The Israel Ministry of Environmental Protection (MOEP) recently published for public comment a draft policy that may have significant implications for the industrial and financial sectors with respect to contaminated land (a link to the draft policy in Hebrew).

The publication of the draft policy is consistent with the continuous efforts by the MOEP in recent years to pass the Contaminated Land Bill in the Israeli Parliament, the Knesset. Until the debates within the political arena regarding the Bill are resolved, the draft policy seeks to present a coherent framework on prevention and remediation of land contamination and provide a degree of certainty for all those who may be affected by this important issue including industrial facilities, financial institutions and real-estate developers.

Although parts of the draft policy reflect existing MOEP rules, part of the policy present new initiatives that may have substantive legal and financial ramifications for the Israeli business sector.

The draft policy outlines the following main principles:

  • Prioritizing the focus of the MOEP on the most contaminated and hazardous sites in Israel, by initiating a national program to identify and remediate such sites. The MOEP defines “polluted land” as land that poses a risk to the public or to the environment, and sets its policy according to this risk-based approach.
  • Under the new policy, industrial facilities will be divided into three main risk categories. Facilities in the highest risk category, which are identified as being “engaged in a risk-related polluting activity”, will be required to automatically submit a Phase I land survey every seven years. In the event that the Phase I survey indicates potential land contamination, the facility will be required to take action to abate the risk that is posed by the contamination. The MOEP estimates this category to include more than 500 facilities across Israel. Facilities in the second risk category, defined as “engaged in a polluting activity”, will be required to conduct a Phase I survey only in the event of the shutting down of the facility. The third risk category, relating to facilities “engaged with hazardous substances”, will require compliance with the general rules on abatement of land contamination, as set out in the environmental permits and licenses of the facility.
  • Within the scope of the new policy, the MOEP intends to publish quantitative thresholds for hazardous substance releases into soil, which will trigger a requirement to report to the MOEP.
  • The MOEP also intends to draft and update numerous underlying guidelines which address the abatement and treatment of contaminated land based on internationally recognized standards, including applicable standards for the presence of hazardous substances in soil; methods for soil sampling and analysis; land survey methodologies and more. The MOEP also intends to publish guidelines regarding its involvement in zoning and building procedures. The drafting and updating of the guidelines will include a public comment period.

While the new policy aims to set clear and coherent rules on the prevention and treatment of land contamination, it is yet unclear whether it will accomplish its goal. The substantive rules that make up the policy – including the various guidelines and risk-related threshold values – are yet to be published and updated. While these elements have not been clarified, the practical aspects of the policy remain uncertain.

Furthermore, being an administrative guideline rather then binding legislation, the new policy is subject to change and thus less stable then legislation would be. In addition, it cannot address issues that can be prescribed strictly by law, such as monetary measures and enforcement tools.

Developments relating to the new policy and its underlying guidelines, as well as progress on the passing of the Contaminated Land Bill, should be followed closely. We anticipate these to significantly affect activities in the industrial, finance and real-estate sectors. No transaction, whether M&A or financing can be complete without a thorough process of due diligence and risk allocation with regard to potential land contamination. Nowadays, these will all have to be performed in close interplay with Israel’s evolving policy so as to minimize financial risk and legal liability potentially arising from contaminated land.