public’s awareness in environmental matters (although there still is a long way to go to match Romanian public’s activity in this field with the one in other EU countries). The increase of NEG’s activity in the field has also contributed to this shift in companies’ position.

3. To what extent are environmental non-governmental organisations (NGOs) and other pressure groups active in your jurisdiction?
The environmental NGOs activity has steadily increased in the recent past, although there is no predictable pattern or areas of interest. In one case, various NGOs have successfully blocked for the time being the initiative to explore mineral resources with methods involving the use of cyanide.

Due to this increase in NGOs activity and the first evidence of successful coordination of NGOs for preventing the implementation of a project, companies have started to pay more attention to public’s participation in the decision-making process. Thus, companies have started to consider NGOs’ presence on the Romanian market when deciding on the implementation of new projects or the amendment of existing ones. Nonetheless, NGOs have yet to be regarded as a major actor in the environmental decision-making process in areas where the environmental impact is not immediately evident or the consequences are not regarded as serious. The range of NGOs (more than 200 in number) varies from those established for specific purposes, such as for fighting the pollution of the Black Sea or the use of cyanide in mining activities, to NGOs covering all aspects having an environmental impact. Local communities have also proven an efficient pressure group in connection with projects having a direct impact on the quality of their lives. Thus, in a few cases, local communities have been successful in delaying the issuance of permits under the integrated pollution prevention and control regulations by acting in an organised and pro-active manner.

Emissions

4. Is there an integrated permitting regime or are there separate environmental regimes for different types of emissions? Can companies apply for a single environmental permit for all activities on a site or do they have to apply for separate permits?
Currently, Romania has an integrated permitting regime. The need to obtain one or several environmental-related permits is determined considering the type of activity carried out, the estimated impact on the environment and the environmental factors that may be affected (e.g., water, air).

Romanian law makes a distinction between activities having a significant impact on the environment (for which a permit is generally required) and activities without such an impact. MESD Order No. 1798/2007 on the approval of the Procedure for the issuance of the environmental authorization defines the activities deemed to have a significant impact on the environment by reference to their object of activity. Distinction between activities with a significant, reduced or insignificant impact on the environment made under the former regime continues to have relevance in connection with the procedures applicable during a project’s construction phase.

Different environmental permits are required for the construction and commissioning of activities with an impact on the environment. Other permits (e.g., water management permits) may be required depending on the location of an activity as opposed to water courses or the possible need to use or discharge waters in the normal course of the activity. Similarly, the discharge of certain greenhouse gases into the atmosphere may require the obtaining of yet another permit. Finally, a different document (i.e., the environmental permit) is required upon the transfer of certain activities having a significant impact on the environment. Overall, the environmental permitting regime is lengthy and burdensome. Added to that burden is the fact that not always the procedural rules for the issuance of the documents are straightforward.

5. If there is an integrated permitting regime, please provide a brief overview of it, in particular: What permits are needed and which regulator issues them?, How long do permits last?, Are there restrictions on transferring permits?, What are the penalties for non-compliance?
Different permits are required for each of the two main stages of a project: the construction and the putting into commission. Main rules in the field are set out by the Government Emergency Ordinance No. 195/2005 on environment protection (the Environmental Protection Law) and the Government Emergency Ordinance No. 152/2005 on integrated pollution prevention and control. Secondary legislation approved by Government Decision and/or MESD orders further supplements the general rules in the field.

For the construction phase, the main environmental permits are:

Environmental permit for plans and programs (aviz de mediu pentru planuri si programe) is a document that may be required as part of the procedure for the approval of plans and programs approved by public authorities (including those co-financed by the European Community) and that may have a significant impact on the environment. For example, land planning documentation may require an environmental permit. The validity of an environmental permit for plans and programs corresponds to the validity of the document for which it was issued, unless amendments occur in the meanwhile.
Environmental approval/environmental integrated approval (acord de mediu / acord integrat de mediu) is a document required for the development of projects that may have a significant impact on the environment. The environmental approval may also be required for the modification of an existing project or for demolition works. The environmental approval may require the performance of an environmental impact assessment and sets out the conditions under which a project may start to be implemented. As a rule, the environmental approval is valid for the duration necessary for the completion of construction works, provided works start within two years from the issuance date. No such conditioning is provided for projects having foreign financing.

