What is contaminated land?
Contaminated land is any land which, by reason of substances in or under the land, appears to be in such a condition that either:
- significant harm to the environment or human health is being caused, or there is a significant possibility of such harm being caused; or
- significant pollution of controlled waters is being caused, or there is a significant possibility of such harm being caused.
Contaminated land can result from a varied range of activities. In the majority of cases, it's the result of previous commercial or industrial activity, such as landfilling or manufacturing processes involving harmful chemicals, having taken place on the land itself or on adjacent land.
Land can be contaminated for many years. Provided there are no receptors (humans or other organisms) being put at risk from the contamination (or pathways to such receptors), it can remain contaminated and not require remediation. However, should there be a change of use which introduces new receptors; if contaminated land is disturbed by physical works; or if contamination migrates and risks causing pollution or harm elsewhere, remediation could be required.
What are the issues commonly arising from contaminated land?
- Damage to the environment. Contaminated land can cause significant harm to the environment and human health. Contamination can cause damage to plants and organisms living on or in the land, with the risk of migration to adjacent areas of land or groundwater or contamination seeping/run off into surface water affecting aquatic life, and impacting the potability of the ground or surface water.
- Time. The presence or identification of contaminated land can cause delays to development projects, in relation to both identifying and classifying the contaminated area, and establishing and implementing a disposal/remediation plan.
- Cost. Remediating or disposing of contaminated soils can have huge cost implications – potentially affecting the viability of a development. In some cases, large areas of land need to be remediated through slow and complicated processes. Additional costs can be incurred in monitoring, coordinating and managing that process.
- Reputational damage. can occur if contaminated land is not properly addressed, particularly during the construction of a development.
Will you be liable?
If an issue with contaminated land means that remediation is required, the local authority will identify who is to be responsible. Two classes of 'person' can be held responsible:
- Class A persons – those who cause or knowingly permit the pollutants to be in, on, or under the land
- Class B persons – the current owner/occupiers of the land.
In simple terms, this means that if the regulator can identify who caused or permitted the original contamination, that person/company will be responsible for its clean up. The regulator may also identify more than one Class A person, and there can be shared liability for remediation works.
However, a lot of contamination in the UK originated many years ago, when heavy industry was more prolific and environmental legislation was less stringent. Consequently, businesses that caused contamination are often no longer in existence. In these situations, the regulator will instead look to current owners and occupiers, and allocate liability between them.
There are complex rules regarding how such liability is allocated, which are outside the scope of this article. But the risk of becoming a Class B person can be significant. If there's a chance you may be or become such a person, you should take immediate, specialist legal advice.
How to minimise the risks
- Thorough due diligence at the pre-planning stage of a development is key to properly assessing the risk of contamination on a site. Most site investigations/property transactions will include a desktop Phase 1 report which highlights potential areas of concern. Where potential risks exist, it's important to undertake a Phase 2 report to confirm whether any of these issues are significant. Some developers fail to undertake a Phase 2 report due to the cost and time implications. However, in our experience, it's much quicker and easier to deal with contaminated land concerns immediately up front, before land has been purchased, and before related contracts, costs and commitments have been entered into, and works commenced.
- Wherever possible, make financial provision at the outset of a project to allow for any potential contamination risks. That's particularly important where full diligence has not been possible.
- Include appropriate provisions in transactional documentation to minimise the risk of inheriting or retaining liability for contamination wherever possible. (There are strict requirements to be followed in the event of a seller trying to transfer liability to a buyer. Failure to do so may mean that the parties' intentions are not accepted by the regulator. Specialist advice will be required.)
- If possible, obtain insurance to cover the potential costs of remediation/dealing with contamination. Specific contaminated land policies aren't cheap, but they may be considerably cheaper than remediating contamination in the future.
Whilst there's a regulatory regime for managing and remediating contaminated land, contamination issues are commonly addressed through the planning regime. Conditions requiring the assessment and, if relevant, the remediation of land are often imposed on the grant of planning permission. It's important that the potential cost of any such remediation works is fully understood at an early stage and, if relevant/possible, dealt with on site acquisition. These conditions will generally need to be complied with either prior to commencement of development, or prior to first occupation. If any required works aren't factored in, they can risk delaying the build programme.
Contaminated land is a complex area. If you're considering purchasing a business and/or occupying/developing land with any risk of contamination, it's vital that you seek advice at the earliest opportunity, to help minimise potential environmental liabilities. Failure to do so can be extremely costly.
Contaminated land: How we can support you
Walker Morris' Environment Team is a multi-disciplinary group of specialist lawyers experienced in all aspects of the environment/sustainability agenda. We can work with businesses at every step of their journey to create, implement and deliver an effective sustainability strategy. With our extensive experience and expertise in the build sector, that includes helping commercial and residential developers to successfully bring projects affected by contaminated land to fruition.
In particular, we can help landowners, developers and their professional consultants with environmental due diligence, the submission of applications to the relevant authorities and regulators for authorisations, licences and consents needed in respect of contaminated land and in respect of emissions, discharges and waste management.
We can provide advice on contractual provisions and arrangements, and assistance with pre-contract negotiations and transactional support. Also in relation to planning and project work, we can guide clients from the purchase of land to the submission of planning applications, review and report on environmental reports, prepare and co-ordinate environmental impact assessments, and help to manage teams of experts with different technical competences.
In the event of any alleged environmental breaches and regulatory investigations, we can assist in negotiations with enforcement authorities and provide clients with sensitive, strategic legal and practical support.
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.
