Contaminated Land Cost Recovery and Hardship - Appendix 1

AGENDA ITEM 4 APPENDIX 1

STATEMENT OF POLICY: CONTAMINATED LAND COST RECOVERY AND HARDSHIP

CONTENTS

1.0 Introduction 2

2.0 Purpose 2

3.0 Application 2

4.0 General Principles and Procedures 3

4.1 General Principles 3 4.2 General Procedure 3 4.3 Borough of Poole Liability 3 4.4 Data Protection 4

5.0 Legal Background 4

6.0 Cost Recovery Assessment Criteria 5

Criteria 1: Cost in relation to land values 5 Criteria 2: Precautions taken before acquiring property 6 Criteria 3: Hardship 7 Criteria 4: Fair and Equitable – Local and National Taxpayers 8

7.0 Assessment Outcomes 8

8.0 Carrying out of Remediation 9

1 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11) 1. INTRODUCTION

This statement of policy sets out the Borough of Poole’s (BOP) position in regards to the possibility of waiving or reducing the recovery of the costs of remediation of land determined as contaminated under Part 2A of the Environmental Protection Act (EPA) 1990. Specifically, this policy relates to Class B persons who currently own or reside in property on the affected land but were not responsible for the pollution.

The policy is based on the relevant sections of the primary legislation and associated statutory guidance. It is recognised that there is likely to be a wide variation of situations associated with land contamination (including its history, ownership and liability for its remediation) and that regard should be paid to the circumstances of each individual case. The adopted approach is therefore to set out a framework of nationally published principles and approaches for consideration in individual cases. This policy sets out how these principles and approaches will be interpreted and applied by BOP.

2. PURPOSE

2.1 To clearly set out the BoP’s policy on the recovery of costs and consideration of hardship in relations to costs of remediation of Contaminated Land determined under Part 2A of the Environmental Protection Act 1990

2.2 To ensure a consistent and transparent approach when seeking the recovery of costs from persons who have to meet the cost remediation including local and national taxpayers that is both fair and equitable.

2.3 To ensure a means of assessing whether genuine hardship would be caused by cost recovery and provide a means for costs to be reduced or waived in such circumstances.

3. APPLICATION

3.1 This policy applies to persons who are responsible for the costs of the remediation of contaminated land by virtue of being the owner of occupier of the contaminated land rather than causing or allowing the pollution to exist.

3.2 Some residents will have purchased environmental indemnity insurance as part of the conveyancing process. Such insurance should ALWAYS be used prior to invoking the procedures in this policy.

2 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11) 4. GENERAL PRINCIPLES AND PROCED

4.1 General Principles: In general terms, the BoP will;

 Seek to recover in full its reasonable costs incurred when performing its statutory duty in relation to the remediation of contaminated land

 Wherever possible, apply the “polluter pays” principle, whereby the costs of remediating pollution are borne by the polluter  Where this is not possible, seek all sources of finance (external to BoP) for remediation

 Have due regard to the avoidance of hardship which the recovery of costs may cause  Aim for an overall result, which is fair and equitable as possible to all who may have to meet the costs of remediation, including national and local taxpayers

4.2 General Procedure

This is also demonstrated in the flow chart in Appendix 1 (to be completed)

4.2.1 Provision of relevant information: In general the BoP expects anyone who is seeking a waiver or reduction in the recovery of remediation costs to present any information needed to support his request.

4.2.2 Central government funding: Initially where a Class B person has satisfied the criteria within the framework it is BoP’s intention to apply for central government funding under the Contaminated Land Capital Projects Programme (CLCPP) where available. When such applications are successful, there will be no need for BoP to undertake works in default and invoke cost recovery procedures.

4.2.3 Cost recovery decision: Where external funding is not available cost recovery assessment will be made. In each individual case a report will be prepared by Head of E&CPS. This report will be submitted to the Environment Portfolio Holder for a decision as to whether all or a portion of costs will be covered by the BoP by way of a loan agreement.

4.3 Borough of Poole Liability

4.3.1 Whilst the legislation requires BoP to have regard to the considerations in this policy it does not mean that the council will inevitably waive its costs. It will however provide a record of the

3 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11) factors it has considered in reaching its decision and the reasons for doing so which will be provided to the applicant.