For the commissioning phase, the main environmental permit is the environmental authorization / integrated pollution prevention and control permit (autorizatie de mediu / autorizatie integrata de mediu) that sets forth the conditions under which an activity with a significant impact on the environment may be carried out. As a rule, the environmental authorization is required for these activities. Where due to the nature of the activity or substances used therein, the impact on the environment is deemed material, the integrated pollution prevention and control permit (IPPC permit) is required instead of a simple environmental authorization. The environmental authorization / IPPC permit may include conformity programs setting out specific obligations, related deadlines and estimated costs.

The environmental permit is required upon the transfer of activities having a potential significant impact on the environment by way of:

transfer of the majority stock of shares in the company carrying out the activity with a potential significant impact on the environment;
asset sale (when resulting in the transfer of an activity with a potential significant impact on the environment);
merger and de-merger;
concession or other situation leading to the change in the entity carrying out the activity with a potential impact on the environment;
dissolution followed by liquidation, liquidation, bankruptcy or cease of activity.

Due to the lack of clarity in the wording of the legal provisions, NEPA’s local agencies sometimes issue environmental permits even when the transaction in question does not lead to a transfer of activity (e.g., the sale of a plot of land). Further to the adoption of the new procedure for the issuance of the environmental authorization in December 2007, the possibility to transfer the environmental authorization as a result of an asset sale is no longer expressly recognized. Thus, the transfer of the environmental authorization may be ordered only upon the change of the company’s name or organizational form. Nonetheless, in practice NEPA’s local agencies continue to approve said transfer.

6. Please summarise the regulatory regime for water pollution (whether part of an integrated regime or separate). In particular:
What permits or other authorisations are required and which regulator issues them?
Are any activities prohibited (such as causing or failing to prevent water pollution)?
Can the regulator require a polluter to clean up or pay compensation for water pollution?
What are the penalties for non-compliance?

The main rules on water protection are set out by the Environmental Protection Law and Law No. 107/1996 – the Waters Law. Additional rules and regulations are included in secondary legislation in the field, including rules on the protection of water sources, obtaining water-related permits or complying with notification obligations, investigating the pollution of groundwater and remediation thereof, etc. The Waters Law provides the companies’ obligation to secure certain water-related permits to the extent their activities may is related or may have a direct impact on waters. The following permits may be required:

Water management permit (aviz de gospodarire a apelor) is a document that needs to be obtained prior to the execution of construction works as part of new investment projects on or in connection with water supply.
Water management authorization (autorizatie de gospodarire a apelor) is a document that needs to be obtained prior to the commissioning and exploitation of new projects erected on water or in connection with ground or underground water, shore line, etc. This document ensures the titleholder’s rights such as to use the surface waters for drinking and industrial purposes, navigation, generating energy, etc. or to discharge used waters.

Where the law does not require the obtaining of a water management permit or authorization, entities have to notify their activities with the competent activity (i.e., the water management system within the relevant branch of “Romanian Waters” National Company) prior to commencing construction and commissioning works. Both the Environmental Protection Law and the Waters Law prohibit the introduction of polluting matter into waters, except when permitted by law (e.g., when the company holds a valid water management authorization and only within the limits set forth therein). The breach of the Environmental Protection Law and/or the Waters Law may result in the application of administrative fines up to RON 100,000 (approx. USD 43,500) per breach and/or of remediation measures imposed by NEG. Criminal liability may also be established in certain cases (e.g., wilful discharge of waste or dangerous substances into waters, failure to comply with the restrictions or interdictions set for water protection). Finally, individuals may request the remediation of environmental damages incurred by them due to the companies’ non-compliance with water regulations in court.

