Cleaning up contaminated land is one of the more scary tasks that developers face, so it’s vital to make sure that your contract is up to snuff. Here’s how to do it
Government statistics show that in 2007 there was about 62,000ha of brownfield land in England, 54% of which was vacant or derelict. Much of this land is contaminated, and it will pose a number of issues for developers.
Environmental investigations are essential to allow the developer to assess remediation costs before acquiring the site. Equally, the developer does not want to pay for unnecessarily detailed investigation.
The developer has to try reasonably to futureproof the remediation by making sure that the standard is not set too low, in case it does not comply with changes in the law. For example, a site that has water pollution may have to take into account the Water Framework Directive and the new Groundwater Directive.
Often when a developer acquires land, it will assume contractual responsibility for contamination, so it has to factor the remediation cost into its development budget. Under the statutory regime for historically contaminated land, the actual or proposed use of a site determines the standard for remediation. If a developer decides not to proceed with a development, there may be no legal requirement to remediate. However, some sites may have a level of contamination that requires remediation even if the development does not go ahead – a risk in a falling property market.
Obtaining and complying with regulatory approvals and consents will be one of a developer’s key objectives. That said, complying with the planning process should not be seen as synonymous with a developer ensuring that it has allocated all elements of the remediation process to a responsible person, and put in place a process for verifying and confirming completion. Discharging planning conditions will not protect the developer from a badly executed remediation scheme.
From a lawyer’s perspective, it is interesting to note that topics such as the technical standards for clean-up, licensing requirements, allocation of liability and the development of new techniques generate a fair amount of comment, but less consideration is given to contractual issues. And there is a lack of contractual documentation specifically aimed at remediation.
When describing remediation objectives it is important to be clear as to who is taking the risk
Most remediation work is carried out on standard forms of contract such as JCT and ICE. This is not a problem in itself, but remediation can involve issues not usually encountered in other types of works and this requires changes to the standard forms. A full consideration of these issues would take more space than I have here, but by way of illustration consider the questions of practical completion and “unforeseen” contamination.
In conventional projects, a snagging list is used to identify minor items that need correction. However, this is unlikely to be a workable solution where remediation has not achieved prescribed levels. Also, verification of remediation may not be a one-off event: indeed, there may be years of post-completion monitoring or maintenance. The question of how the concept of practical completion fits with remediation needs to be considered for each project.
Some contracts will require the reduction of the amounts or concentrations of certain types of contaminant to a prescribed level. Often there will be a risk that other contamination may be found.
In relation to industrial sites, a contractor should anticipate that there will be “hotspots” of contamination. When describing the remediation objectives it is important to be clear as to what the contract sum covers and who is taking the risk for unknowns.
To save time and money, it is preferable to use standard forms wherever possible. However, it is not prudent to adopt a formulaic approach to remediation contracts. For a contract to cover remediation issues robustly there needs to be a clear understanding of contaminated land situations, their legal implications and what the standard forms do – in other words, a blending of the environmental law and the construction law disciplines.
Also, there needs to be clarity as to the remediation objectives for a particular site. For this to be reflected in the drafting there needs to be good communication between the developer, its environmental consultants and its lawyers.
Claire Sheppard is a partner in Addleshaw Goddard