Paying The Price Of Contaminated Land

Victoria Joy, an environmental consultant at Addleshaw Booth & Co, looks at how tenants can reduce the various risks when acquiring a potentially contaminated site under the new contaminated land liability regime. Addleshaw Booth & Co is almost unique amongst law firms by being able to offer the services of an environmental specialist.

Tenants are often under the misapprehension that they are not liable for contamination unless they have caused it. After all, the polluter pays, doesn't he? Unfortunately, it is seldom that simple.

The 'polluter pays' principle is a useful starting point and, in general, a tenant will be legally responsible for any pollution that it has caused. So, if the tenant's oil tank has leaked and contaminated a watercourse, it is the tenant who will face enforcement action by the Environment Agency. This could means prosecution, a fine, having to clean up the contamination or even imprisonment. Moreover, if the contamination has infringed someone else's rights, perhaps by damaging a neighbour's land or killing fish which were the legitimate sport of the local angling club, then these parties will have the right to sue the polluter. So far so good. It seems only fair that a polluter should bear the consequences of his actions.

Things become less straightforward when the tenant has not actually caused pollution, but occupies a property which has been polluted by the landlord or a previous owner or occupier. If the tenant knows about the pollution but does nothing to remedy it, it could become liable in addition to the original polluter through "knowingly permitting" land or water pollution. This phrase occurs both in the relevant water pollution legislation, the Water Resources Act 1991, and in the new contaminated land legislation which came into force in England and Scotland last year and has only just come into force in Wales.

The most likely situation in which this would occur is where contamination on the property, perhaps from a chemical spill many years ago, is gradually escaping into the aquifer beneath or a surface watercourse. A tenant who is aware of this, but does not take effective steps to prevent it, could be prosecuted and/or made to clean up the contamination.

Under the new contaminated land liability regime referred to above, a clean-up liability attaches to both "causers" and "knowing perimeters" of land contamination, but sites which are not harming the environment and are suitable for their...