One of the main principles governing Romanian environmental law is the “polluter pays” principles. Furthermore, the Environmental Protection Law provides that generally, the polluters’ liability is strict and joint, the latter when more than one polluter exists. Romania has recently transposed the Environmental Liability Directive through Government Emergency Ordinance No. 68/2007 on environmental liability with regard to the prevention and remedying of environmental damage (Environmental Liability Law). This enactment provides for prevention and remediation measures in case of polluting incidents leading, amongst others, to water pollution.

7. Please summarise the regulatory regime for air pollution (whether part of an integrated regime or separate). In particular:
What permits or other authorisations are required and which regulator issues them?
Are any activities prohibited (such as discharging certain substances into the air without a permit or causing air pollution)?
Can the regulator require the polluter to clean up or pay compensation for air pollution?
What are the penalties for non-compliance?

In addition to the general rules set by the Environmental Protection Law, the regulatory regime for air pollution is provided by the Government Emergency Ordinance No. 243/2000 on the atmosphere’s protection. Specific rules are further set out in specific areas, such as those concerning the emission of volatile organic compounds. The discharge of emissions into the atmosphere is permitted only with the observance of the applicable regulations, as well as the conditions set out in the relevant environmental approval or authorization. Installations generating greenhouse gas emissions are required to obtain a special greenhouse gas emission permit. The general rules on liability for environmental damages also apply in case of air pollution. As an application of the “polluter pays” principle, entities releasing certain polluting matters into the atmosphere are required to pay a special tax to the Environmental Fund. The administrative fines in this field may amount to up to RON 20,000 (approx. USD 8,700), and criminal penalties may also be applied for breaches similar to those related to water pollution.

Climate change

8. Please provide a brief overview of emissions trading schemes in your jurisdiction, including any national targets and carbon allowances systems. Is your jurisdiction party to international agreements on this issue and how have they been implemented into your national law?
Romania has transposed the Directive 2003/87/EC on the greenhouse emissions trading scheme and the Directive 2004/101/EC linking the EU emission trading scheme with the mechanisms set out by the Kyoto Protocol. The allocation plans for the periods 2005 – 2007 and 2008 – 2012 have been approved by the European Commission and the Romanian Government. However market players have only recently starter to show interest in the operation of the emission trading scheme. The operation of the emission trading scheme forms part of the wide set of measures adopted by Romania to fight climate change. Under the Kyoto Protocol, Romania undertook to reduce greenhouse gas emissions by 8% as compared with its 1989 levels by 2012. In addition to the emission trading scheme, Romania is active in the implementation of certain mechanisms adopted by the Kyoto Protocol (ratified by Romania by Law No. 3/2001). In particular, Romania has successfully completed various Joint Implementation Projects.

Environmental impact assessments

9. Please provide a brief overview of the requirements to carry out environmental impact assessments (EIAs) for certain projects (for example, construction of an oil and gas facility). In particular:
What type of projects and impacts are covered?
Are permits or other documents required before the project can start and which regulator issues them?
What are the penalties for non-compliance?

Government Decision No. 1213/2006 sets out the main rules on the performance of environmental impact assessments (EIAs) for certain projects. Generally, an EIA is necessary in case of projects considered to have harmful effects on one or several environmental factors. The categories of projects for which an EIA is always required are expressly set by law, e.g., heat plants and energy generating units having an installed power of at least 300 MW, integrated chemical installations, including oil refinery, etc. Similarly, the law provides the list of projects for which the need for an EIA is determined on a case by case basis.

