Sub Groups

protocols requiring adoption of certain farming practices, including separation distances. The thresholds and protocols would need to command the broad support of all parties with an economic interest and wider societal confidence. Protocols should be developed by industry in consultation with prospective GM farmers and organic and conventional non-GM farming representatives and other interested parties, including retailers.

12. Seeking agreed protocols would be consistent with the approach the AEBC has often endorsed, which is to put a high premium on negotiation and agreement, rather than on litigation and confrontation between farmers. Members of the liability sub-group would like stakeholders to be aware that, importantly, it was not axiomatic from the start of the sub-group’s considerations that the emphasis should be on developing an agreed coexistence regime rather than looking to revert to the law to address the issues: this was a positive conclusion of the group rather than a default position.

What are stakeholders’ views on the conclusion that it would be preferable to seek a system of compliance with protocols in order to avoid as far as possible litigation between farmers to deal with any economic loss arising from adventitious presence of GM material in non-GM crops?

13. Some members of the group emphasise the need for symmetry in the arrangements: a recognition that wishing to grow GM crops whose safety has been assessed and approved through the regulatory process is as valid a claim as wanting to grow organic or non-GM crops. If the protocols do not impose an excessive economic or logistic burden on the GM farmer and could help achieve coexistence and an orderly introduction of the technology, their deployment would not offend the principle of symmetry too greatly, although on the protocol model the burden of responsibility for taking the necessary measures to achieve coexistence falls primarily to the GM farmer. The goal of seeking to achieve coexistence would seem to justify this slight asymmetry.

14. The negative economic impact at farm level that might trigger a demand for compensation would be where GM material was found to be present in a non-GM crop in excess of specified thresholds, leading to loss of market for a particular crop or loss of a market premium for organic or non-GM produce. The group’s initial view is that where there was evidence that this had happened as a result of a breach of an agreed protocol by one or more GM farmers, then the GM farmer (or farmers) could reasonably be held responsible for his neighbour’s economic loss. The group believes that this outcome might be achieved under existing civil liability law, on the basis that adventitious presence of GM material would be regarded as physical damage and breach of the protocol as evidence both of fault and foreseeability. But these assumptions are by no means certain, and could only be established through litigation or by express statutory provision.

The sub-group would welcome views on this, particularly from stakeholders with legal expertise.

15. The overriding aim however would be to avoid problems from AP in the first place and farmers having to revert to law. There are substantial practical hurdles in terms of cost and time in taking cases to court, and going to court is often a stressful experience. The existence of protocols, combined with post-market monitoring and the likely gradual uptake of the technology should facilitate development of an insurance market and might also encourage out of court settlement in cases of dispute, either through insurance indemnity or directly, as is the case at present for damage caused by pesticide drift.

What do stakeholders think about the prospects for development of an insurance market on this scenario?

How would any protocols be enforced?

16. The consumer choice sub-group is examining this issue further, but at this stage there would seem to a number of possible economic drivers that would promote compliance by GM farmers with protocols.

17. The first would be through the existing contractual and statutory mechanisms through which seed is supplied to growers. Consent-holders (i.e. agricultural biotechnology companies) are able to determine which farmers are given access to particular seed varieties, and could through this mechanism require compliance with a protocol for the cultivation of GM varieties. The British Society of Plant Breeders would enforce this on behalf of the consent holders. On this scenario, the incentive for making the scheme work would be for the biotechnology industry to support measures to achieve coexistence as part of an orderly introduction of the technology, minimizing opposition from other farmers or the public. The incentive for the GM farmer to abide by the terms of the protocol would be continued future access to GM crops.

18. The second is the expectation that a GM farmer or farmers would be liable for economic damage that could be shown to arise from breach of a protocol. Third, if an insurance market did develop after any commercialisation of GM crops, and GM farmers took out insurance against being found liable for economic damage, insurance companies would seem likely to stipulate that the GM farmer abides by the protocol. Both these points would seem to suggest that it would be in GM farmers’ interests to seek to abide by a protocol.

