 Environmental
Liability > Introduction
Tightening
environmental legislation in the UK and Europe makes
property investment a much riskier activity than in
the past. The Government is urging remediation and regeneration
but beware the legal pitfalls facing those who attempt
to take this on.
There
is an air of nervousness, particularly among developers,
funders and institutions and currently around 65% of
funders will not consider "brownfield" lending.
Everyone is attempting to pass the legal parcel and
they way in which the property industry is dealing with
its' liabilities is basically flawed.
Tysers
Environmental Credentials
Tysers
are the leading independent broker advising on environmental
risk and as a testament to this expertise, we have been
involved in many recent activities and initiatives in
the environmental sector:-
-
Principal insurance industry contributor to the Construction
Industry Research and Information Association's (CIRIA)
Research Project "Brownfields: Managing the Development
of Previously Developed Land: A Client's Guide".
- Principal
representative of the insurance industry on the "Single
Regeneration Permit" Working Group currently
reporting to DEFRA on the need to replace the current
contaminated land licensing regime.
- Principal
member of the insurance industry on the Price Waterhouse
Coopers/Environment Agency consultee group on the
"Management and Funding of Long Term Liabilities
Associated with Landfill Sites".
 We
are an active member of the Environmental Industries
Commission with representation on the Contaminated Land
and Integrated Waste Management working groups.
Tysers
are active members of The United Kingdom  Environmental
Law Association (UKELA) with representation on the Insurance
and Liability and Contaminated Land Working Groups.
Tyser
has access to the entire environmental insurance market,
which currently consists of six insurers. We provide
insurance and risk management solutions to property
developers, housebuilders and housing associations,
contractors, manufacturers, tenants, consultants, funders,
institutions, lawyers, accountants, surveyors and valuers
all of whom can be affected by the impact of environmental
legislation.
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An
old problem, a new liability
If
your company has any financial connection with the ownership
of any land, then it also has a potential liability
of unquantifiable proportions. The equation is simple.
With the growing awareness of Environmental Pollution
comes a growing concern - a concern which governments
all over the world are addressing with a simple directive:
clean it up, whatever the cost.
Who
pays for this clean-up? The polluter, if they can be
identified, otherwise the present owner or occupier
of the land and/or those with a financial interest in
it. So if your company now owns land that was polluted
at any time in history, for example during the war,
at the time of the Industrial Revolution, or even in
Roman Times, then you could face financial liability
for its clean-up.
Clear today, here tomorrow
Just
because a site is clear today, doesn't mean it's clear
tomorrow. Pollution can remain hidden or go unrecognised
for years, then suddenly come to light due to a variety
of factors:
-
the very slow migration of contaminants means they
can surface on supposedly clean sites from neighbouring
sites - even without new spills or leaks
-
the increasing awareness of the financial penalties
of pollution mean that a growing number of M&A
deals involving land transactions are likely to reveal
undiscovered contaminations
-
dangers of contract works disturbing and reactivating
dormant contaminations (particularly relevant in brownfield
developments)
-
as medical and environmental knowledge increases,
a substance that was thought to be benign can suddenly
be classified as a pollutant. Asbestos is a good example.
Affecting
more companies, more severely
Pollution
used to be a problem confined largely to the 'dirty'
industries. They knew that their products or by-products
were potential pollutants and could enact measures to
control or confine them.
No
longer. Pollution should now be a major concern to every
company, large or small, that occupies land or provides
finance with land as security. Every business sector
can be affected, even if they have no manufacturing
or service processes involving contaminants. If they
own land, they are at risk because if pollution is discovered
and the original polluter cannot be identified, then
the clean-up costs must be borne by the present occupier
or failing that, those with a financial interest in
the land. And, once a pollution condition is identified,
the speed and thoroughness of remedial action is paramount,
causing an immediate and potentially catastrophic effect
on the company's financial viability.
Ignoring
the problem is not an option. Local and national governmental
and EU environmental legislation is getting tougher.
The costs of clean-up are escalating as the number of
pollutants increases. And company reputations are in
jeopardy as media becomes increasingly hungry for environmental
infringement stories.
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