The EIA is usually prepared as part of the procedure for the issuance of the environmental approval prior to commencing the construction works. The content of the EIA is defined by the competent authority taking into consideration the description of each project. If an EIA is prepared during the project’s construction phase, the same EIA may be relied upon during the procedure for obtaining the environmental authorization or IPPC permit. When an EIA was not prepared during the construction phase or when one wishes to reauthorize an existing activity, the environmental authority may require the preparation of an environmental audit as part of the procedure for issuing the environmental authorization. The audit’s level (level 0, I or II) varies depending on the project and the circumstances in which it is requested. For example, a level I environmental audit may be required when the activity fails to meet the conditions set by the existing environmental authorization. As the environmental approval is the document issued on the basis of the EIA, the law provides sanctions for the case when the approval is not obtained. In such a case, the competent authorities may apply administrative fines up to RON 60,000 (approx. USD 26,100) and order the dismantling of all works carried out without an environmental approval and the return of the land to its original state.

Waste

10. Please provide a brief overview of the regulatory regime for waste. In particular:
What permits or other authorisations are required and which regulator issues them?
What activities are prohibited (such as storing or disposing of waste without a permit)?
Do operators need to meet certain criteria (such as having sufficient financial means to operate landfills and other waste disposal sites)?
Are there special rules for certain types of waste (such as hazardous waste or electrical equipment)?
What are the penalties for non-compliance?

The regulations on management of waste are generally similar to those set out by the European Community law. The general framework in this field is ensured by Government Emergency Ordinance No. 78/2000 on the regime of waste, further supplemented by rules on landfills, waste incineration, shipment of waste, waste electrical and electronic equipment, end-of-life vehicles, packaging waste and waste from batteries and accumulators, etc. Transitional periods for implementing certain EU provisions concerning waste have been agreed upon in areas such as shipment of waste, landfills, waste electrical and electronic equipment, incineration of waste and packaging waste.

For carrying out waste management activities, companies need to hold an environmental authorization or an IPPC permit. Additional requirements need to be fulfilled in certain cases. For example, the shipment of waste needs to be performed with vehicles holding the required operating permits. Landfill operators need to provide proof that they hold the necessary financial means for operating and closing the respective landfills. In certain sectors (e.g., car manufacturing, manufacturing of electrical and electronic equipment, manufacturing of batteries or packaging materials), companies have the obligation to ensure the recovery and recycling of a determined percentage of waste resulting from their products. Generally, these companies have the possibility to organize this recovery activity through their own means or by delegating this responsibility to specialized organizations. Companies are prohibited from carrying out waste-related activities without holding the required authorization / permit or without observing the rules set out therein. The applicable law regulates both administrative fines amounting to RON 60,000 (approx. USD 26,100) and criminal sanctions for breaches of the provisions on the management of waste.

Asbestos

11. Please provide a brief overview of the regulatory regime for asbestos in buildings. In particular:
What activities are prohibited?
What are the main obligations (such as investigating the presence of asbestos and risk assessments for employees) and who is liable to carry them out?
What permits or other authorisations are required and which regulator issues them?
What are the penalties for non-compliance?

As of January 1, 2007, the sale and use of asbestos and products containing asbestos is prohibited pursuant to the Government Decision No. 124/2003 regarding the prevention, reduction and control of the environmental pollution by asbestos (transposing Council Directive 87/217/EEC). By exception, the materials or products containing asbestos which had already been installed or which had been put into operation prior to the year 2005 may continue to be used until the end of their life cycle. Failure to comply with this prohibition may result in the application of administrative fines up to RON 60,000 (approx. USD 26,100). The general rules on asbestos also provide for mandatory measurements of asbestos emissions in the air and water. These measurements are performed by approved laboratories based on a specific methodology approved by MESD.

Romania has also adopted rules concerning the health and safety of workers who may be exposed to asbestos. Employers have to evaluate and monitor any risks related to the employees working in an asbestos-containing area. Moreover, employers should ensure that no worker will be exposed to asbestos in the air exceeding a concentration of 0.1 fibres per cubic centimetre determined as an average over a period of eight hours. If this threshold is surpassed, measures should be taken to remedy this occurrence and the activity should be ceased until these measures are put in place.