19. There remains a question about whether protocols would need some legal underpinning beyond their potential use in determining liability under the existing civil liability law, notwithstanding the factors above, which might tend to increase compliance. Protocols could in principle be voluntary, or underpinned in a range of ways: by criminal law, administrative law, or by existing liability law in which latter case, (as noted earlier), a GM farmer who had abided by the protocol would have a defence to an action for compensation. The Part C consent conditions envisaged by EC/2001/18 relate to human health and environmental risk and do not appear to offer any scope to impose conditions designed to achieve coexistence. One option would to make the protocols part of statutory transitional arrangements that subsequently could be relaxed as the best use of GM crops became more familiar. Sub-group members agree that monitoring of compliance with the protocols would be necessary, but the AEBC has not yet taken a view on whether the protocols would need to be statutory or not.

20. It is not clear that Member States would be free to legislate for statutory protocols in this area outside an EC legal framework. Establishing legislation at EU or national level in place would take time and would seem unlikely to be practicable before spring 2004.

21. The sub-group has also noted the possibility of setting up some sort of independent expert tribunal to adjudicate in cases of dispute over the cause of AP leading to putative economic loss. The tribunal’s decisions could be binding in law if it was set up by statute; or binding if the parties in the dispute agreed that its ruling would be so. This option might help avoid farmers having to revert to law in cases of dispute.

What are stakeholders’ views on the role of the law in securing compliance with any protocols? Would a scheme regulated through existing contractual and statutory mechanisms be adequate?

Would an insurance market be likely to develop on this scenario?

Economic loss when no party is at fault

22. Assuming practicable protocols were in place, there remains the difficult possible situation where economic loss is occasioned by adventitious presence but there was no evidence that there had been any breach of a protocol by any GM farmer. The aim would be to have protocols that made such cases rare, but this scenario would seem likely to be an issue of concern to some farmers in advance of possible commercialisation. Since fault could not be proved then the loss would be expected to lie where it fell (i.e. with the non-GM farmer) unless accepted by a third party (perhaps through a Government or industry fund) or covered by an insurance policy held by the non-GM farmer. The sub-group have not resolved how to deal with this question.

23. Views among the liability sub-group members about industry underwriting a fund are divided. Some see it as a potential confidence-building measure which could go a long way to showing that industry was confident the protocols would work and would be throwing its weight behind making them work, as this would be in its direct economic interest, as part of an orderly introduction of the technology in the UK. Other members are sceptical: beside the practical difficulties of setting up a fund, they suspect that it would be portrayed by anti-GM campaigners in the opposite way, as industry showing that it did not have confidence that protocols would work.

Questions for stakeholders: How to deal with the case of a non-GM or organic farmer suffering economic loss where there is no evidence of any breach of a coexistence protocol? What is industry’s view of a contingency fund to deal with any economic loss through AP where there is no evidence of a breach of a protocol? How might any such fund be operated?

Indirect economic effects

24. The group have considered indirect economic effects, for example, if a food processor or supermarket refused to buy non-GM produce on the basis that it came from a farm ‘in the vicinity’ of a GM farm. In law at present there would be no grounds for the non-GM farmer to sue the supermarket for economic loss. Moreover, the group takes the view that there would be no justification for seeking to introduce new provisions in law for GM crops to extend the notion of economic loss in this way, nor would seeking such an extension be realistic. The key aim should be to ensure that processors and supermarkets were content with the provisions of a coexistence regime so that unless there was evidence that protocols had been breached, supermarkets and food processors would accept non-GM crops in line with normal arrangements.

25. Taking a second category of examples, if a restaurant serving organic food could not source its ingredients from its usual farm because the farmer had lost organic status as a result of AP, the group understands that the restaurant owner or operator’s putative loss is insufficiently proximate to be recoverable either in the law as it stands nor, the group considers, would it be justified to seek to change the law to make it so.

