The European Commission has been asked to draft regulations that would govern environmental impairment liability in the European Union.

Encouraged by the European Parliament, the initiative is seen by supporters as a key to enforcement of E.U. pollution control laws. Opponents fear that substantial financial and administrative burdens will be imposed on European industry.

"Any solution must bring strict liability to all E.U. member countries," said E.U. Environment Commissioner Ritt Bjerregaard, who regards the E.U. mandate as an "efficient and flexible instrument to enforce E.U. pollution laws."

Ms. Bjerregaard said regulations would apply only to future claims and not be retroactive.

One advantage to harmonization is improved competition, Ms. Bjerregaard said. "Diverse liability regulation in Europe brings different cost burdens to different economies," she said. In the long term, such burdens could be the determining factors in where companies set up operations.

Some E.U. members, including Germany, France and Great Britain, have voiced opposition to the new initiative.

Edwin Frietsch, head of the Department of Environmental Liability Compensatory Damages Law, warned of cost burdens on industry, which are already great. Germany he said, preferred to "regulate itself."

Fears of unfair competition are unfounded, said Mr. Frietsch. "In most E.U. countries, environment liability legislation is still young and has little effect on competition," he says.

"We all have different problems, so we all need different solutions," she said. "It would be almost impossible to embody this in pan-European legislation."

Advantages of uniting E.U. EIL still outweigh disadvantages, said Ms. Bjerregaard, who points out that several E.U. countries, such as Austria, Greece, the Netherlands and Sweden, have yet to implement any strict EIL laws, fearing that they will place undue burdens on industry in their countries. Instead they are waiting for E.U. guidelines that set rules for all E.U. countries.

"A solution will be found," says Ms. Bjerregaard.

Two options are under review. One is an E.U. guideline, which would set the framework for national legislation in E.U. member countries.

The other would be for the European Union to join the so-called Lugano Convention, a Council of Europe 1993 convention that sets general guidelines for environmental impairment liability.

The Lugano Convention would implement liability for dangerous activities and for damage to the environment beyond personal or property damage.

Five E.U. member countries have already joined the convention: Finland, Greece, Italy, Luxembourg and the Netherlands. Others, including Germany, Great Britain, Denmark and France, oppose the convention and will not ratify it.

The convention would not succeed if Germany, Great Britain and France continue to oppose it.

Great Britain is not signed up to the convention, and there are no indications it will.

"German insurers are very concerned about Lugano," said Alexander Mack, head of the casualty claims division at Cologne-based Gerling-Konzern Allgemeine Versicherungs A.G. "If Lugano were to be ratified, it would make companies liable for any activity."

The E.U. Commission studied the possible financial effects of new regulation on industry and concluded that the extent of the financial burden is impossible to estimate.