The lie of the land

With uncertain liabilities, the development of brownfield land is a risky business. Paul Davies and Andrew Jackson say that legislation should be changed to encourage more investment

The latest ‘English Partnerships Annual Report’ confirms that although there has been a considerable turnover of brownfield land, there remains a significant hard core of problem sites that existing initiatives are failing to bring into productive use. With house-building at a historic low, it stands to reason that only the most lucrative brownfield sites have been redeveloped. If the remaining sites are uneconomic to redevelop, it is difficult to see how the current level of brownfield building can be sustained.
The statutory framework governing liability for contaminated land in the UK is provided by Part IIA of the Environmental Protection Act 1990. The act provides that liability for the clean-up of brownfield land falls primarily on those who cause or knowingly permit contamination. If the current owner or occupier of the property is aware of historic contamination and fails to deal with it, he may also be liable as a knowing permitter (class A persons). If the relevant authority cannot identify a class A person, liability will fall on the current owner or occupier of the land (class B persons). For transparency, details of all remedial works carried out by the relevant authority or class A or B persons has to be recorded on a public register. However, what is sadly lacking is a formal process under which brownfield sites can be ‘signed off’ as having been adequately remediated.
The lack of a definitive end to the clean-up process is one of the main stumbling blocks to brownfield redevelopment. Developers are reluctant to invest because of the difficulties they encounter in determining the full extent of their potential liability. This lack of finality has led some to question whether current legislation needs to be revised.
Although the concept of signing off appears straightforward, the procedures are often complex and there are a number of approaches that may be adopted. At its simplest, signing off could take the form of an agreement by the Government not to pursue the land owner in respect of specific contaminants and approved remedial works. The other, and rather remote end of the spectrum, would be a blanket agreement not to pursue liability claims against the land owner in respect of any future contamination issues.
As one might expect, the issue of signing off was debated extensively during the passage of Part IIA through the Houses of Parliament. It was argued that without such a procedure there would “remain a stain on the title of the property that would make it virtually unsaleable”. Lord Northbourne, probably the greatest protagonist on this subject, suggested during the report stage that local authorities should have to issue a certificate of exemption once remedial works had taken place. His later, more modest proposal was that the local authority should be required to record on the remediation register what it had directed to be done and whether this was done to a standard that was acceptable. Although both amendments were subsequently withdrawn, there remained a genuine concern that many sites were difficult enough to bring forward for redevelopment without adding to their problems.
It is worth noting that some local authorities have attempted to provide extra comfort to the parties involved in the redevelopment of brownfield land by voluntarily certifying that the clean-up has been completed satisfactorily. On the one hand, this voluntary sign-off should be applauded as a step in the right direction, but the fact that additional works could be required demonstrates the need for a statutory sign-off procedure that clearly sets out the circumstances in which further liability can be imposed.
Even if existing legislation is amended to include some form of sign-off procedure, this will only provide a partial solution. With fewer than expected sites being processed under Part IIA, the planning system will be a key driving force in cleaning up contamination. The Government has issued draft planning guidelines to complement Part IIA and these emphasise that the potential for contamination is widespread and needs to be considered at all stages of the planning and development process. Broader objectives are set for clean-up, the guidelines stressing that planning controls should not deal solely with the significant risks as detailed in Part IIA. It is difficult to predict what this will mean in practice.
The continuing uncertainty that plagues the redevelopment of brownfield land in the UK cannot be resolved under current planning and environmental legislation. In response to this dilemma, new products are being launched that represent a change in approach when compared with existing options for allocating risks associated with the redevelopment of brownfield land.
The new WSP Active Transfer environmental liabilities outsourcing product, for example, removes uncertainty by enabling businesses to transfer their environmental liabilities in perpetuity, effectively outsourcing contractual liability and associated clean-up. Although in its infancy in the UK, this approach has been a success in the US. Other similar products are being developed by organisations such as Certa and Cherokee. These solutions by contrast involve conventional environmental insurance or loss of control over the brownfield land in question to secure the necessary indemnity.
The continuing uncertainty regarding the legislative framework underpinning the redevelopment of brownfield land is creating great uncertainty in the marketplace. As long as this uncertainty continues, the parties involved in redeveloping brownfield land will either have to rely on more sophisticated products becoming available to provide bespoke solutions or muddle on in the hope that the law is reformed.
Andrew Jackson is a partner and Paul Davies a solicitor at Macfarlanes

Case study: Sandridge
Cleaned up by Crest Homes in the late 1980s, prior to the construction of a 66-home estate. Historically, the site formed part of a large chemical works. In May 2000, it was discovered that significant levels of bromate were polluting the underlying aquifer and had even been detected in one borehole some 10 kilometres away. Investigations are underway to determine what additional work will need to be carried out.

Case study: Warrington
Warrington Borough Council has launched an investigation in respect of homes and open spaces on part of the former Burtonwood airbase. Although some clean-up was carried out in the 1970s and 1980s prior to redevelopment of the area, concern has been raised that further works may now be required.