Introduction
Progress in the contaminated land framework
Established regime: United States
Comment
Introduction
The National Environmental Management Waste Act (59/2008) came into force on July 1 2009, with the exclusion of Chapter 4, Part 8 which regulates contaminated land. Almost three years have lapsed without these Chapter 4 provisions commencing.
The Chapter 4 provisions will apply retrospectively to both users and owners of contaminated land. The proposed provisions include:
- the identification and notification of investigation areas;
- the preparation of site assessment reports;
- orders to remediate contaminated land;
- restrictions on the transfer of remediation sites; and
- the establishment of a contaminated land register.
Commentators have noted that the proposed contaminated land provisions are vague, have potentially far-reaching consequences for the acquisition and disposal of land(1) and, as they stand, fall significantly short of what a potentially effective regime should include.(2)
Recent developments include the approval of a draft National Waste Management Strategy by the Cabinet on November 9 2011. On March 19 2012 draft regulations for site assessments and reports and draft norms and standards for remediation of contaminated land and soil quality were published. These publications are open for a 60-day public comment period.
This update considers the steps that the Department of Environmental Affairs is taking as a precursor to the entry into force of Chapter 4. The proposed regulation is briefly compared to some of the more extensive mechanisms established in the United States.
Progress in the contaminated land framework
While the relevant provisions of Chapter 4 have not yet come into force, the frameworks, draft regulations and norms and standards necessary for their enactment are being developed by the department. The 2011 strategy was published subsequent to the establishment of the Framework for the Management of Contaminated Land, dated May 2010. The framework and 2011 strategy have no official status.
The framework states that there is no single consistent set of guidelines or regulations to assess the risk and status of contaminated land or to provide the basis for accepting remediation plans. It notes that it is essential to adopt a risk-based tiered approach, founded on international best practice, considering the high costs involved in remediating contaminated land. It proposes, among other things, a protocol for site risk assessments, reporting norms and standards and the use of soil screening values. The recently published draft regulations and draft norms and standards give effect to the framework's suggestions.
The 2011 strategy acknowledges the lack of data on contaminated sites resulting from the extent of mining activities and the historical lack of regulation. It states that before the Waste Act, the general obligations to prevent and remediate pollution in terms of Section 28 of the National Environmental Management Act (107/1998) and Section 19 of the National Water Act (36/1998) are applicable. These 'duty of care' provisions are similar to the intended provisions on contaminated land: they extend to the landowner, provide for strict liability and are retrospective.
However, due to the inadequate provisions in the Waste Act, many questions remain unanswered, including whether individual owners will be held liable for high costs, whether the state will have the final obligation to remediate land and whether a remediation fund will be established.(3)
The department previously identified certain key objectives and targets intended to be achieved by 2015, including:
- establishing a contaminated sites register linked to the deeds register before site investigations can take place;
- finalising remediation standards;
- developing norms and standards to identify independent parties to conduct site assessments; and
- resolving inter-departmental jurisdictional conflict.
The publication of draft regulations and norms and standards appears to address some of the objectives listed above. The draft regulations aim to regulate:
- the content of site assessment reports;
- the party which may undertake site assessments;
- public participation; and
- the submission of reports.
They provide for instances where the minister of environmental affairs may appoint an independent party to undertake a site assessment if the owner is unable to. However, the costs can be redeemed from the site owner (Regulation 4(2)). The draft norms and standards provide for an approach for the remediation of contaminated land, minimum standards for assessing sites and sampling and analysis of listed contaminants.
In the 2011 strategy, the department states that it will also assess the extent of the state's liability for remediation and consider appropriate funding mechanisms with the National Treasury. It indicated that regulations will be developed exempting liability for government bodies that involuntarily acquire ownership and owners of sites contaminated by migration of substances (ie, through soil or water). Where liability cannot be apportioned, remediation cost will fall to the state. This has not been addressed in the recent publications.
The department has previously emphasised that financial institutions which accept land as security against loans must exercise due diligence in respect of potential liability.
The targets set in the 2011 strategy include that 80% of site assessments listed on the national register and 50% of remediation plans be completed by 2015.
Established regime: United States
The South African strategies and draft publications appear still to fall short of comprehensive considerations for contaminated land regulation. The US Comprehensive Environmental Response, Compensation and Liability Act 42(4) (CERCLA) is an example.