4.3.2 Whilst providing a cost recovery framework, this policy in no way places a requirement on the BoP to pay for remediation for which it is not liable.

4.4 Data Protection Information regarding individual financial status will need to be gathered should any applications be made for hardship. All information gathered as part of applications for hardship will be treated in accordance with the Data Protection Act 1998 and will only be used for the sole purpose of assessing ability to pay in each individual case.

5.0 LEGAL BACKGROUND:

5.1 Section 78F(2) of the EPA 1990 states that any person or persons who caused or knowingly permitted land to be contaminated is an ‘appropriate person’ in relation to any remediation which is required. This follows the Polluter Pays principle and such persons are known as “Class A persons”

5.2 Section 78F(4) goes on to say that if after reasonable enquiry no Class A persons can be found then the owner or occupier of the contaminated land in question is an appropriate person. In this case the owner or occupier is known as a “Class B person”

5.3 Wherever possible, voluntary remediation of contaminated land should be encouraged, however where this cannot be achieved the local authority has the ability to serve a remediation notice specifying what an appropriate person is to do by way of remediation and the periods within which he is required to do the work. Alternatively the local authority is entitled to complete the remediation work itself and recover the reasonable cost incurred in doing it from the appropriate person via a written agreement.

5.5 Generally the local authority should seek to recover its reasonable costs in full. However, section 78P (2) of the EPA 1990 states that the authority should decide whether to recover costs from appropriate persons and if so how much of the cost having regard to both hardship which may be caused by cost recovery and any guidance issued by the Secretary of State.

5.6 This policy outlines how the BoP will interpret and apply the statutory guidance on Cost Recovery.

5.7 Further information can be found within:

 Environmental Protection Act 1990 – Part 2A, sections 78A – 78Y

4 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11)  The Contaminated Land (England) Regulations 2006 (SI 2006 No. 1380)  DEFRA Circular 01/2006:

6.0 COST RECOVERY ASSESSMENT CRITERIA FOR CLASS B PERSONS

6.1 The criteria discussed on the following pages will be taken into account when considering whether an individual Class B person should be liable for all the costs incurred for the remediation of their property, or whether BoP will enter into a loan agreement.

6.2 Prior to undertaking the assessment BoP will undertake a remedial options appraisal in line with CLR11: Model Procedures for the Management of Contaminated Land. The options appraisal will include a budget estimate for the preferred remediation option.

6.3 CRITERIA 1: Cost in relation to Land Values

6.3.1 In some cases where extensive remediation works are required it is conceivable that the cost of remediation may exceed the value of the land.

6.3.2 BoP will consider waiving or reducing its cost recovery if a Class B person can demonstrate to the satisfaction of the authority that the costs of remediation are likely to exceed the value of the land. The “value” will be taken to be the value of the remediated land would have on an open market, at the time the cost recovery decision is made, disregarding any possible blight arising from the contamination.

6.3.3 Method:

Where it is thought conceivable that the cost of remediation may exceed the value of the land, the following measures will be undertaken:

(a) The class B person should obtain an independent valuation of their property by an appropriately accredited professional; this will be compared with the budget estimate identified in 6.2

(b) If there is any doubt over the validity of the valuation provide BoP retains the right, at its own expense, to obtain a separate independent valuation of the property in question.

6.3.4 In general the extent of the waiver or reduction in costs recovery should be sufficient to ensure that the costs of remediation borne by the Class B person do not exceed the value of the land However, after this

5 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11) procedure the Class B person is still entitled to follow the procedure outlined in Test 3 if the reduced amount could still cause hardship.

6.4 CRITERIA 2:Precautions taken before Acquiring a Freehold or a Leasehold Interest

6.4.1 The Borough of Poole will consider waiving or reducing its costs recovery where the Class B person satisfies the authority that, at the time they purchased the dwelling, he did not know, and could not have been expected to have known, that the land was adversely affected by the presence of a pollutant

6.4.2 Specifically, BOP will consider waiving or reducing costs if the Class B person purchased the property prior to July 2001 or after this date but meet the requirements of the following tests:

(a) Land and property bought prior to July 2001 Proof is provided that the purchase of land was made prior to the publication of BoP’s Contaminated Land Strategy (July 2001). It could be reasonably argued that contaminated land enquiries made to the Council prior to the publication of the strategy would not have been dealt with in the same manner as such enquiries made after this date.