Prior to starting any work which may entail an asbestos-related risk, employers should notify the competent labour authority. This notification should include details on the worksite, type and quantity of asbestos to be used or handled, envisaged activities and number of employees involved, as well as measures to be implemented for protecting employees while carrying out the envisaged activities.In addition, companies have to ensure that their employees or elected representatives are informed and consulted on the risks entailed by the existence of asbestos at the workplace and on envisaged measures for mitigating these risks. Special trainings should also be ensured for all employees working in the asbestos-containing area.

Contaminated land

12. Please provide a brief overview of the regulatory regime for contaminated land. In particular:
Which regulator is responsible and which legislation applies?
In what circumstances can a regulator require the investigation and clean-up of contaminated land?
What are the penalties for non-compliance?

In addition to the general rules set out by the Environmental Protection Law, special rules on the evaluation of soil and underground contamination and the remediation thereof are set out in Government Decision No. 1408/2007 and Government Decision No. 1403/2007 respectively. All land users, irrespective if they hold an ownership or use title over the land, have to comply with specific conservation and land planning regulations aimed at preventing soil and subsoil pollution. Additional rules exist with respect to the protection of agricultural and forestry areas, including conditions for the removal of land from the agricultural and forestry circuit.

As a means to protect the quality of life and ensure adequate leaving conditions for city inhabitants, currently the Environmental Protection Law prohibits the change in destination of green areas (e.g., parks, public gardens). In addition to the MESD, the NEPA and the NEG, the local authorities having land planning attributions, as well as Romsilva – the National Forestry Regie have responsibilities in so far the protection of land and underground is concerned.

The applicable legislation provides a wide range of sanctions for failure to comply with the rules on the protection of soil and underground. These sanctions include administrative fines from RON 10,000 (approx. USD 4,350) to RON 100,000 (approx. USD 43,500), criminal fines or imprisonment. In addition, the NEPA through its regional or local agencies or the NEG may order the implementation of remediation measures in case soil contamination is ascertained.

13. In relation to liability for contaminated land:
Which party is liable for carrying out or paying for environmental investigation and clean-up?
Can an owner or occupier who has not caused contamination be liable for investigation and clean-up of contamination on their land?
Can previous owners or occupiers be liable for contamination they have caused in the past?
Are there limits on liability or ways for a party to limit its liability?

Generally, the person actually causing the pollution should be liable for carrying out or paying for environmental investigation and clean-up as an application of the “polluter pays” principle. However, in practice the current owner or occupier of the land is usually the first contacted in connection with a contamination ascertained on its land. If this owner/occupier fails to provide sufficient arguments to the environmental authority that the contamination was caused by the previous owner/occupier or a third party, it will be initially held liable for the investigation and/or remediation costs. The current owner/occupier will then be entitled to go against the actual polluters for recuperating the costs incurred.

When the same activity resulting in the contamination of land is carried out by different owners/occupiers at different moments in time, they may be held jointly liable for environmental investigation and clean-up of contamination. If only one owner/occupier is held liable, it may go against the other polluters for their share of the costs incurred with the investigation and clean-up. Sale-purchase agreements play a significant role in defining the limits of each successive owner’s liability in so far the contamination of land is concerned (for details, please refer to Question 16 below). Land belonging to State-owned companies undergoing privatization represents a special matter of concern, as the State is reluctant to accept responsibility for the contamination existing as of the privatization date.

14. Can a lender incur liability for contaminated land and is it common for a lender to incur such liability? What steps do lenders commonly take to minimise such liability?
Considering the general rules on environmental liability, and in particular the “polluter pays” principle, lenders should not be held liable for contaminated land. As a means to further protect themselves against being held liable for borrowers’ actions resulting in the contamination of land, Romanian banks usually include relevant representations and warranties into their loan agreements, as well as full indemnity clauses for environmental matters.

