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Environment Protection Act 1990: Part IIA Contaminated Land

Chapter D - Statutory Guidance on Exclusion from, and Apportionment of, Liability for Remediation

PART 1 - Scope of the Chapter

D.1 The statutory guidance in this Chapter is issued under sections 78F(6) and 78F(7) of the Environmental Protection Act 1990. It provides guidance on circumstances where two or more persons are liable to bear the responsibility for any particular thing by way of remediation. It deals with the questions of who should be excluded from liability, and how the cost of each remediation action should be apportioned between those who remain liable after any such exclusion.

D.2 Section 78F provides that:

"(6) Where two or more persons would, apart from this subsection, be appropriate persons in relation to any particular thing which is to be done by way of remediation, the enforcing authority shall determine in accordance with guidance issued for the purpose by the Scottish Ministers whether any, and if so which, of them is to be treated as not being an appropriate person in relation to that thing.

"(7) Where two or more persons are appropriate persons in relation to any particular thing which is to be done by way of remediation, they shall be liable to bear the cost of doing that thing in proportions determined by the enforcing authority in accordance with guidance issued for the purpose by the Scottish Ministers".

D.3 The enforcing authority is therefore required to act in accordance with the guidance in this Chapter. Introductory summaries are included to various parts and sections of the guidance: these do not necessarily give the full detail of the guidance; the section concerned should be consulted.

PART 2 — Definitions of Terms

D.4 Unless otherwise stated, any word, term or phrase given a specific meaning in Part IIA of the Environmental Protection Act 1990, or in the statutory guidance in Chapters A or B, has the same meaning for the purpose of the guidance in this Chapter.

D.5 In addition, for the purposes of this Chapter, the following definitions apply:

(a) a person who is an appropriate person by virtue of section 78F(2) (that is, because he has caused or knowingly permitted a pollutant to be in, on or under the land) is described as a "Class A person";

(b) a person who is an appropriate person by virtue of section 78F(4) or (5) (that is, because he is the owner or occupier of the land in circumstances where no Class A person can be found with respect to a particular remediation action) is described as a "Class B person";

(c) collectively, the persons who are appropriate persons with respect to any particular significant pollutant linkage are described as the "liability group" for that linkage; a liability group consisting of one or more Class A persons is described as a "Class A liability group", and a liability group consisting of one or more Class B persons is described as a "Class B liability group";

(d) any determination by the enforcing authority under section 78F(6) (that is, a person is to be treated as not being an appropriate person) is described as an "exclusion";

(e) any determination by the enforcing authority under section 78F(7) (dividing the costs of carrying out any remediation action between two or more appropriate persons) is described as an "apportionment"; the process of apportionment between liability groups is described as "attribution";

(f) a "remediation action" is any individual thing which is being, or is to be, done by way of remediation;

(g) a "remediation package" is all the remediation actions, within a remediation scheme, which are referable to a particular significant pollutant linkage; and

(h) a "remediation scheme" is the complete set or sequence of remediation actions (referable to one or more significant pollutant linkages) to be carried out with respect to the relevant land or waters.

D.6 Any reference to "Part IIA" means "Part IIA of the Environmental Protection Act 1990". Any reference to a "section" in primary legislation means a section of the Environmental Protection Act 1990, unless it is specifically stated otherwise.

PART 3 — The Procedure for Determining Liabilities

D.7 For most sites, the process of determining liabilities will consist simply of identifying either a single person (either an individual or a corporation such as a limited company) who has caused or knowingly permitted the presence of a single significant pollutant, or the owner of the site. The history of other sites may be more complex. A succession of different occupiers or of different industries, or a variety of substances may all have contributed to the problems which have made the land "contaminated land" as defined for the purposes of Part IIA. Numerous separate remediation actions may be required, which may not correlate neatly with those who are to bear responsibility for the costs. The degree of responsibility for the state of the land may vary widely. Determining liability for the costs of each remediation action can be correspondingly complex.

D.8 The statutory guidance in this Part sets out the procedure which the enforcing authority should follow for determining which appropriate persons should bear what responsibility for each remediation action. It refers forward to the other Parts of this Chapter, and describes how they should be applied. Not all stages will be relevant to all cases, particularly where there is only a single significant pollutant linkage, or where a liability group has only one member.

First Stage - Identifying Potential Appropriate Persons and Liability Groups

D.9 As part of the process of determining that the land is "contaminated land" (see Chapters A and B), the enforcing authority will have identified at least one significant pollutant linkage (pollutant, pathway and receptor), resulting from the presence of at least one significant pollutant.

Where there is a single significant pollutant linkage

D.10 The enforcing authority should identify all of the persons who would be appropriate persons to pay for any remediation action which is referable to the pollutant which forms part of the significant pollutant linkage. These persons constitute the "liability group" for that significant pollutant linkage. (In this guidance the term "liability group" is used even where there is only a single appropriate person who is a "member" of the liability group.)