Financial hardship

26. The group have also considered the situation of a farmer growing GM crops finding it financially difficult to pay a non-GM farmer for any economic loss, either as a result of a court judgement where a protocol had been breached; or in an out-of-court settlement. The group’s thinking is that all that can be done here is to encourage the development of an insurance market (as already exists for damage caused by pesticide use). Financial difficulties of this kind are simply a feature of the normal business environment – equivalent situations could arise now in the course of conventional farming.

27. The group have discussed whether Government could ‘cap’ liability for negative economic impacts resulting from AP in non-GM crops, to encourage an insurance market to develop among farmers. The group’s initial conclusion is that the extent of likely losses from AP, if protocols were in place, individual losses would be of a sufficiently low order to render a cap irrelevant.

Beekeeping

28. The question of whether liability law has a role in dealing with any negative economic effects to beekeepers had been flagged up as an issue for the report, but the sub-group has come to no conclusion in this area yet, having concentrated on crop cultivation in its work so far.

Review of arrangements

29. The sub-group proposes that arrangements put in place to deal with potential economic loss should be reviewed after 5 or 10 years.

Are there any factors or points that stakeholders think are missing or insufficiently prominent in the sub-group’s thinking?

EMERGING CONCLUSIONS ON ENVIRONMENTAL LIABILITY

30. The second main question for the liability report relates to potential impacts of commercial GM crop growing on farmland and non-farmland habitats and on biodiversity. The group is seeking to address the questions often raised in public discussion about GM crops: who would be responsible for any environmental damage from GM crops, if any damage occurred? What options are there for redressing any harm? What would or should be the role of the law?

31. It is a necessary feature of a discussion of environmental liability that our starting point is looking at potential problems arising from GM crop cultivation. That involves taking hypotheses about environmental damage that might occur if GM crops were grown commercially in the UK, to test what the responses of the current or envisaged arrangements might be in hypothetical cases, how robust they would be, and whether new provisions might be required. In this context, it is important to stress that the sub-group is not endorsing a negative view of GM technology.

32. The question which arises is whether the present range of GM crops raises new issues in relation to liability for environmental damage and if so, how. Social research suggests the public have concerns about the potential for GM crops to cause currently unforeseeable environmental harm. The group accept that if environmental harm results from the release of GMOs, there should be a statutory remediation regime on similar lines to existing arrangements applying to water pollution and contaminated land (under the 1990 Environmental Protection Act), under which a regulator may require remediation to be undertaken, and may in default do the necessary work and charge the costs back to those whose acts or omissions caused the damage. The group is examining how far the existing arrangements might be expected to cover any GMO-related damage.

33. Notwithstanding this, the group do not plan to recommend introduction of any special additional environmental remediation regime going beyond this, for GM crops alone, because of the similarity of issues raised by a wide range of agricultural and other practices, and because of the difficulties in devising a suitable regime. In coming to this conclusion the group has drawn some comfort from the regulatory safeguards under EC/2001/18 to assess individual new GM varieties for environmental safety and powers to withdraw a GM variety if harm specifically associated with a GM crop came to light, as well as the existing provisions under the 1990 Environmental Protection Act to remedy environmental damage. The group will want to draw Government’s attention to the evidence it has heard that the driver for raising environmental standards in other industries employing new technologies, such as nuclear power generation, has been strong regulatory provision coupled with an effective inspection regime.

34. Some group members do believe that there should be a strengthening of the draft EC environmental liability directive, even though this should not be in respect of GM crops alone, to improve protection to farmland and non-farmland biodiversity from farming practices. Not all members of the group believe that the wider environmental liability legal regime needs strengthening in this way in respect of GM crops or other crops. The group can all agree, however, that given the time it has taken and would take to change and agree the EC directive, the EC directive is not a feasible vehicle for any change in the short term.

