Escaping the liability net
Owen Lomas and Ciara Lynch-Kelly from Allen & Overy’s Environmental Law Group set out the practical steps that can be taken, by those involved in developing and managing brownfield land, to manage their liability
Once a local authority (or the Environment Agency in the case of heavily contaminated ‘Special Sites’) has identified a site as contaminated, it will seek to cast the ‘liability net’ as widely as possible. It will often be the case that many of the responsible parties may no longer exist or cannot be found, especially in relation to a site with a long history of industrial use. The local authority is obliged to include all potentially responsible parties and will be keen to do so to increase its chances of fixing liability on someone. So what is the likelihood of receiving a remediation or clean-up notice and what practical steps can you take to increase your chances of escaping the ‘liability net’ once a notice has been received?
Most developers and owners or occupiers have seen no tangible change in regulatory interest in their sites since the introduction of the contaminated land regime three years ago. This experience can often result in the conclusion that the risk of any action from the authorities is low. However, a pattern is emerging of regulatory interest in contaminated land being triggered by site re-development and associated planning applications. There is, in essence, nothing new here as site condition reports are a well-established part of the planning process. But local authorities are starting to take this opportunity at least to assess whether the regime may apply. In the cases of operational industrial sites, the introduction of the Integrated Pollution Prevention and Control (IPPC) regime adds a twist to this assessment. The PPC Regulations 2000 require an application for a new permit to include a baseline site condition survey, which will describe the condition of the site and identify substances present that may constitute a pollution risk.
This application process thus gives an authority the opportunity to update its knowledge of a site and, by its nature, may spark interest in contamination issues. In such circumstances your on-going relationship with the regulator is likely to be a significant factor in how the issue is managed.
The good news, however, is that the thresholds for liability under the contaminated land regime are high - this and other relevant mitigating factors are set out in box A.
Once a regulator has identified a site as contaminated, it must notify in writing the owner, occupier and any party it considers to be potentially liable for clean-up. At this stage, the procedure is informal, so the opportunity to exit proceedings here is far greater than when a Remediation Notice has been served. Once a notice has been received, a company should establish its involvement with the site, identify documentation and personnel with knowledge of the issues, and engage with the regulatory authority.
The ultimate aim in this situation is to avoid or mitigate, as appropriate, clean-up costs. Some circumstances will call for liability to be disputed and others for a company to accept a share of liability. Either way, knowledge of the problem, as well as specialist advice on the Contaminated Land Regime and how it operates, are key tools in dealing with both the threat, and if unavoidable, the service of, a Remediation Notice.
There are various strategies that can be employed when dealing with a remediation notice, some of which are set out in box B.
Some key facts that a company should aim to investigate include:
Involvement: It will be important to define in what capacity you were involved with the site. Were you an owner or occupier? Did you share occupation of the land with other parties? Establishing when and for how long you were at a site will help to quantify further your involvement with and potential liability for clean-up at that site.
Activities: The activities that you or others have carried on at a site may give an indication of the source of the contamination. It may also link you to personnel who have first hand information about the site.
Other Parties: It will be essential to try and establish other users and occupiers of the site with the aim of identifying other potentially responsible parties. Also check documentation for any agreements on liability or contractual provisions you may be able to rely on to mitigate any eventual costs, for example, agreements entered into on the sale of the site.
Previous redevelopment / clean-up: If a site has been re-developed, the problem may have been previously documented as part of the planning process or some form of clean-up may have already been undertaken. This may not result in you escaping liability, as generally authorities do not ‘sign off’ on clean-up programmes, but it is important evidence that may assist in mitigating your potential liabilities.