Statutory Contaminated Land Regime 2

Introduction

Whilst not yet in force this much talked about regime has been on the statute books for over four and a half years. Prior to that important policy reviews were published in 1991 (“Paying for our Past”) and 1994 (“Framework for Contaminated Land”). The change of Government in 1997 saw little change to the substance of the regime though the financing issue was addressed. In December 1997 Michael Meacher, the Environment Minister, acknowledged that implementation of the regime would create “significant financial burdens for the local authorities and the Environment Agency”. These were considered during the Comprehensive Spending Review and in July 1998 the Minister stated that £50 million over a three year period would be made available to “support local authorities in developing inspection strategies, carrying out investigations of individual sites and taking forward necessary enforcement action”. Many commentators argue that such funding is simply not sufficient.

In any event there now seems to be very good prospects that the regime will be brought into force in or about April 2000 in England and Scotland. In Wales there is a prospect that implementation will be delayed. Having said that for a number of reasons there is little cause to hold one’s breath following implementation of the regime:-

• The prime regulators under the regime, the local authorities, will have 15 months from the date of publication of guidance accompanying the regime to produce a strategy for inspection of their areas. In all likelihood little will be done on the ground before such inspection process is complete. Anecdotal evidence suggests that some local authorities are more advanced than others. We should not be surprised therefore to find differing approaches and speeds of response appearing across the country. Interestingly, an important development that occurred during the gestation period of the regime which was not contemplated at its conception, was devolution in Great Britain. It remains to be seen whether devolution will give rise to substantial differences in implementation of the regime in England, Scotland and Wales (see also below).
• The regulators may be slow to exercise their new duties and powers. So, for example, last April the Environment Agency was given long awaited and much sought after powers under the Water Resources Act 1991. These powers enable the Environment Agency to serve anti-pollution Works Notices on polluters in the case of water pollution. They enable the Environment Agency to order the polluter to undertake clean-up of water pollution incidents at the polluter’s cost (before this the Environment Agency only had the power to undertake the clean-up itself and subsequently to seek recovery of its reasonable costs). However, very little use has yet been made of these powers by the Environment Agency.
• In the business and “transactional” worlds the regime has for several years now been treated as if it is already in force. So for instance, most relevant corporate, property, planning and infrastructure transactions, in both due diligence and contractual drafting, proceed on the basis that the regime is in force. This is very important, if only because the Government has said that it would prefer to see parties addressing these issues in transactions relating to land rather than relying on regulatory enforcement actions.
• In land and facilities management there is an operational awareness of the workings of the regime. Several large property owners have geared up or are gearing up to manage the impact of the regime, including how to deal with enquiries from local authorities.
• In contentious matters between landowners/occupiers we are already seeing parties trying to involve the relevant local authority in resolving disputes.

This statutory contaminated land regime will require local authorities to inspect their areas for the purpose of identifying contaminated land, and, amongst other things, serve remediation notices on Appropriate Persons (i.e. the persons who must bear the costs of the remediation). Statutory guidance is to be issued in this regard. (The last consultation draft of the guidance for England is dated September 1999 and for Scotland it is dated November 1999. It is understood that the last consultation draft for Wales has yet to be issued). Set out below is a very brief summary of some of the main guidance provisions (excluding those relating to special sites and certain procedural matters).

Suitable for Use

What the local authority is to look for is a source of contamination, a pathway and a receptor which is or could be harmed by the contaminants by means of the pathway. If those elements are present a “pollution linkage” is formed and if that pollutant linkage is significant then prima-facie the land is contaminated land. Not all harm will trigger remediation. The guidance stresses that the harm must fall within the “suitable for use” approach. That concept also determines the standard of remediation required. Suitable for use in practical terms is “the range of uses to which land is likely to be put, where those uses would not require any further official permission such as planning approval”.

Further, only certain types of harm will be regarded as significant. For instance, in relation to humans, death, serious injury, cancer or other disease, genetic mutation, birth defects or the impairment of reproductive functions will be regarded as significant. With regard to ecological systems or living organisms forming part of such systems, only those which have certain statutory protection are covered and the harm must result in an irreversible adverse change, or in some other substantial adverse change, in the functioning of the ecological system.

Harm to property is split into two types. The fist is livestock, or other owned animals (including pets), or wild animals which are the subject of shooting or fishing rights, or crops and produce grown domestically. There must be death, disease or other physical damage (in some instances the damage or disease must be serious). Generally the loss in yield or value must be substantial (i.e. when a substantial proportion of animals or crops are dead or otherwise no longer fit for the intended purpose when it fails the Food Safety Act 1990. 20% diminution in yield or loss should be regarded as a benchmark for a substantial diminution or loss). The second relates to buildings (but no plant or machinery). Harm here must be structural failure or substantial damage or substantial interference with any right of occupation in the sense that any part of the building cannot be used for the intended purpose.

Pollution of controlled waters may trigger the contaminated land regime if the contaminants are poisonous, noxious or polluting matter, or solid waste matter and are entering or are likely to enter controlled waters. Separate guidance exists for the interface between this regime and that under the Water Resources Act 1991 (referred to above).

Remediation

The aim of remediation is to ensure that the land is suitable for current use. The local authority should be looking to determine a reasonable remediation package for each significant pollutant linkage and must take into account the effectiveness, durability and practicability of the package.

Appropriate Persons Exclusions

Where there are two or more Appropriate Persons liable for any remediation, the local authority is to apply guidance to determine whether any should be excluded from liability. Appropriate Persons are divided into two categories: Class A persons are those who “caused or knowingly permitted” the contaminants to be in on or under the land. Class B persons are owners or occupiers for the time being. (Class B persons are responsible for the liability of Class A persons who cannot be found).

In applying the exclusions tests (and apportionment tests - see below) the local authority is not to have regard to the financial circumstance of the persons in question (i.e. not to look for “deep pockets”). Where Appropriate Persons have agreed between themselves as to how to apportion remediation costs the local authority is to respect that agreement provided it does not increase the share of costs theoretically to be borne by a person who would benefit from the hardship or recovery of costs provisions (this would have the effect of putting financial burden on the state). Otherwise different tests apply to Group A members from those which apply to Group B members. Those tests are very interesting but cannot, unfortunately, be explored in this article. In both cases the tests must be applied sequentially and can only be applied to such a stage whereby at least one group member remains (i.e. the tests cannot be applied to exclude all members of the group).

Apportionment

Any lessening of liability of one member of a liability group will increase the liability of the others. In contrast, when applying the hardship and recovery of costs provisions (not summarised here) a reduction of liability of one member of a liability group will not increase the liability of the others but will instead be borne by the local authority.

The aim of the apportionment rules with respect to Class A persons is to apportion liability by reference to the relative degree of responsibility of Class A persons. Stating that aim is simple but complying with it may be fairly complex. The guidance provides further detail. Otherwise the local authority is to apportion liability between the members of any liability group in equal shares.

With regard to Class B persons and apportionment, unless a remediation action relates to a particular area of land, in which case the owners or occupiers of that area of land should bear responsibility, the local authority is to apportion liability to reflect the proportion which the capital value of the particular Class B person’s land bears to the aggregate capital value of all the affected land.

Comment

The above is necessarily a selective thumb nail sketch of what is likely to prove to be a difficult regime to apply in practice in many instances. Having said that parties in transactions having been trying to tackle the issues for several years.

Paul Sheridan
Partner, Environment Law Group
CMS Cameron McKenna
[email protected]
(+44) (0)20 7367 3000