In July a new regime comes into force which will require the clean up of contaminated land.
Given that the UK is the birth place of the Industrial Revolution, this regime is set to have a major impact.
The regime is concerned with historic contamination only. Current and future pollution remains to be dealt with under existing liability control regimes, such as the Water Resources Act 1991.
The regime is concerned with contamination of land and watercourses, including groundwater.
Key features are:-
The regime is found at Part IIA of the Environmental Protection Act 1990. It is to work as follows:-
1. The Environment Agency has jurisdiction over "Special Sites" where contamination is acute. In most cases the Regulator is likely to be the Local Authority. The Local Authority is to inspect its area and within the next 15 months draw up a written strategy for implementation of the regime.
2. The Local Authority may serve a Remediation Notice on "Appropriate Persons" requiring them to remediate such contamination identified in the Notice.
Appropriate persons are:-
a. The Original Polluter (eg) the person who caused or knowingly permitted the contamination to be present or
b. The current Owner or Occupier will be deemed to be the appropriate person, if the Original Polluter cannot be found, irrespective of the fact it has not caused or knowingly permitted any contamination to be present.
A Remediation Notice will be served where the Local Authority is of the view that Significant Harm is being caused, or is likely to be caused. Significant Harm is defined as follows:-
An Appropriate Person will be required to clean up a "pollutant linkage" (or more than one).
A pollutant linkage is where a pollution source reaches a receptor, via a pathway (eg) hydrocarbon contamination migrates through soil to reach a vegetable garden.
Normally the Local Authority will enter into a three month consultation period with the Appropriate Person. This short time period must be put to good use. It may be tactically sensible to agree a Remediation Strategy with the Local Authority to avoid a Remediation Notice being served at all, or indeed it may be a useful time window in which to point the Regulator in the direction of the real Original Polluter if it has not correctly identified the same.
Once a Remediation Notice has been served, it is a criminal offence not to comply. If the person alleged to be the Appropriate Person does not consider that the Remediation Notice has been properly served, or it is otherwise invalid, then there is a right of Appeal to the Magistrates Court, unfortunately not the most appropriate jurisdiction to hear issues of such complexity.
The regime will have far reaching effects.
Remediation can be expensive. We are aware of civil remediation claims of £45 million, £23 million and £18 million. These are even before a Notice has been served. A company receiving a Remediation Notice may find that its income stream is reduced, that it has difficulty in financing loans and that the value of its assets (eg) the land in question may become negative overnight. We are aware of industrial sites where the land has been valued at minus £200,000 per acre.
Thus not only the buying and selling of property will be affected, but the ability and willingness of funders to assist with Corporate mergers and acquisitions is likely to be affected too.
There are limited ways in which it will be possible to avoid and apportion liability for contaminated land clean up.
Whilst a Remediation Notice will not be served on a person who cannot be found ((eg) a company which has been dissolved) there are anti avoidance provisions to prevent group companies from amassing potential liabilities in a subsidiary company which may be sunk without trace.
Contractual mechanisms such as Warranties and Indemnities may give protection and comfort, and also certain insurance policies may be taken out to provide cover for certain defined risks thus providing comfort to Buyers, Sellers and Funders that a long-tail Environmental Liability will not bite.
This has by necessity been a very short summary of the new regime. It is absolutely critical that you obtain specific expert legal advice before embarking on the purchase, sale or funding of a potentially contaminated site.
For further information please contact Mike Shepherd, e-mail: Click Contact Link , Trinity Court, 16 John Dalton Street, Manchester, M60 8HS, UK, Tel: + 44 161 830 5000
This article was first published in the March 1999 Hammond Suddards Safety, Health and Environment Newsletter Update
The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.
Given that the UK is the birth place of the Industrial Revolution, this regime is set to have a major impact.
The regime is concerned with historic contamination only. Current and future pollution remains to be dealt with under existing liability control regimes, such as the Water Resources Act 1991.
The regime is concerned with contamination of land and watercourses, including groundwater.
Key features are:-
- It is retrospective - the person who caused or knowingly permitted the contamination to be present on land will be liable for remediation to a required standard whether or not such conduct was considered blameworthy at the time.
- No time limits - provided the Polluter can be found, then he will be liable, regardless of the age of the contamination.
The regime is found at Part IIA of the Environmental Protection Act 1990. It is to work as follows:-
1. The Environment Agency has jurisdiction over "Special Sites" where contamination is acute. In most cases the Regulator is likely to be the Local Authority. The Local Authority is to inspect its area and within the next 15 months draw up a written strategy for implementation of the regime.
2. The Local Authority may serve a Remediation Notice on "Appropriate Persons" requiring them to remediate such contamination identified in the Notice.
Appropriate persons are:-
a. The Original Polluter (eg) the person who caused or knowingly permitted the contamination to be present or
b. The current Owner or Occupier will be deemed to be the appropriate person, if the Original Polluter cannot be found, irrespective of the fact it has not caused or knowingly permitted any contamination to be present.
A Remediation Notice will be served where the Local Authority is of the view that Significant Harm is being caused, or is likely to be caused. Significant Harm is defined as follows:-
- Death, disease, injury to humans
- Adverse change in protected habitat
- Subsoil damage or failure of buildings
- Significant loss of livestock/crops.
An Appropriate Person will be required to clean up a "pollutant linkage" (or more than one).
A pollutant linkage is where a pollution source reaches a receptor, via a pathway (eg) hydrocarbon contamination migrates through soil to reach a vegetable garden.
Normally the Local Authority will enter into a three month consultation period with the Appropriate Person. This short time period must be put to good use. It may be tactically sensible to agree a Remediation Strategy with the Local Authority to avoid a Remediation Notice being served at all, or indeed it may be a useful time window in which to point the Regulator in the direction of the real Original Polluter if it has not correctly identified the same.
Once a Remediation Notice has been served, it is a criminal offence not to comply. If the person alleged to be the Appropriate Person does not consider that the Remediation Notice has been properly served, or it is otherwise invalid, then there is a right of Appeal to the Magistrates Court, unfortunately not the most appropriate jurisdiction to hear issues of such complexity.
The regime will have far reaching effects.
Remediation can be expensive. We are aware of civil remediation claims of £45 million, £23 million and £18 million. These are even before a Notice has been served. A company receiving a Remediation Notice may find that its income stream is reduced, that it has difficulty in financing loans and that the value of its assets (eg) the land in question may become negative overnight. We are aware of industrial sites where the land has been valued at minus £200,000 per acre.
Thus not only the buying and selling of property will be affected, but the ability and willingness of funders to assist with Corporate mergers and acquisitions is likely to be affected too.
There are limited ways in which it will be possible to avoid and apportion liability for contaminated land clean up.
Whilst a Remediation Notice will not be served on a person who cannot be found ((eg) a company which has been dissolved) there are anti avoidance provisions to prevent group companies from amassing potential liabilities in a subsidiary company which may be sunk without trace.
Contractual mechanisms such as Warranties and Indemnities may give protection and comfort, and also certain insurance policies may be taken out to provide cover for certain defined risks thus providing comfort to Buyers, Sellers and Funders that a long-tail Environmental Liability will not bite.
This has by necessity been a very short summary of the new regime. It is absolutely critical that you obtain specific expert legal advice before embarking on the purchase, sale or funding of a potentially contaminated site.
For further information please contact Mike Shepherd, e-mail: Click Contact Link , Trinity Court, 16 John Dalton Street, Manchester, M60 8HS, UK, Tel: + 44 161 830 5000
This article was first published in the March 1999 Hammond Suddards Safety, Health and Environment Newsletter Update
The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.
