European companies are fighting new EU rules to make them pay for damaging the environment, under a draft liability law they say would force them to write a blank cheque to nature.

The liability directive is one of three major new European Union environmental policy proposals that industry is desperate to soften, along with a plan to cap "greenhouse gas" emissions and new rules on testing chemicals.

Under the proposal, big smokestack industries and firms dealing in waste management, chemicals and genetically modified organisms (GMOs) would be liable for incidents that pollute water, air or soil or harm protected natural sites or species.

The European Commission reckons the new regulations would cost around e1.5 billion a year, but industry says the real cost is incalculable and uninsurable. The law would therefore impose an unbearable new risk on companies.

"We are very worried about open-ended liability for bio-diversity damage," Erik Berggren of EU employers confederation Unice told Reuters. "We have simply no idea what risks companies would run when nature is damaged."

Unlike property whose value can be assessed, there is no price tag on endangered species or landscapes. This could leave firms open to arbitrary and excessive claims, industry says.

Unice wants the law to set a cap on possible claims.

Environmentalists, who see themselves as proxies for animals and plants that cannot fight their own battles, have campaigned for the eco-liability rules for years and will fight any attempts from industry to water them down.

They say that although companies pay damages when their activities harm people and property, they often escape when the environment is the victim.

They point to cases like Spain's worst ecological disaster, the Donana incident, when a waste pond from a zinc mine burst, flooding the surrounding area with toxic chemicals with serious damage to wildlife in a nearby national park.

"Is it fair on the public that it is the state and citizens that have to pay for damage caused by activities on which companies are making profits?" said Sandra Jen, liability campaigner at green group WWF.

The WWF says the EU bill is already too weak and allows firms get-out clauses to escape prosecution. It is urging the European Parliament, which starts debating the bill in November, to plug what it sees as loopholes.

Under the draft published by the Commission last January, companies could avoid being sued for damage caused by, for example, accidental chemical spills, if they had complied with environmental regulations and had a permit to operate.

Unfortunately for industry, the European Parliament member leading the EU assembly's work on the legislation agrees with the WWF that this so-called "permit defence" should be deleted.

"If you drive a car and kill somebody, you don't have any excuse, you cannot say that the car was not good... so you pay or your insurance company pays," Greek deputy Mihail Papayannakis told Reuters.

Such an amendment would ensure the bill covered GMOs, the scientifically altered crops which some environmentalists say could harbour unknown risks once released into nature to mix with other plants.

Under Papayannakis's version of the bill, if a GM crop were to do damage to wildlife, the company responsible would have to pay to rectify the harm, even if scientific evidence had revealed no such dangers when the organism was tested.

If parliament follows Papayannakis's advice, it will add to a growing body of controls the EU is imposing on GMOs, to the increasing anger of the United States, which accuses the bloc of obstructing the market for its agricultural goods.

But for Papayannakis, a member of the leftist party Synaspismos, the issue is clear - someone should pay to mend damage to nature and that has to be the polluter.

"This is not a moral problem... the question is about a remedy, someone has to pay."

As well as reducing industry's defences, Papayannakis would force firms to take out insurance or contribute to a clean-up fund similar to one that already exists at international level to deal with oil spills.

With his proposed amendments, which will be voted on by parliament's environment committee next month and by the full assembly in February, the bill would have major implications for all sectors of industry, Papayannakis said.

"It is very big. It changes the habits of proper planning and investment. You have to examine very well the places you are going to invest, the chance of accidents, the cost of insurance and the cost of the fund."

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