15. Can a private individual bring legal action against a polluter, owner or occupier (for example, for damage caused by the movement of contamination onto his land)?
Any individual or legal person may bring an action against the owner or occupier of a plot of land for environmental damages incurred by it as a result of the latter’s polluting actions. The environmental liability under the Environmental Protection Law has a strict character and, thus, the person claiming damages does not have to prove the intent or fault of the owner/occupier causing the pollution.

Transactions

16. In what circumstances can a buyer inherit pre-acquisition environmental liability in:
An asset sale? / The sale of a company (share sale)?

Asset sale
Generally, each polluter should be held liable for the damages caused by it. As previously mentioned (Question 13 above), in practice the buyer may sometimes be held liable for existing pollution. The buyer and the seller may agree on how environmental responsibility should be divided between themselves. Under the general principles of Romanian law, the parties to an agreement may agree on a waiver of liability provided this waiver does not lead to the entire and unconditioned discharge of the debtor’s liability, as such would render such liability discretionary. Moreover, this waiver cannot protect the parties from third party claims based on liability in tort. In case the asset deal results in a transfer of activities having a potential significant impact on the environment, the seller (through the company carrying out the relevant activities) has to obtain an environmental permit prior to the completion of the transaction. The environmental permit is issued on the basis of an environmental audit, the level of which is determined by the authority on a case by case basis.

The seller and the buyer should then agree on the manner in which obligations set out in the environmental permit shall be divided between themselves and inform the NEPA in this respect within 60 days from the closing of the transaction. The agreement’s clauses on the division of environmental obligations have a public character. Thus, the interested public may request access from the environmental authorities to view said environmental-related clauses. In the absence of express legal provisions to that effect, the environmental authorities and third parties are not bound to take into consideration the agreement on the division of environmental obligations between the seller and the buyer. However, if the buyer is held liable for damages that should have been covered by the seller, the buyer may go against the latter on the basis of the agreement reached on environmental obligations.

17. In what circumstances can a seller retain environmental liability after disposal in:
An asset sale? / A share sale?

Asset sale
Save when otherwise provided in the sale-purchase agreement, the seller retains environmental liability for the polluting events caused by it while performing the transferred activity. The considerations on waivers of liability and environmental permits made under Question 16 above also apply in this case.

Share sale
The same consideration as those provided for asset deals apply for a share deal (see also Question 16 above).

18. Does a seller have to disclose environmental information to the buyer in:
An asset sale? / A share sale?

Asset sale
There is no express provision requesting sellers to disclose environmental information to the buyer. However, to the extent an environmental permit is required for the envisaged transaction, the fulfilment of this requirement would implicitly lead to the seller disclosing some environmental information to the buyer. Not always the environmental permit reflects all environmental risks or liabilities related to the target of the asset deal, especially when the permit is issued on the basis of a level 0 environmental audit. The level 0 audit is performed by specialized persons within the company and not by the authorized independent companies as in the case of the level I and II environmental audits.

Share sale
The same consideration as those provided for asset deals apply for a share deal.

19. Is environmental due diligence common in an asset sale or a share sale? If yes:
What areas are usually covered?
What types of environmental assessments are available?
Are environmental consultants usually used? If so, what issues should be covered in an engagement letter (for example, limit on consultant’s liability)?

Environmental due diligence has become the common practice in case of acquisitions involving activities with a significant impact on the environment. The most significant environmental due diligences have been carried out to date in the context of large privatization projects in the oil and electricity sectors. But private acquisitions have also been looked at from an environmental perspective, especially in case of large transactions. When an environmental permit is required by law, the seller has to sometimes prepare a detailed environmental audit for identifying the potential environmental obligations to be included in the permit. Said detailed environmental audits (level I or level II) are prepared only upon the environmental authority’s request.

Areas covered

When the environmental due diligence is carried out voluntarily by the buyer, the latter is free to set the areas of concern. Generally, the following aspects are looked into:

target company’s environmental permitting status;
identifying existing or threatened pollution at the targeted site(s);
identifying emissions of polluting substances into environmental factors such as water, air, soil, etc. and estimate their effects;
waste management.