D.11 To achieve this, the enforcing authority should make reasonable enquiries to find all those who have caused or knowingly permitted the pollutant in question to be in, on or under the land. Any such persons constitute a "Class A liability group" for the significant pollutant linkage.

D.12 If no such Class A persons can be found for any significant pollutant, the enforcing authority should consider whether the significant pollutant linkage of which it forms part relates solely to the pollution of controlled waters, rather than to any significant harm. If this is the case, there will be no liability group for that significant pollutant linkage, and it should be treated as an "orphan linkage" (see paragraphs D.103 to D.109 below).

D.13 In any other case where no Class A persons can be found for a significant pollutant, the enforcing authority should identify all of the current owners or occupiers of the contaminated land in question. These persons then constitute a "Class B liability group" for the significant pollutant linkage.

D.14 If the enforcing authority cannot find any Class A persons or any Class B persons in respect of a significant pollutant linkage, there will be no liability group for that linkage and it should be treated as an orphan linkage (see paragraphs D.103 to D.109 below).

Where there are two or more significant pollutant linkages

D.15 The enforcing authority should consider each significant pollutant linkage in turn, carrying out the steps set out in paragraphs D.10 to D.14 above, in order to identify the liability group (if one exists) for each of the linkages.

In all cases

D.16 Having identified one or more liability groups, the enforcing authority should consider whether any of the members of those groups are exempted from liability under the provisions in Part IIA. This could apply where:

(a) a person who would otherwise be a Class A person is exempted from liability arising with respect to water pollution from an abandoned mine (see section 78J(3));

(b) a Class B person is exempted from liability arising from the escape of a pollutant from one piece of land to other land (see section 78K); or

(c) a person is exempted from liability by virtue of his being a person "acting in a relevant capacity" (such as acting as an insolvency practitioner), as defined in section 78X(4).

D.17 If all of the members of any liability group benefit from one or more of these exemptions, the enforcing authority should treat the significant pollutant linkage in question as an orphan linkage (see paragraphs D.103 to D.109 below).

D.18 Persons may be members of more than one liability group. This might apply, for example, if they caused or knowingly permitted the presence of more than one significant pollutant.

D.19 Where the membership of all of the liability groups is the same, there may be opportunities for the enforcing authority to abbreviate the remaining stages of this procedure. However, the tests for exclusion and apportionment may produce different results for different significant pollutant linkages, and so the enforcing authority should exercise caution before trying to simplify the procedure in any case.

Second Stage - Characterising Remediation Actions

D.20 Each remediation action will be carried out to achieve a particular purpose with respect to one or more defined significant pollutant linkages. Where there is a single significant pollutant linkage on the land in question, all the remediation actions will be referable to that linkage, and there is no need to consider how the different actions relate to different linkages. This stage and the third stage of the procedure therefore do not need to be carried out where there is only a single significant pollutant linkage.

D.21 However, where there are two or more significant pollutant linkages on the land in question, the enforcing authority should establish whether each remediation action is:

(a) referable solely to the significant pollutant in a single significant pollutant linkage (a "single-linkage action"); or

(b) referable to the significant pollutant in more than one significant pollutant linkage (a "shared action").

D.22 Where a remediation action is a shared action, there are two possible relationships between it and the significant pollutant linkages to which it is referable. The enforcing authority should establish whether the shared action is:

(a) a "common action" — that is, an action which addresses together all of the significant pollutant linkages to which it is referable, and which would have been part of the remediation package for each of those linkages if each of them had been addressed separately; or

(b) a "collective action" — that is, an action which addresses together all of the significant pollutant linkages to which it is referable, but which would not have been part of the remediation package for every one of those linkages if each of them had been addressed separately, because:

(i) the action would not have been appropriate in that form for one or more of the linkages (since some different solution would have been more appropriate),

(ii) the action would not have been needed to the same extent for one or more of the linkages (since a less far-reaching version of that type of action would have sufficed), or

(iii) the action represents a more economic way of addressing the linkages together which would not be possible if they were addressed separately.

D.23 A collective action replaces actions that would have been appropriate for the individual significant pollutant linkages if they had been addressed separately, as it achieves the purposes which those other actions would have achieved.

Third Stage - Attributing Responsibility between Liability Groups

D.24 This stage of the procedure does not apply in the simpler cases. Where there is only a single significant pollutant linkage, the liability group for that linkage bears the full cost of carrying out any remediation action. (Where the linkage is an orphan linkage, the enforcing authority has the power to carry out the remediation action itself, at its own cost.)

D.25 Similarly, for any single-linkage action, the liability group for the significant pollutant linkage in question bears the full cost of carrying out that action

D.26 However, the enforcing authority should apply the guidance in Part 9 with respect to each shared action, in order to attribute to each of the different liability groups their share of responsibility for that action.

D.27After the guidance in Part 9 has been applied to all shared actions, it may be the case that a Class B liability group which has been identified does not have to bear the costs for any remediation actions. Where this is the case, the enforcing authority does not need to apply any of the rest of the guidance in this Chapter to that liability group.