35. The group has nonetheless come to the firm view that the possible advent in the countryside of a new technology, such as GM crops, should be seized as an opportunity to help promote biodiversity and raise environmental standards in agriculture across the board - but not by means of changing environmental liability law. This view stems from recognition that all forms of agriculture have environmental impacts; equally it does not imply that all sub-group members think that the introduction of GM crops was no different to that of conventional crops. Some members think that the nub of the issue is to have credible arrangements in place to allay perceived public concerns about meeting the costs of any unforeseen environmental consequences arising from GM crop cultivation, while acknowledging that a change in EC environmental liability law was not a realistic means to achieve this. The group’s attention has been drawn to the proposed reforms to the Common Agricultural Policy that would require farmers to comply with a broad range of environmental requirements as a prerequisite to receiving subsidies.

What are stakeholders’ views on the sub-group’s emerging thinking that there is not a case for setting up a separate regime for remediation to deal with any environmental damage arising from the cultivation of GM crops?

Further confidence building measures?

36. Liability regimes work best for specific events with clear causal links. They are not well suited to dealing with diffuse or cumulative and possibly unforeseeable environmental damage. Where there are major problems, Government generally has to step in as a last resort because only it has the capacity and funds to do so, whatever the formal liability position might be (because any party at fault would not normally have sufficient resources to offer redress). The conclusion that liability law is not a suitable way to address concerns about these kinds of environmental damage does not require a view about the likelihood of any such damage occurring as a result of commercialising GM crops.

37. At present the sub-group plans to set out in its draft report what it sees as the options in response to concerns about who will take responsibility for any such, possibly unforeseeable, environmental impacts. Liability is apportioned in a legal framework, and thus given to those involved. Responsibility is something people take on themselves rather than being given. The group has discussed what seem to be two main possibilities for addressing this concern, given that environmental liability legislation is not a suitable vehicle for doing so.

38. First, simply by highlighting that adoption of a new technology is a wider societal issue that should be assessed and regulated properly - to avoid unacceptable problems arising. But if things go unforeseeably wrong at some future point, then Government (and by implication future taxpayers) pick up the bill. On this line of thinking there is essentially a choice for society: it could embrace these new technologies – taking such precautions as deemed necessary – or not go ahead.

39. Second, some AEBC members have suggested that industry, recognising the public climate in relation to GM crops and evidence of public mistrust, could underwrite an industry fund to deal with any adverse environmental effects. These members think that this would send an important signal to the public about the confidence industry had in the safety of the products of agricultural biotechnology.

40. Other members fear that opponents of the technology would simply seize on such a move as evidence that industry believed that the GM products were unsafe or negatively ‘different’ from their conventional counterparts in some way – otherwise why would they be putting money aside to deal with any negative effects? It was also true that some possible consequences (foreseen and unforeseen) are not remediable in financial terms. The sub-group notes too a practical consideration - that alongside agricultural biotechnology companies and bulk commodity crop producers, there are much smaller firms involved (e.g. those working with horticultural crops and smaller scale agricultural crops) which might find it difficult to contribute to any fund (either for AP-related economic impacts or these possible wider ones).

41. Being seen to ‘take responsibility’ in this or perhaps in some other way does not do away with the need for underpinning regulatory provision, but could exist alongside regulation. It would be about inspiring greater confidence in a different way from relying on more and more regulation - the route that industry and Government had adopted so far in relation to agricultural biotechnology. Some sub-group members stress that in their view the agricultural biotechnology companies already take full responsibility for their products – selling them was after all how these companies expected to stay profitable in coming years. The products have been assessed as safe and under EC/2001/18 there is now a requirement for long-term monitoring of environmental impact.

42. This fund would be separate from the possibility of an industry fund to compensate the category of farmers who had suffered economic loss through adventitious presence but where there was no evidence that any GM farmer had breached a protocol.

The sub-group would welcome stakeholders’ views on the options for addressing in its report the issue of concerns about any unforeseeable or foreseeable diffuse or cumulative damage resulting from the commercial cultivation of GM crops.

AEBC Secretariat
March 2003