Originally published in BLG's Environment and Health & Safety Digest, Autumn 2007

The House of Lords judgment in the eagerly anticipated "leapfrog" appeal in R (on the application of National Grid Gas PLC) v Environment Agency was handed down on 27 June 2007.

The case considered whether successor companies to former public utilities can be required to step into the shoes of their polluting predecessors and clean up contaminated land under Part IIA of the Environmental Protection Act 1990 ("Part IIA") as if they had been the original polluter.

Under Part IIA, those who "caused or knowingly permitted" the substances by reason of which land is contaminated, to be in, on or under that land are "appropriate persons". Where they can be found, they should bear liability for clean up. Where they cannot be found, innocent current owners and occupiers are liable. A former gasworks site in Bawtry, Doncaster had been redeveloped in the late 1960s as residential housing, but contaminants still remained.

The Environment Agency ("EA") concluded that the gas companies that operated the site in the period from 1915-1950 caused or knowingly permitted the contamination. Furthermore, although those companies were long since dissolved, they could still be "found" for enforcement purposes (following a series of statutory transfers contained in the Gas Acts and subsequent corporate demergers, mergers and name changes) in the form of their successor company, NGG. It reached this decision even though NGG itself had never owned the site or had any other interest in it.

NGG judicially reviewed the EA's decision to make it an appropriate person. The High Court heard NGG's application in 2006 but did not overturn the EA's decision. It decided that the Gas Acts' liability transfer provisions were intended to work in this way. Furthermore, Part IIA liability should be borne by the original polluter and spare the innocent owner/occupier if at all possible and the EA's decision was consistent with this principle.

The House of Lords came to the opposite view. NGG was not the same legal "person" as its predecessors. It had never owned or operated the site and could not have caused or knowingly permitted the pollution. No liability had arisen in respect of the contamination under any legislation in force at the time of the transfers under the Gas Acts. There was, therefore, no existing liability for these Acts to transfer. Even if there was contamination liability of some sort for the Gas Acts to transfer, Part IIA liability was completely new and was not in force at the time of the Gas Act transfers. The Gas Acts could not therefore transfer Part IIA liability.

The remediation of the site will now be paid for out of public funds. The EA has confirmed that it will not pursue the householders who would otherwise be liable.

Although much still depends on the precise timing and wording of the liability transfer provisions, successor companies will be breathing a collective sigh of relief at the judgment. Prior to the appeal, many successor companies were having to face up to contaminated land liabilities that related to sites of which they had no record and were therefore almost impossible to quantify.

The judgment renders Part IIA a less effective tool in the remediation of contaminated land. Legislation will have to be introduced if its effectiveness in relation to the remediation of former public utility property is to be increased. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.