“Fisktrans” – withdrawal of wreck removal order following consideration of proportionality

In a recent administrative appeal decision, the Norwegian Coastal Administration (the “NCA”) Head Office reversed the wreck removal order issued by the NCA Emergency Response Centre in respect of the “Fisktrans” which sank in Northern Norway in 2017. The decision confirms that the pollution authorities shall consider the proportionality of the measures ordered when exercising their administrative discretion.

The cargo ship “Fisktrans” experienced steering problems, grounded and later sank near Brennvika in Steigen municipality in Northern Norway on 25 January 2017 during difficult weather conditions. The vessel had a length overall of 58.4 m. While originally built in 1952, it had been retrofitted several times. The vessel sank to a depth of 152 m, where it became partially embedded in the soft clay seabed. At the time of the sinking the vessel was carrying a cargo of unpacked minced fish and had limited quantities of fuel onboard.

The initial wreck removal order

Following a notice from the NCA Emergency Response Centre that it was considering ordering the removal of the wreck, experts were engaged on behalf of the owners and insurers of the vessel to provide advice on the technical feasibility of a wreck removal and an environmental assessment of the net benefits of the removal of the wreck. The resulting reports concluded that a wreck removal, although technically possible, would be very costly and involve significant health, safety and operational risks. The reports also found that the environmental impact of the wreck was limited and that, since there would be negative environmental consequences of carrying out a wreck removal operation, there was no net ­benefit in removing the wreck.

It was therefore argued that there was no legal basis for ordering the wreck removal and that, in any event, ordering the wreck removal would be disproportionate taking into account the location of the wreck (depth, embeddedness in seabed, exposure to weather conditions), technical challenges, the risk to health and safety and very high costs, as well as there being no net environmental benefit in removing the wreck.

The assessment was whether the environmental benefits of removal were proportional to the costs, the risks concerning health and safety, as well as environmental and other negative consequences of removal.

The NCA Emergency Response Centre nevertheless ordered the removal of the wreck in November 2018. In its wreck removal order, it dismissed the application of a proportionality requirement in its exercise of administrative discretion, and noted that all wrecks should in principle be removed. In their view allowing a wreck to remain would be contrary to environmental principles and the general developments in international environmental law.

Previous consideration of proportionality

The decision of the NCA Emergency Response Centre was not surprising taking into account previous precedents on the application of proportionality to environmental law in Norway, including on wreck removal in particular. In a judgment from 2011 (Rt-2011-304 “Frøholm”), the Norwegian Supreme Court dismissed the idea of a general proportionality rule in administrative law, and in a 2015 judgment (LB-2015-54634 “Server”), Borgarting Appeal Court held that the provision in the Pollution Act which sets out the conditions for when there is a duty to remove a wreck did not contain a proportionality requirement. However, neither of these judgments had considered whether proportionality was a required element in the exercise of administrative discretion. The NCA Emergency Response Centre did not accept that there was such a requirement.

The appeal

The owners and insurers of the “Fisktrans” remained of the opinion that there was no basis for the wreck removal order, and therefore filed an administrative appeal against the order.

The appeal decision – withdrawing the wreck removal order

A year and a half after the complaint had been filed, the NCA Head Office issued its decision on the complaint in October 2020. In the decision the NCA Head Office upheld the view that there were as a starting point two alternative legal bases on which to order a wreck removal, namely (1) that the wreck was considered a threat to the environment and (2) that it was aesthetically unsightly (Norw. “skjemmende”). However, it proceeded to consider whether factors other than the environmental impact of the wreck should be taken into account when exercising their discretionary authority.

The NCA Head Office agreed with the views of the owners and insurers, and first looked at the co-relationship between the purpose and guidance for application of the Pollution Act, as set out in sections 1 and 2 of the Act respectively. The NCA Head Office noted that the purpose of the Act was to ensure “satisfactory environmental quality” (emphasis added), which in itself indicated that environmental aspects were not the only relevant concerns for the interpretation and application of the Act. The purpose of the Act was immediately followed by a ­provision which prescribes a weighing of environmental aspects against other concerns, including economic factors. On this basis the NCA Head Office concluded that:

“The provision must be interpreted as obliging the one who applies the law to also take into consideration a clean environment, socio-economic efficiency and fairness, as policy considerations underpinning the Act and the rules on cost liability. In matters on cost liability, there is no consideration of guilt or what is considered reasonable based on the polluter’s personal circumstances, economic position or similar. Socio-economic efficiency is a question of the benefits of the measure and the overall societal costs of pollution. In practice, much of the value of the benefits and the costs must be estimated on an uncertain basis.”

The purpose of the Act is to ensure “satisfactory environmental quality”, which in itself indicates that environmental aspects are not the only relevant concerns.

The NCA Head Office then noted that the owners and insurers had documented that a wreck removal operation would be very demanding and costly, and that it could pose a risk to both the environment and the personnel involved in the operation. Furthermore, the NCA Emergency Response Centre had not presented any evidence to the contrary. While expressing doubt as to its conclusion, the NCA Head Office accordingly withdrew the wreck removal order.

Weighing of factors equals proportionality test

The NCA Head Office does not describe its weighing of ­environmental considerations against other factors as a proportionality test. However, what the NCA Head Office is effectively doing in its decision is assessing whether the environmental benefits of having the wreck removed outweigh the risks ­concerning health and safety, as well as the economic, environmental and other negative consequences of the removal. The decision is particularly interesting because it marks a pause in a recent development whereby the Norwegian authorities have explicitly stated that all wrecks should be removed on the basis that they constitute threats to the environment. The ­confirmation that the authorities must also take into account other factors when exercising their discretion is therefore important, and in line with the exercise of similar discretion by environmental authorities in other countries. Despite this important confirmation, it must be noted that proportionality as part of the exercise of administrative discretion is subject to limited review by the courts, the threshold as a starting point being that the exercise of administrative discretion is highly unreasonable. This consideration of proportionality therefore differs from the proportionality assessment made under the Nairobi Wreck Removal Convention where the relevant legal basis for the wreck removal expressly provides for a proportionality test to be fulfilled as a condition for the issuance of an order to remove a wreck.

Wikborg Rein assisted the owners and insurers of the vessel.

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