Professor Kenneth C RossPartner

Brodies LLP

Historical background

Who pays?

Law Society leaflet

“Recent clarification of Law Society advice

Why is this a problem?

Land put to “Contaminative use”

Blight

Uncertainty

Environmental Protection Act 1990Section 143

Contaminated land

Environmental Protection Act 1990Section 78A to 78YC

“Any land which appears to the Local Authority in whose area it is situated to be in such a condition by reason of substances in, on or under the land that (a) significant harm is being caused or there is a significant possibility of such harm being caused or (b) pollution of controlled water is being or is likely to be caused”

NB – ORIGINAL DEFINITION – NOW REVISED

“Contaminated land” is defined as

Definition altered to:

“Any land which appears to the Local Authority in whose area it is situated to be in such a condition by reason of substances in, on or under the land that (a) significant harm is being caused or there is a significant possibility of such harm being caused or (b) pollution of the water environment is being caused or there is a significant possibility of such pollution being caused”

Contaminated Land (Scotland)Regulations 2005

“Pollution” in relation to the water environment means the direct or indirect introduction, as a result of human activity, of substances into the water environment or any part of it which may give rise to any harm.

Contaminated Land (Scotland)Regulations 2005

Contaminated land

Special site

Harm

Appropriate person

Local Authority duty to inspect

Remediation Notice

Registers

Environmental Protection Act 1990Section 78A to 78YC

Risk assessment – contaminant, receptor, pathway

Significant harm

Significant possibility of significant harm

Pollution of the water environment

Guidance

Listed actions

Payment to carry out clean up

Sold with information

Introduction of further substances

Escape of substances from other land

Subsequent introduction by others of relevant pathways or receptors

Exclusion tests

The purpose of this test is to exclude those who have been identified as having caused or knowingly permitted the land to be contaminated land solely by reason of having carried out certain activities. The activities are ones which, in the Scottish Executive’s view, carry such limited responsibility, if any, that exclusion would be justified even where the activity is held to amount to “causing or knowingly permitting” under Part IIA. It does not imply that the carrying out of such activities necessarily amounts to “causing or knowingly permitting”.

Test 1 – Excluded Activities

The purpose of this test is to exclude from liability those who have already, in effect, met their responsibilities by making certain kinds of payment to some other member of the liability group, which would have been sufficient to pay for adequate remediation.

Test 2 – Payments made for Remediation

In applying this test, the enforcing authority should consider whether all of the following circumstances exist:-

one of the members of the liability group has made a payment to another member of that liability group for the purpose of carrying out particular remediation on the land in question; only payments of the kinds set out in paragraph D.53 below are to be taken into account;

that payment would have been sufficient at the date when it was made to pay for the remediation in question;

Test 2 – Payments made for Remediation(cont)

if the remediation for which the payment was intended had been carried out effectively, the land in question would not now be in such a condition that it has been identified as contaminated land by reason of the significant pollutant linkage in question;

and the remediation in question was not carried out or was not

carried out effectively.

Test 2 – Payments made for Remediation(cont)

However, no payment should be taken into account where the person making the payment retained any control after the date of the payment over the condition of the land in question (that is, over whether or not the substances by reason of which the land is regarded as contaminated land were permitted to be in, on or under the land).

Test 2 – Payments made for Remediation(cont)

The purpose of this test is to exclude from liability those who, although they have caused or knowingly permitted the presence of a significant pollutant in, on or under some land, have disposed of that land in circumstances where it is reasonable that another member of a liability group, who has acquired the land from them, should bear the liability for remediation of the land.

In applying this test, the enforcing authority should consider whether all of the following circumstances exist:-

one of the members of the liability group (the “seller”) has sold the land in question to a person who is also a member of the liability group (the “buyer”);

Test 3 – Sold with Information

one of the member of the liability group (the “seller”) has sold the land in question to a person who is also a member of the liability group (the “buyer”);

The sale took place at arms’ length (that is, on terms which could be expected in a sale on the open market between a willing seller and a willing buyer);

Before the sale became binding, the buyer had information that would reasonably allow that particular person to be aware of the presence on the land of the pollutant identified in the significant pollutant linkage in question, and the broad measure of that presence; and the seller did nothing material to misrepresent the implications of that presence; and

Test 3 – Sold with Information (cont)

After the date of the sale, the seller did not retain any interest in the land in question or any rights to occupy or use that land.

In determining whether these circumstances exist: In transactions since 1 January 1990 where the buyer, at

the time of the transaction, is a large commercial organisation or public body, permission from the seller for the buyer to carry out his own investigations of the condition of the land should normally be taken as sufficient indication that the buyer had the information referred to in paragraph D.58 (c) above.

Test 3 – Sold with Information (cont)

The purpose of this test is to exclude from liability those who are members of a liability group solely because they caused or knowingly permitted the presence in, on or under the land of a substance which has only lead to the creation of a significant pollutant linkage because of its interaction with another substance which was later introduced to the land by another person.

Test 4 – Changes to Substances

The purpose of this test is to exclude from liability those who would otherwise be liable for the remediation of contaminated land which has become contaminated as a result of the escape of substances from other land, where it can be shown that another member of the liability group was actually responsible for that escape.

Test 5 – Escaped Substances

The purpose of this test is to exclude from liability those who would otherwise be liable solely because of the subsequent introduction by others of the relevant pathways or receptors (as defined in Chapter A) in the significant pollutant linkage.

Test 6 – Introduction of Pathwaysor Receptors

The planning and development control system

Civil liability

Criminal sanctions

The Waste Regime (Environmental Protection Act 1990 Section 59)

Existing control

Landfill gas problem

Is it contaminated land?

Existing Law – Circular Facilities (1)

Who is the appropriate person?

Exclusion Tests

Existing Law – Circular Facilities (2)

Appeal of May 2005

What is a “knowing permitter”

Existing Law – Circular Facilities (3)

R (National Grid Gas plc) (formerly Transco plc))

-v- Environment Agency [2007] UKHL30

Coal gasworks 1915 on

Operations cease 1948

Land sold to developer for housing by East Midlands Gas Board 1965

Sequence of Events

Gas Act 1948

Gas Act 1972

Gas Act 1986

Transfer of all liabilities existing “immediately before” the transfer date

The Legal Provisions

1. Environmental survey

2. Restricted environmental search

3. Official Register under Section 78R

4. Title deeds

5. Information available to client

6. Warranties and Indemnities

7. Environmental insurance

Mechanisms available with respect tocontaminated land

Impact on Full Repairing and Insuring Leases

1. Duty to return property in good tenantable order and repair.

2. Tenants duty to implement notices.

3. Schedule of Environmental Condition.

Professor Kenneth C RossPartner

Brodies LLP