Fourth Stage - Excluding Members of a Liability Group

D.28 The enforcing authority should now consider, for each liability group which has two or more members, whether any of those members should be excluded from liability:

(a) for each Class A liability group with two or more members, the enforcing authority should apply the guidance on exclusion in Part 5; and

(b) for each Class B liability group with two or more members, the enforcing authority should apply the guidance on exclusion in Part 7.

Fifth Stage - Apportioning Liability between Members of a Liability Group

D.29 The enforcing authority should now determine how any costs attributed to each liability group should be apportioned between the members of that group who remain after any exclusions have been made.

D.30 For any liability group which has only a single remaining member, that person bears all of the costs falling to that liability group, that is both the cost of any single-linkage action referable to the significant pollutant linkage in question, and the share of the cost of any shared action attributed to the group as a result of the attribution process set out in Part 9.

D.31 For any liability group which has two or more remaining members, the enforcing authority should apply the relevant guidance on apportionment between those members. Each of the remaining members of the group will then bear the proportion determined under that guidance of the total costs falling to the group, that is both the cost of any single-linkage action referable to the significant pollutant linkage in question, and the share of the cost of any shared action attributed to the group as a result of the attribution process set out in Part 9. The relevant apportionment guidance is:

(a) for any Class A liability group, the guidance set out in Part 6; and

(b) for any Class B liability group, the guidance set out in Part 8.

PART 4 — General Considerations Relating to the Exclusion, Apportionment and Attribution Procedures

D.32 This Part sets out general guidance about the application of the exclusion, apportionment and attribution procedures set out in the rest of this Chapter. It is accordingly issued under both section 78F(6) and section 78F(7).

D.33 The enforcing authority should ensure that any person who might benefit from an exclusion, apportionment or attribution is aware of the guidance in this Chapter, so that they may make appropriate representations to the enforcing authority.

D.34 The enforcing authority should apply the tests for exclusion (in Parts 5 and 7) with respect to the members of each liability group. If a person, who would otherwise be an appropriate person to bear responsibility for a particular remediation action, has been excluded from the liability groups for all of the significant pollutant linkages to which that action is referable, he should be treated as not being an appropriate person in relation to that remediation action.

Financial Circumstances

D.35 The financial circumstances of those concerned should have no bearing on the application of the procedures for exclusion, apportionment and attribution in this Chapter, except where the circumstances in paragraph D.85 below apply (the financial circumstances of those concerned are taken into account in the separate consideration under section 78P(2) on hardship and cost recovery). In particular, it should be irrelevant in the context of decisions on exclusion and apportionment:

(a) whether those concerned would benefit from any limitation on the recovery of costs under the provisions on hardship and cost recovery in section 78P(2); or

(b) whether those concerned would benefit from any insurance or other means of transferring their responsibilities to another person.

Information and Decisions

D.36 The enforcing authority should make reasonable endeavours to consult those who may be affected by any exclusion, apportionment or attribution. In all cases, however, it should seek to obtain only such information as it is reasonable to seek, having regard to:

(a) how the information might be obtained;

(b) the cost of obtaining the information for all parties involved; and

(c) the potential significance of the information for any decision.

D.37 The statutory guidance in this Chapter should be applied in the light of the circumstances as they appear to the enforcing authority on the basis of the evidence available to it at that time. The enforcing authority’s judgements should be made on the basis of the balance of probabilities. The enforcing authority should take into account the information that it has acquired in the light of the guidance in the previous paragraph, but the burden of providing the authority with any further information needed to establish an exclusion or to influence an apportionment or attribution should rest on any person seeking such a benefit. The enforcing authority should consider any relevant information which has been provided by those potentially liable under these provisions. Where any such person provides such information, any other person who may be affected by an exclusion, apportionment or attribution based on that information should be given a reasonable opportunity to comment on that information before the determination is made.

Agreements on Liabilities

D.38 In any case where:

(a) two or more persons are appropriate persons and thus responsible for all or part of the costs of a remediation action;

(b) they agree, or have agreed, the basis on which they wish to divide that responsibility; and

(c) a copy of the agreement, is provided to the enforcing authority and none of the parties to the agreement informs the authority that it challenges the application of the agreement;

the enforcing authority should generally make such determinations on exclusion, apportionment and attribution as are needed to give effect to this agreement, and should not apply the remainder of this guidance for exclusion, apportionment or attribution between the parties to the agreement. However, the enforcing authority should apply the guidance to determine any exclusions, apportionments or attributions between any or all of those parties and any other appropriate persons who are not parties to the agreement.

D.39 However, where giving effect to such an agreement would increase the share of the costs theoretically to be borne by a person who would benefit from a limitation on recovery of remediation costs under the provision on hardship in section 78P(2)(a) or under the guidance on cost recovery issued under section 78P(2)(b), the enforcing authority should disregard the agreement.

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