Where does liability for contaminated land really lie?
The House of Lords on Wednesday 27 June 2007 handed down its
judgment in the Bawtry case.[i]
The judgment, which has wide ranging implications for the
operation of the contaminated land regime (the Environmental
Protection Act 1990 Part 2 A), held that National Gas Grid PLC
(NGG) should not have liability for the contamination caused by
their predecessor gas undertakers.
The House of Lords pointed out that NGG did not cause, or
knowingly permit, any substances to be in, on, or under, the land.
That was done by the East Midlands Gas Board or its predecessor gas
undertakers many years before NGG came into existence. The court
went on to say that NGG was not the polluter, and had never been in
the business of producing coal gas as its business is, and always
has been, the transportation of natural gas. NGG had never been the
owner of any part of the site, it having been sold to developers in
1965, before the privatisation of the gas industry and before
liabilities for contaminated land were created by the Environmental
Protection Act 1990.
our comment
The House of Lords looked at the very specific wording of the
Gas Act 1986 where the government privatised the gas industry. That
Act talks about taking over the assets and liabilities as they
stood immediately before the transfer date. As the House of Lords
pointed out, the Bawtry site formed no part of the assets
transferred to British Gas Plc; the site had been sold for housing
over 20 years earlier and the liabilities created by the
contaminated land regime did not exist when British Gas was
floated.
Had the predecessors to British Gas still been in existence,
there is no question they would have had liability. Similarly, had
the developers still been in existence they would have had
liability. The precise wording of the privatisation, coupled with
the wording of the contaminated land regime, means that liability
did not pass to NGG. This case does not bring an end to the
contaminated land regime, but it does mean that very careful
consideration needs to be given when trying to pass historic
liability onto companies that have been either formed by mergers
and acquisitions or that have taken over other companies.
Regulators need to tread carefully and those who thought they might
have liability may find themselves off the hook.
There are many housing estates around the country built over
former gas works where remediation was carried out to a standard
that may no longer be appropriate. This case will almost certainly
mean that NGG does not have liability, and in that case, liability
could well fall on the current owners and occupiers or the public
purse. Developers, local authorities and all those involved with
the contaminated land regime will need to give careful
consideration as to how to manage these issues.
Notes:
[i] (R (on the application of National Grid Gas Plc formerly
Transco Plc)
-v- Environment Agency. The case was heard on 21st May 2007 and
judgment was handed down on Wednesday 27 June 2007- Reference
[2007] UKHL 30.