(b) Reasonable precautions taken The Class B person is expected to show that such steps were taken prior to acquiring the land as would have been reasonable at that time to establish the potential for the presence of any pollutants. This will normally have involved obtaining the relevant searches including local authority searches and commercially available environmental searches. Conveyancing companies should have been aware of the issues relating to contaminated land liabilities after the issue of a Law Society Warning Card on the matter on 1st June 2001.

Commercial searches usually issue a pass/fail certificate depending on the outcome of the search. Evidence should be submitted showing that searches were undertaken and did not highlight any potential contaminating land uses or concerns in regards to the site of the property.

(c) Information acted upon by the purchaser. Where initial enquiries raise a potential concern e.g. a fail certificate is issued with the environmental search, appropriate research should be shown to have been undertaken. The information from the research should not have been disregarded.

6 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11) 6.4.3 Consideration will be given to reducing the contribution made to the cost of remediation in relation to the extent of the enquiries made and precautions taken when purchasing the property.

6.4.4 If the Class B person has inherited the dwelling or received it as a gift, the approach will be applied with respect to the time at which he received the property.

6.5 CRITERIA 3: Hardship

6.5.1 When making any cost recovery decision BoP will have regard to any hardship which may be caused to the person in question.

6.5.2 The term “hardship” is not defined in Part IIA legislation and therefore carries its ordinary meaning – hardness of fate or circumstance, severe suffering or privation.

6.5.3 Any such waiver or reduction will be to the extent needed to ensure that the Class B person in question bears no more of the cost or remediation than it appears reasonable to impose, having regards to his income, capital and outgoings.

6.5.4 The statutory guidance states that when judging the extent of a waiver or reduction in cost recovery that the means test method used in applications for housing renovation grants can be employed. This will measure the Class Bs ability to pay for or contribute to the works.

6.5.5 Because of the potential costs associated with remediation work, no upper limit has been set. However, any maximum contribution by BoP in any particular case will be a matter for the Portfolio Holder in conjunction with the Head of Service.

6.5.6 Method - The following steps will be followed:

(a) The Class B person will be provided with a copy of the Means Test form along with a covering letter sufficient to explain the purpose of the Test and what BoP will do with the information provided.

(b) The information provided will be input into Government approved means test software, and the result of the assessment will determine whether the Class B person has sufficient resources in order to fund or partly fund the identified remediation works.

(c) E&CPS will be responsible for communicating the result of this assessment to Class B persons.

6.5.7 There shall be no appeal mechanism against the findings of the Means Test unless it can be demonstrated that:

7 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11) - The information submitted for assessment was erroneous; or

- The circumstances of the Class B person have substantially changed between the time of the initial assessment and completion of the works in a way that would require a re-test.

6.6 CRITERIA 4: Fair and equitable – local and national tax payer

6.6.1 Criteria 4(i) - National tax payer If funding is to be sought from CLCPP or another central government source, consideration will be given to whether any reduction in cost recovery would be fair and reasonable taking into account the interests of national taxpayers.

6.6.2 Criteria 4(ii) - Local tax-payers If external funding is not available, any non-recovered costs become the responsibility of the BoP. Before making any individual decision relating to waiving or reducing any costs recovered the BoP will also consider the burden to local taxpayers such a waiver will create. In reaching such a decision the BoP would have due consideration to the prevailing public sector financial climate at the time of the assessment, and the consequential budgetary position of the Authority.

6.6.2 BoP will have to be satisfied that it would be fair and reasonable, taking into account the interests of national and local taxpayers, that the Class B person should not bear the whole cost of remediation. It is likely that cases of genuine hardship will be treated with higher priority than cases assessed against Criteria 1 and 2.

7.0 ASSESSMENT OUTCOMES

7.1 After assessment against the relevant criteria including 1,2,3 and 4(i) E&CPS will produce a report of the assessment, which will either be used as supporting information for a Contaminated Land Capital Projects Programme (CLCPP) application or to progress to a cost recovery decision.

If CLCPP cannot be sought, is only awarded in part, or an application is unsuccessful the report will be reviewed and a recommendation will be provided by the Head of E&CPS to the Environment Portfolio Holder for assessment against criteria 4(ii).

