On 1st April 2000 the legislative regime for remediation of contaminated land (“Contaminated Land Regime”) was brought into force in England. Current predictions from the Scottish Executive are that the Contaminated Land Regime will be brought into force in Scotland on 14th July 2000 but no such predictions are as yet available in relation to Wales.
The relevant legislation was enacted under the Environment Act 1995 but forms a new Part IIA of the Environmental Protection Act 1990. In the almost five years since the enactment of Part IIA a process of consultation on the important supporting statutory guidance and regulations has taken place. Throughout that period environment law practitioners have been developing mechanisms to manage the risks of liability to those connected with potentially contaminated land either as purchasers, sellers, developers or those carrying out works on or with contaminated land.
The Contaminated Land Regime in context
For some time after the enactment of Part IIA there was a tendency to see the Contaminated Land Regime as a black hole of liability for previously unsuspecting persons, in particular, landowners.
However, in order to properly understand the Contaminated Land Regime it is important to see it in its wider context as a further segment in an overall regulatory system covering ground contamination and water pollution. The segment filled by the Contaminated Land Regime is intended to apply to risks from historically contaminated land in the context of the existing use of that land.
Developing the Contaminated Land Regime has forced the Government and Environment Agency to analyse and seek to clarify how (on paper at least) the different regulatory systems interlink. Developing land which is contaminated for a more sensitive use may result in remediation requirements under the Town and Country Planning regime. Further, the Contaminated Land Regime will not apply to pollution or contamination from industry regulated under Part I of the Environmental Protection Act 1990 (soon to be replaced by the Pollution Prevention and Control Act 1999) to the extent that powers under that regime apply. The Contaminated Land Regime will also not apply to land which is subject to a waste management licence to the extent that the powers under the waste management licencing regime apply. Those responsible for polluting waters will still be open to prosecution under the Water Resources Act 1991 but the dividing line between the Contaminated Land Regime and the Environment Agency’s powers to require water clean-up works under that legislation is only set out in guidance and involves certain distinctions which may be technically difficult to establish.
It is also worth pointing out that the Contaminated Land Regime does not confer rights upon individuals to claim compensation if they suffer loss as a result of ground contamination or water pollution. Those who suffer loss will in most cases, as before, have to base claims in the common law principles in negligence and nuisance.
Contaminated land
Under the Contaminated Land Regime each local authority is required to inspect its area to identify contaminated land. Contaminated land is defined in the legislation as “land which appears ... to be in such a condition by reason of substances in, on or under the land, that:
n significant harm is being caused or there is a significant possibility of such harm being caused; or
n pollution of controlled waters is being, or is likely to be, caused.”
The statutory guidance expands on what type and level of harm is to be considered significant and there are already proposals to amend the second limb of the definition to include an express requirement of “significance”.
Remediation notices
Once land is identified as contaminated the enforcing authority is under a statutory duty to require appropriate “remediation” of that land. “Remediation” in this context may take the form of assessment action, remedial treatment or monitoring. The enforcing authority will serve a remediation notice on the “appropriate person(s)” who will be the person(s) responsible for doing and funding any necessary works. Before a remediation notice is served the enforcing authority must consult the appropriate person and (if different) the owner and/or occupier of the contaminated land. It cannot serve a remediation notice until the expiry of a three month consultation period. This three month consultation period is designed to give the appropriate person an opportunity to reach a binding agreement with the enforcing authority setting out the scope of necessary remediation work, thereby obviating the need for a remediation notice.
Who is the “appropriate person”?
The appropriate person is the person who “caused or knowingly permitted” the contaminants to be present in, on or under the land. This phrase is designed to apply the “polluter pays principle”. If, however, no such person can be found after reasonable enquiry then the appropriate person is the current owner or occupier of the land. The enforcing authority when deciding who is the appropriate person, must refer to the statutory guidance. The guidance classifies those falling into the “cause or knowingly permit” category as Class A persons and owners or occupiers as Class B persons.
Class A exclusion tests
There may be more than one Class A person (this is known as a liability group) in which case, if no person is excluded from that group (see below), each person will be liable for that proportion of the costs which reflects his responsibility (there are detailed rules in the statutory guidance for apportioning costs between Class A persons). The enforcing authority must apply a series of exclusion tests in a strict sequence to determine whether any person who appears to fall in a Class A liability group can be excluded from that liability group. At no point, however, can the tests be applied so as to exclude all members from the Class A group. There must always be at least one person remaining. The tests are set out below.
Test 1 - excluded activities
The purpose of this test is to exclude those persons who fall within the Class A group solely by reason of various activities. Those activities include: providing or withholding financial assistance; providing legal, financial, engineering, scientific or technical advice; carrying out intrusive investigations in certain circumstances; a landowner who has granted a licence to occupy where the occupier has operated a waste storage or disposal business at the site; performing a contract by providing goods or a service (this includes sub-contractors) where the ultimate employer is also a member of the liability group.
Test 2 - Payments made for Remediation
The purpose of this test is to exclude those members who have already paid some other member of the group to carry out adequate remediation.
Test 3 - “Sold with Information”
The purpose of this test is to exclude any person who has sold or let the land on a long lease and has provided the purchaser or lessee with sufficient information to give that person the opportunity to take that information into account before the sale took place.
Test 4 - “Changes to Substances”
The purpose of this test is to exclude those persons who have caused or knowingly permitted the presence of a substance on the land, but that substance has only become a pollutant by virtue of the introduction of a later substance by another member of the group.
Test 5 - “Escaped Substances”
The purpose of this test is to exclude persons otherwise liable for contamination where the contamination results from the escape of substances from other land which was caused by another member of the group.
Test 6 - “Introduction of Pathways or Receptors”
The purpose of this test is to exclude those persons who only become responsible because of the subsequent introduction of the relevant pathway or receptor by another member of the group.
Class B Exclusion Tests
In the absence of any Class A person a Class B person can be held responsible for the remediation except where the requirement relates solely to the pollution of controlled waters or relates to contamination which has migrated onto neighbouring land. If there is more than one Class B person the enforcing authority must apply exclusion tests which exclude those who hold licences to occupy with no marketable value or who pay market rent but hold no beneficial interest in the land apart from the tenancy. Again, the tests cannot be used to exclude all members of the Class B group. If more than one person remains then liability must
be apportioned.
Points of caution
The Contaminated Land Regime and the overall regulatory setting is certainly an issue of importance to those involved in the development of land. Apart from being aware of the potential liabilities including the operation and scope of the exclusion tests it is important to know how and from whom to obtain relevant information and advice. Even more now than is already the case those potentially exposed to liability will seek to obtain contractual protection. In some cases this may take the form of relatively innocuous looking wording which seeks the benefit of the exclusion tests. In other cases contracts may contain lengthy acknowledgements and indemnities which may be backed up with insurance policies or other forms of financial provision.
Finally, it is worth pointing out that although there now is relative certainty as to the form and language of the Contaminated Land Regime it remains to be seen how this complex system will be interpreted and applied
in practice.
For further information on this topic, please contact Daniel Chappell at daniel.chappel@cms-cmck.com or on +44 (0)20 7367 3000.
