Local authorities will welcome a decision by the Court of Appeal that Powys County Council is not liable for contamination caused by a former landfill site operated by its predecessor. However, the decision is not such good news for landowners.

Background

Mr Price and Mrs Hardwick own a farm near Builth Wells in mid-Wales. From the early 1960s until 1993 Builth Wells Urban District Council and its successor, the Borough of Brecknock (Brecknock), operated a landfill site on part of the farm under a series of licences from Mr Price, Mrs Hardwick and their co-owner. In 1996 Brecknock was abolished as part of a local government reorganisation in Wales and its functions were taken over by the newly-created Powys County Council (Powys).

Powys assumed that it had taken over Brecknock's liability for the former landfill site. With the landowners' permission, Powys carried out various sampling and monitoring works, which led to concerns about leachate pollution from the former landfill site entering nearby rivers. In response, Powys carried out drainage works and entered into a lease with the landowners in August 2001 for the installation and operation of a leachate treatment and filtration plant and a pumping station.

The Part 2A contaminated land regime

On 15 September 2001 the contaminated land regime in Part 2A of the Environmental Protection Act 1990 (Part 2A regime) came into force in Wales. The regime contains the legal framework for identifying contaminated land and allocating responsibility for remediation. The persons responsible for remediation are usually those who have caused or knowingly permitted contamination, but where they cannot be identified or no longer exist, then it is the current owner/occupier. Powys assumed that it would be liable under the Part 2A regime if the former landfill site was identified as contaminated land and carried out monitoring and mitigation activities on that basis until 2015.

The 'Transco' case

In 2007 the House of Lords ruled in a dispute between the Environment Agency and Transco plc over liability for contamination arising from a former gasworks that the transfer of rights and liabilities from a private company to a nationalised utility under the Gas Act 1948 and then to a privatised company under the Gas Act 1986 did not include liabilities under the Part 2A regime. In the light of this ruling, in 2013 Powys reconsidered its assumption of liability for former landfill sites operated by its predecessor local authorities and concluded that it could not have caused or knowingly permitted any contamination on Mr Price's and Mrs Hardwick's land because the landfilling operations had ceased before Powys came into existence. In 2015 it ceased its monitoring and mitigation activities on the land and terminated its lease.

Was Powys liable for Brecknock's operation of the landfill site?

In March 2016 Mr Price and Mrs Hardwick applied to the High Court for a declaration that the transfer of liabilities from Brecknock to Powys in 1996 included a contingent liability for contaminated land under the Part 2A regime. In October 2016 the judge ruled that Powys would be liable under the Part 2A regime if the former landfill site was classified as contaminated land, because it had taken over Brecknock's liabilities under the legislation providing for the local government reorganisation in Wales in 1996. Powys appealed to the Court of Appeal, arguing that any 'liabilities' transferred to it in 1996 could not include liabilities arising under legislation which did not come into force until 2001.

The Court of Appeal saw no real difference between the 'Transco' case and this case. It therefore granted Powys's appeal. It ruled that the Part 2A regime did not operate retroactively so as to deem Brecknock to have been under a liability which only arose under legislation which came into force after Brecknock had ceased to exist. Brecknock had no accrued, contingent or potential liability under the Part 2A regime which was capable of passing to Powys in 1996.

Implications

On the face of it, the Court of Appeal's decision is not good news for owners of land formerly used by local authorities as landfill sites, where those authorities have been the subject of local government reorganisations. However, like any other case this case was decided on its facts and, in particular, the fact that Brecknock ceased to exist and Powys came into existence before the Part 2A regime came into force. The outcome may have been different if the local government reorganisation had taken place after the Part 2A regime came into force.

However, owners of land formerly used by a local authority as a landfill site, or for any other type of polluting activity, who may have assumed that the local authority remains liable for any contamination arising from the operation of the site, need to look carefully at the dates of any site operations and any local government reorganisations involving the local authority, in order to ascertain whether they or the local authority would be liable under the Part 2A regime, were the site to be identified as contaminated land.