7.2 There are 4 possible outcomes from assessment:

A. The Class B person is proved to have insufficient funds or capital to pay for any of the remediation works. BoP will fund remediation costs to the value of any CLCPP grant awarded by the Environment Agency, without recovery of costs. For the remainder of the costs (or, in the case where no such CLCPP grant has been

8 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11) awarded, the entire costs) BoP would seek to enter into a loan agreement whereby a charge equivalent to the full costs of recovery is placed upon the property, and recovered upon eventual sale of that property – a fair and reasonable rate of interest would be charged on the loan. No payments would be required throughout the period up to eventual sale or disposal of that property, notwithstanding the assessment as outlined in Criteria 4(ii).

B. The Class B person is proved to have sufficient funds or capital to pay for part of the remediation works, or the individual circumstances of the case are appropriate BoP will fund part remediation costs to the value of any CLCPP grant awarded by the Environment Agency, without recovery of costs. For the remainder of the costs (or, in the case where no such CLCPP grant has been awarded, the entire costs) the BoP would seek to enter into a loan agreement, as identified in A above.

C The Class B person is proved to have sufficient funds or capital to pay for all of the remediation and it is not considered appropriate to waive any portion of the cost. In this case the Class B will be responsible for the total cost of remediation.

D In any of the cases outlined in A, B or C above, the Class B person does not wish to enter into any loan agreement offered by the BoP, or the BoP declines to enter into a loan agreement, and the owner does not indicate any intention to carry out the required remedial works. In such instances E&CPS will make an assessment of the individual circumstances, the level of risk associated with the contamination, and any remedial works of a temporary nature that may be applicable in the circumstances and relevant to the risks involved. A report outlining relevant options, including works in default, will then be presented to Environment Overview and scrutiny Committee.

8.0 CARRYING OUT OF THE REMEDIATION

8.1 Outcome A - BoP will carry out the remediation works on behalf of the Class B person, this will include the final design of the works, commissioning the services and goods required for the work and validating the work.

8.2 Outcome B - BoP would also fully carry out the remediation works on behalf of the Class B person, subject to the Class B person agreeing and entering into a written agreement with BoP determining what work would be carried out and that the Class B would pay for the agreed portion of incurred costs. If the Class B person does not currently have available funds it will be possible for the written agreement to place a charge on the property and the funds be paid to BOP on the sale of the

9 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11) property. There would be a requirement that the funds from the Class B person would be placed into a holding account with the BoP prior to entering engagement of a remediation contractor.

8.3 Outcome C – There are two options available where the Class B person is responsible for the total cost of remediation.

(i) The Class B person reaches an agreement in writing with BoP for BoP to arrange, organise and directly commission the necessary remediation works. The agreement includes how the total costs incurred by BoP will be recovered. There would be a requirement that the funds from the Class B person would be placed into a holding account with the BoP prior to entering engagement of a remediation contractor.

(ii) Alternatively, the Class B person may take responsibility for arranging, commission and paying for the remediation works directly. In such a situation the role of BoP would be to review the work undertaken to ensure the site is remediation and validated to a suitable standard. This will be done in the same manner as the review of remediation work undertaken as part of a conditional planning permission.

8.4 Outcome D - E&CPS will make an assessment of the Individual circumstances, the level of risk associated with the contamination, and any remedial works of a temporary nature that may be applicable in the circumstances and relevant to the risks involved. A report outlining relevant options, including works in default, will then be presented to Environment Overview and Scrutiny Committee.

8.4 Standard of Remediation Required All works will be undertaken to standards required in statutory guidance and relevant bet practice. Current guidance states that such remediation should be required to make the site suitable for use by removing risk and ensuring that the works are durable for the lifetime of the development. In some situations it may be possible for temporary works to be undertaken until such a time that funds are available to undertake more durable remediation. This will be considered on a case by case basis.

8.5 Conclusion of Works On the conclusion of the works undertaken under any of the above situations a remediation statement will be issued by BoP detailing what work has been undertaken and confirming that the site is no longer considered to be contaminated land under Part IIA of the Environmental Protection Act 1990.

10 Contaminated Land Cost Recovery and Hardship Policy – Draft 1 (20.04.11)