Landmark contaminated land cases
R (on the application of National Grid Gas plc (formerly Transco)) v Environment Agency
A landmark House of Lords judgment raised significant issues with Part IIA of the Environmental Protection Act 1990 (EPA 1990).
The case involved a site in Bawtry, Doncaster, formerly used as a gas works which was owned by National Grid Gas plc (NGG) (formerly known as Transco plc and British Gas plc). The site was sold to private developers in 1965 who redeveloped the site for residential purposes. During privatisation of the gas industry in 1986, the 'property rights and liabilities' were transferred to British Gas plc under a statutory transfer scheme. It is assumed contamination occurred prior to 1952 when coal gas was being produced by state-owned entities.
The site was designated 'contaminated land' as a special site under Part IIA of the EPA 1990 in 2003 as a result of the identification of pollutant linkages of nickel and polyaromatic hydrocarbons found in the land and groundwater. The Environment Agency (EA) subsequently undertook remediation works on a row of 11 houses at a cost of £700,000. The EA then sought to recover a proportion of the costs from NGG.
However, the Lords rejected the claim that NGG should be liable for the costly remediation of the site. Within the context of the EPA 1990 and the Gas Acts of 1948 and 1986, the Lords ruled that NGG could not be considered the 'appropriate person' and therefore be expected to fund the necessary remediation. The Lords judgment concludes an appeal by NGG following a previous High Court ruling, which concluded NGG was in part responsible for the clean-up works.
The Lords highlighted the fact that NGG did not cause or knowingly permit any substances to be in, on, or under the land as NGG had never undertaken coal gas production on any of its sites. These activities were carried out by some of its many predecessor gas companies. In addition the Lords pointed out that NGG had never actually owned the site as it had been sold to developers in 1965 prior to the gas industry privatisations and liabilities created by the EPA 1990. More specifically, the Gas Acts of 1948 and 1986 only transferred the assets and liabilities that stood immediately before transfer to a privatised company. With respect to this case the Lords highlighted the fact that firstly, the Bawtry site comprised no part of the assets transferred to British Gas plc upon privatisation nor did the EPA 1990 exist when British Gas was floated on the stock market.
The House of Lords did not agree with the EA's interpretation of the EPA 'polluter pays' principle in this case, commenting it was 'a quite impossible construction to place on the uncomplicated and easily understandable statutory language'. The judgement effectively ruled that an 'appropriate person' (as defined within the EPA 1990) should not include every successor to the liabilities of the original polluter following the Gas Acts of 1948 and 1986.
Overall this judgement has far reaching effects with respect to contaminated sites and the liabilities of successive privatised businesses, particularly ex-nationalised utilities. It has been reported there are potentially up to 2,000 sites across the UK, which may have been contaminated by former utility companies and which have subsequently undergone privatisation/nationalisation in the past. The fact that the statutory successor at such sites may not automatically be liable for remediation costs will be great relief to many of the current utility companies and their shareholders.
There is now much debate over whether amendments to the EPA 1990 will be proposed by Defra in reaction to this ruling.