CERCLA's basic principles relating to contaminated land appear to be similar to the Waste Act (ie, identification and assessment of sites, listing of sites in a national list, strict liability and retrospectivity). However, CERCLA deals more extensively with the vast regulation issues.(5)
CERCLA, in the 2002 Brownfields Revitalisation Act (Law 107-118), established a comprehensive liability scheme, holding certain categories of party liable to conduct or pay for clean-up of releases of hazardous materials.(6) The Brownfields amendment responded to the liability concerns of certain landowners, by providing authority for a grant programme and enabling the Environmental Protection Agency (EPA) to obtain a windfall lien(7) on certain properties owned by bona fide prospective purchasers.
Some common elements must be met to qualify as bona fide prospective purchasers, contiguous property owners and innocent purchasers. Among other things, all appropriate inquiries must have been made before acquiring a property, purchasers may not be affiliated with parties liable for the pollution, and certain common ongoing obligations must be complied with, including:
- land use restrictions;
- taking reasonable steps to prevent releases; and
- providing cooperation, assistance and property access to the authorities.
Grants are provided for assessment and clean-up of certain sites; however, the EPA promotes site clean-up by potentially responsible parties and private parties. The EPA also has a policy on lender liability insofar as lender exemption is not dealt with under CERCLA. Generally, a lender is exempted from liability where it is not the owner or operator of the property and if it does not participate in the management of the facility.
Although no legal regime is flawless and the US regime has been criticised, lessons may still be learnt from a system that has been tried and tested. It is clear that much still needs to be done before an effective contaminated land regime is established in South Africa.
Comment
Even though Chapter 4 has not yet commenced, owners or users of land can be ordered to take the necessary measures to clean up contamination or the costs for the clean-up can be recovered from them under Section 28 of the National Environmental Management Act and Section 19 of the National Water Act.
Determining the presence of contaminated land should form a key consideration in a due diligence investigation before any property acquisition. This is regardless of the status of the legal framework. The due diligence should determine the condition of the land and the current liabilities, and alert a purchaser to possible future obligations. Such an investigation forms an important benchmark, going forward, of the condition of the land when the purchaser acquires the property. This is important for the purchaser and the seller. In future, such an investigation will be necessary to demonstrate that 'all appropriate inquiries' were conducted before a property is purchased.
Where the decommissioning of facilities requires an environmental authorisation(8) or rehabilitation of contaminated land requires a waste management licence,(9) an assessment of the site's contamination, as envisaged in the framework, should be included for property to be sold. This information can be used to negotiate the purchase price of a property and ensure that the purchaser and lender are informed of the associated risks.
Members of the public can comment on the draft regulations and norms and standards within 60 days of the date of its publication.
For further information on this topic please contact Claire Tucker or Melissa Strydom van Dyk at Bowman Gilfillan Inc by telephone (+27 11 669 9000), fax (+27 11 669 9001) or email ([email protected] or [email protected]).
Endnotes
(1) C Tucker, "New Waste Management Bill Contains Far Reaching Retrospective Provisions Regarding Contaminated Land", Engineering News, April 13 2007, 29.
(2) M Kidd, "Should Bad Law be Remediated? The Contaminated Land Provisions in the National Environmental Management Waste Act", SAJELP (2009) 16, 2.
(3) For further detail please see "The Waste Management Bill: implications for land owners and sales of businesses"
(5) See US EPA Publication No 330-F-11-002.
(6) EPA Office of Site Remediation Enforcement, EPA Publication no 330-F-11-002, Revitalizing Contaminated Sites: Addressing Liability Concerns, The Revitalization Handbook, March 2011, www.epa.gov/compliance/resources/.../handbook/index.html.
(7) Bona fide prospective purchasers are not liable as owners or operators of property for CERCLA costs, but the property they acquire may be subject to a windfall lien where the EPA response action has increased the fair market value of the property.
(8) Activity 27 of GNR 544 published in Government Gazette 33306 on June 18 2010 requires an environmental authorisation for the decommissioning of existing facilities or infrastructure for activities where the facility or the land on which it is located is contaminated.
(9) The list of waste management activities published in GNR 718 in Government Gazette 32368 of July 3 2009 requires a waste management licence for the remediation of contaminated land (Activity 12 of Category A).