For each area, the environmental due diligence reports include identified risks and proposals for remediation thereof, as well as recommendations on the relevant representations, warranties, conditions precedent and indemnity clauses to be included in the sale-purchase agreement.

Types of assessment

Assessments may be either voluntary, when performed by the buyer to identify environmental-related risks, or mandatory, when required as part of the procedure for the issuance of environmental permits.

Moreover, the assessment may consist of documentary review of existing documents and/or on-field sampling and testing. For example, the level I environmental audit is performed solely on the basis of documentary review, whereas the level II environmental audit is performed on the basis of sampling and tests performed on site.

Environmental consultants

Environmental consultants are generally used for carrying out environmental assessments. Environmental consultants need to hold the certifications issued by MESD for specific types of activities. The activity of environmental consultants in Romania has increased significantly during the past years, thus proving an emerging market for international environmental consulting firms. The activities of environmental consultants include:

assistance in preparation of documentation for permitting procedures;
performance of environmental impact assessments and environmental audits, as part of the permitting procedures or of internal compliance reviews;
liaison activities between the clients and environmental authorities.

20. When are environmental warranties and indemnities usually given and what issues do they usually cover in:
An asset sale? / A share sale?

Asset sale
Environmental warranties are common, especially in case of transfer of activities having a significant impact on the environment. These warranties may refer to:

the existence of valid and complete environmental authorizations, permits, approvals and the company’s compliance with the provisions included therein;
confirmation on the lack of occurrence of polluting events in the past or imminence thereof;
confirmation on compliance with environmental laws and regulations;
lack of sanctions or remedial actions imposed by environmental authorities;
compliance with the payment obligations of various environmental taxes;
confirmation that no existing of threatened environmental claims exist.

The content of environmental warranties is determined on a case by case basis, depending on the negotiations between the parties to the transaction. While environmental representations and warranties are a common practice, their enforcement by courts has only rarely been requested in practice. Provisions on environmental indemnity are also common. As a rule, the parties are free to establish the extent of their liability, provided they do not breach the rules on public interest or provide a waiver leading to the entire and unconditioned discharge of the debtor’s liability. Waivers are not binging upon third parties, which may continue to rely on the rules on liability in tort for the remediation of the damages incurred by them.

Share sale
The same consideration as those provided for asset deals apply for a share deal.

21. Are there usually limits on environmental warranties and indemnities, for example, time limits or financial caps?
The content and limits of environmental warranties and indemnities are usually the result of negotiations between the parties. Except for the general rules on legal statutes of limitation for claims, there are no other mandatory limits on environmental warranties and indemnities. The general statutes of limitation for damages is of three years from the date the affected party has discovered or should have discovered the damage. Special statutes of limitation may apply depending on the object of the claim.

Reporting and auditing

22. Do regulators keep public registers of environmental information (for example, of environmental permits or contaminated properties)? What is the procedure for a third party to search those registers?
Until now, Romanian environmental authorities have not organized public registers of environmental information. Lists of contaminated lands are currently prepared by MESD in corroboration with the central authorities for economic, public finance, agriculture and rural developments matters. Pursuant to Government Decision No. 1408/2007, such lists should be completed by September 2008. The interested public (including environmental organizations) may have access to environmental information held by the environmental authorities, including:

permits/approvals/authorizations issued and related documentation;
contractual clauses on division of environmental obligations set out in environmental permits; and
results of investigations conducted with respect to certain activities.

The general framework on access to environmental information is ensured by Government Decision No. 878/2005 (transposing the Directive 2003/4/EC) and the 1998 Aarhus Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (ratified by Romania through Law No. 86/2000). In certain cases (e.g., IPPC permits) the relevant documents issued during the permitting process are published on the authority’s website.

