Keeping it clean
23 May 1995
The potential areas of liability under environmental law which affect businesses in this country are well known.
The Environmental Protection Act 1990, the Water Resources Act 1991, provisions under the Environmental Bill and the legacy of common law provide the framework within which industry and commerce operate.
There are very good reasons for operating within this legal framework - to avoid prosecution, fines and legal costs; to maintain confidence, whether of financial institutions, shareholders, employees or public interest groups or simply to encourage good public relations.
There are many practical situations where the degree of risk of environmental liability is not clear, and there is a need for opinion based on an expert's experience and knowledge. The legal profession provides legal opinion and it is an unwise environmental consultant who enters that particular lion's den, but there is also frequently a need for the professional opinion of an environmental consultant to assist the lawyer.
One of the most common areas where lawyers' and environmental consultants' paths cross is contaminated land.
Of all the areas of potential environmental liability this is possibly the one with the greatest degree of uncertainty.
The revelation that contamination of ground could constrain development and result in costly remedial work first received wide recognition in the late 1970s when a number of high profile developments ran into problems.
Throughout the 1980s, the Government considered and debated the issue culminating in the provision for Section 143 registers in the EPA 1990. Lawyers will all be aware of the story since then.
The Environmental Bill attempts to consolidate the legal framework within which contaminated land can be identified, recorded and, where appropriate, dealt with.
The high public profile and potential costs associated with contaminated land have led to a requirement for risk to be assessed wherever ownership of property is being transferred. Purchasers, vendors, funders, lenders and their legal and property advisers, all recognise the need for information on the condition of the property and advice in direct liability or ways that the land's condition could affect its value.
When there is a significant risk of contamination then site investigation and analysis of soil may be needed to confirm the extent of any contamination, although is some cases this may be obvious.
The fact that a site is contaminated is not the end of the story. Owning a contaminated site is not a hanging offence. The site only becomes a liability if the contamination is causing, or is likely to cause 'significant harm' to the environment or third party interests.
This is where the knowledge and experience of an environmental consultant is essential.
The assessment of actual or potential harm requires an understanding of geology, hydrogeology, hydrology, chemistry, biology, building materials and techniques and knowledge of environmental law and of the regulators. The consultant must be able to assess the likelihood of action to require clean-up of a site whether as part of redevelopment proposals or through simple ownership.
The good environmental consultant must be able to advise his client in a clear and practical way either by assigning costs to the various possibilities and options, or by commenting on the marketability or financeability of a property from an environmental viewpoint. The client and his other professional advisors, including the lawyers, bankers, surveyors and valuers, are then able to take this into account in their own assessments.
In advising on contaminated land the environmental consultant takes on certain responsibilities and must maintain correspondingly high professional indemnity insurance.
A measure of a consultant's record is his ability to obtain such cover, normally £5 million, at an economic cost. The insurance industry will not take risks on bad advice on contamination.
The benefits to the client arising from the consultant's advice, depending on the particular circumstances, include resolution of doubt in relation to the true significance of contamination of a site, better informed valuation, speedier sales, increased shareholders' confidence, ability to raise finance and avoidance of regulatory action prosecution.
Dr Keith Jones is a director of RPS Consultants and advises government and industry on environmental liability.