Remediation costs: Who is liable?

What happens when you discover that your property is significantly contaminated with hazardous chemicals or materials long after purchasing it from the seller? Who is liable for the remediation costs? The procedure for dealing with contaminated land is dealt with in part 8 of the National Environmental Management: Waste Act 59 of 2008 (Waste Act) and under several provisions of the National Environmental Management Act 107 of 1998 (NEMA).

In terms of section 36 of the Waste Act, the landowner, or the person responsible for the contamination must notify the Minister and MEC (environmental authorities) as soon as they become aware of the contamination. Once the environmental authorities have been notified of the nature of the contamination on the site, they may issue a directive to the person who caused the contamination or to the current landowner to conduct a site assessment in order to determine the extent of the contamination, and whether it presents any environmental or health risks that would warrant urgent remediation.

The environmental authorities will normally issue a directive to conduct a site assessment to the same person that submitted the notification for contaminated land, which in most cases will be the current landowner. A site assessment can be costly especially if you get consultants who have the relevant experience and know what they are doing. So, who is liable for the site assessment costs? Absent any clause in the sale agreement dealing with who will be responsible for historical contamination on the property between the seller and the purchaser, the current landowner may end up carrying the costs and the responsibility for arranging a site assessment.

Once the site assessment has been concluded and if it indicates that the site is significantly contaminated and poses an immediate risk to the environment or to people’s health then, the environmental authorities, in particular the national contaminated land directorate, issues a remediation order. Remediation costs can run into hundreds of thousands and even millions based on the extent of the contamination on the site. Who is liable for these costs and what is the landowner’s recourse?

South Africa subscribes to the polluter must pay principle. According to section 2(4)(p) of NEMA the costs of remedying pollution, environmental degradation and consequent adverse health effects and of preventing, controlling or minimising further pollution, environmental damage or adverse health effects must be paid for by those responsible for harming the environment”. This means that the current landowner does not have to be liable for the remediation costs if they can prove that they are not responsible for the pollution or contamination on the property. In some cases, the person responsible for the contamination of land is more than one previous owner, especially if the property is within an industrial site which was used for activities that could likely result in land contamination.

In such cases the landowner may make representation to environmental authorities using section 28 of NEMA to identify who was responsible for the contamination and request the authorities to issue a directive to each of the responsible parties. To the extent that each previous landowner contributed to the contamination of the land, then each previous owner is liable for the remediation costs. These costs will be apportioned according to the degree to which each person was responsible for the contamination.

In practice, environmental authorities often find it convenient to go after the current landowner instead of several persons that contributed to the contamination of the site and they expect the landowner to claim back their costs directly from the responsible parties. If the landowner encounters this situation, they may apply directly to a court for an order directing the environmental authorities to issue a directive to the respective persons who are responsible for the contamination.

Whether you have purchased a property that is contaminated, or you are contemplating an acquisition of a property which may likely be contaminated due to the nature of the business operations which were conducted on site, its crucial to involve an environmental lawyer to conduct a due diligence assessment and provide advice on clauses which could be included in a sale agreement to avoid the post implications of dealing with contaminated land.