23. Do companies have to carry out environmental auditing? Do companies have to report information to the regulators and the public about environmental performance?
Currently, Romanian companies are not required by law to perform environmental auditing or to report information resulting from internal audits performed on a voluntary basis. However, the Environmental Protection Law requires entities to implement self-monitoring systems and report the results of this activity to the competent authorities. Specific auditing requirements may be included in environmental authorizations, approvals or permits on a case by case basis.

24. Do companies have to report information to the regulators and the public about environmental incidents (such as water pollution and soil contamination)?
The Environmental Protection Law provides the natural and legal persons’ general obligation to report any environmental incident immediately upon its occurrence. Failure to comply with this obligation may result in the application of administrative fines up to RON 50,000 (approx. USD 21,750). More specific incident reporting obligations are set out by the Environmental Liability Law. Pursuant to this enactment, incidents or threats thereof should be reported within 2 hours from the date the threat or incident became apparent. Usually, permits and authorizations require that reporting of environmental incidents is done immediately and, in any case, no later than 24 hours from their occurrence.

25. What powers do environmental regulators have to access a company’s documents, inspect sites, interview employees and so on?
The NEG has wide powers when it comes to investigating environmental compliance. Such powers include the right to have access on site, review documents and data relevant for the investigation and interview those persons deemed necessary for clarifying the environmental compliance status. As of November 2007, NEG representatives have to comply with a new investigative procedure drafted in line with the European Parliament and of the Council Recommendation 2001/331/EC. Pursuant to this procedure, investigations may be carried out with or without prior notification. Unannounced investigations are the preferred approach currently implemented by NEG investigators. The object of investigations may differ, from verifying compliance with specific regulations to overall compliance checks for a given site.

Insurance

26. What types of insurance cover are available for environmental damage or liability and what risks are usually covered? How easy is it to obtain environmental insurance and is it usually obtained in practice?
While general insurance is available, this does not usually ensure adequate coverage for environmental damages. Local insurance companies have yet to provide environmental insurance as a regular product and, thus, obtaining this type of insurance is not always easy or possible in practice.

Tax

27. What are the main environmental taxes in your jurisdiction (for example, tax on waste disposal, carbon tax and tax breaks for carrying out clean-up of contaminated land)? For each tax, please briefly state how it is calculated, who pays it and the tax rates.
Romania has adopted various environmental taxes that are set out in two main enactments: the Government Emergency Ordinance No. 196/2005 on the Environmental Fund and the Fiscal Code. The taxes owed to the Environmental Fund include:

tax of 3% of the turnover generated by the sale of ferrous and non-ferrous waste;
taxes in various fix amounts for the release of certain pollutants into the atmosphere from fix sources;
tax of RON 1 per kilogram for the weight of packaging materials put on the Romanian market by manufacturers and importers of packed goods and disposable packaging;
contribution of 2% of the value of substances qualified by law as dangerous for the environment and put on the market by manufacturers or importers, except for those used for medicines manufacturing;
tax of RON 1 per kilogram of tyre for manufacturers or importers who put on the market new and/or used tyres provided for reuse.

In certain cases (e.g., packaging or tyres) the taxes are due only by entities who fail to meet the relevant waste recovery and recycling targets. For cars registered for the first time in Romania, the Fiscal Code provides the obligation to pay a special tax the amount of which is determined on the basis of a special formula. This tax has been subject to various discussions, including as a result of the European Commission initiating proceedings against Romania for breach of the Community law. A proposal for the revision of this tax is currently under discussion and should be approved shortly.

Reform

28. Please summarise any proposals for reform and state whether they are likely to come into force and, if so, when.
Currently, there are around 25 projects underway, including a new regulation governing the functioning of NEPA, rules on managing waste from construction works, new rules on the vehicle tax, the framework on the import, export and transit of genetic modified organisms. In addition to the above, various discussions are held in connection with the amendment of the overall environmental permitting regime with a view of integrating the various permits and authorizations into one document. Similar discussions are held for adopting rules related to the implementation of various European Union’s Regulations, such as the REACH Regulation.

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