British courts test successor-of-polluter pays principle

The Environment Agency and National Grid Gas locked horns in the courtroom this week as the gas company tried to argue it was not legally responsible for the clean-up of land contaminated by the gas industry in the 1960s, well before its own formation.

R (on the application of National Grid Gas plc) v Environment Agency

The case of R (on the application of National Grid Gas plc) v Environment Agency came before the English Courts this week, in which it was held that the provisions of Part IIA of the Environmental Protection Act 1990 (EPA 1990) imposed a liability for remediating contaminated land on a person where contaminating substances had been brought onto the land by their statutory predecessors.

The case before the Court was an application for judicial review, in which National Grid Gas plc (formerly Transco plc) sought to challenge a decision of the Environment Agency (EA), whereby the EA had decided that National Grid Gas plc was an “appropriate person” under Part IIA of the EPA 1990.

The site in question had been a former gas works which was thereafter developed for housing from 1966 and now consisted of residential properties with gardens.

The EA had therefore decided that National Grid Gas plc was an “appropriate person” since the contamination was caused by one or more of their statutory predecessors which operated the site up until 1965.

National Grid Gas plc sought to argue that they were not an “appropriate person” on the basis that the liability in question was in respect of contaminating substances brought onto the land by one of their predecessors, not National Grid Gas plc itself.

They further argued that the liability had not accrued at the time of the various relevant transfers and that it was imposed under a statutory regime which creates new liabilities, different from those which existed at the time the contaminating substances were brought on to the land.

However the case failed on the basis of the first ground put forward as the main issue before the court therefore concerned what was the proper meaning of the word “person” within section 78F of the EPA 1990 and whether this simple meant the “original undertaking” or whether it should be construed to mean the entity comprising the original undertaking that caused or knowingly permitted the contaminating substances to be in, on or under the land and any body that has succeeded to the liabilities of the original undertaking under the relevant statutory regime.

The court agreed with the submissions of the EA to the effect that the word “person” is sufficiently flexible to mean an entity comprised of a succession of corporate bodies that have been continuously involved in the relevant activities and in respect of which there are statutory transfer provisions to ensure legal certainty, i.e “the Gas Industry”.

The provisions of Part IIA of the EPA 1990 were therefore given a purposive construction as while Parliament’s intention was that primary responsibility for contamination should be borne by the original polluter, this “would clearly best be furthered by a perfectly permissible construction of the term “person” as a result of which the original polluter can be “found” in the form of its statutory successor”.

Further details of the case can be found by following the link.

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