Greater clarity needed in the clean-up debate

According to the Environment Agency, the Government’s target of 60% of new developments to be built on previously developed land or converted from existing buildings has been met eight years ahead of schedule. Now, with Gordon Brown’s promise to build three million new homes by 2020, the demand to identify brownfield land for new developments is higher than ever before – but many brownfield sites are former industrial sites and could be contaminated.

Brownfield sites pose a challenge to local authorities in two ways. Firstly, LAs planning to renovate or redevelop their housing stock or other land that may be contaminated by harmful materials must be aware of the potentially high remediation costs. Anybody remediating a brownfield site needs to be wary when removing potentially hazardous materials remaining from a site’s previous uses, and when demolishing and removing existing structures.

All producers of waste have a duty to ensure it is managed lawfully and responsibly.

Since the Landfill Directive was introduced, there are now very few sites that can accept contaminated waste. This has driven up the cost of disposal to the extent that now, dealing with waste from contaminated land is more expensive than ever.

Secondly, LAs are responsible for enforcing remediation orders, forcing liable individuals or businesses to pay clean-up costs when contamination is caused or discovered on privately owned land. Unfortunately, there is a lack of legal clarity over who is liable for the resulting costs when harm is caused to people and property – is it the present owner/occupier of the land or somebody who owned or occupied it in the past? This uncertainty is, in many cases, making it difficult for authorities to identify who should pay for the clean-up.

So, who is ultimately liable? Government policy is that whoever is responsible for the source of pollution must pay. This applies whether this is a person or organisation that has knowingly polluted, or whether this is simply the current owner or occupier of the land – which is the source of pollution – and which may have actually been contaminated by a former owner.

Complex in practice

But the ‘polluter pays’ liability regime, while apparently simple in theory, has recently become very complex as a result of a legal case won by the Environment Agency against National Grid Gas in 2005 and, significantly, following the recent bouts of severe flooding. In the legal case, the EA asserted that National Grid Gas should contribute to the clean-up costs of contaminated land on which a gas works formerly stood. This was despite the fact that National Grid did not cause the contamination and indeed no longer owned the land.

The contamination was actually caused by the company’s predecessors, which had operated at the site until 1965 when the site was sold for housing development. The EA succeeded in their claim that in acquiring the business from their statutory predecessors, National Grid had also inherited liability for any contamination of the land. An appeal has been launched against this decision and the result of the case, which will decide whether liability can be passed on in this way, is now eagerly awaited.

The recent severe floods have also highlighted the need for clarification of liability for remediation costs. Many potential brownfield development sites lie near rivers and canals or sit on flood plains. Some of these will have buried waste and potential pollutants that have not been recorded. The current owner or developer could be completely unaware of these, even if they have carried out all the site surveys and investigations currently deemed reasonable.

As recent experience has shown, flood waters can cause harmful materials to re-surface, migrate and cause harm to residents and property off-site. Under the ‘polluter pays’ regime, a strict allocation of liability in such circumstances may seem harsh, and has yet to be tested in the courts.

Calls to end uncertainty

So, what does the future hold? There is increasing pressure on the Government to bring an end to the uncertainty surrounding liability. A mandatory financial security directive was eventually dropped from the EU’s recent Environmental Liability Directive. Many commentators, however, believe there is a strong case for introducing a statutory requirement for environmental insurance in the UK, either for the developer of the land, its owner, or both. This will make sourcing the money for clean-up operations a lot easier for LAs.

Until then, and until the uncertainty over liability for remediation costs is addressed, brownfield sites will continue to cause headaches for local councils.

Neena Sharma is an associate for the regulatory team at Keoghs