THE CONTAMINATED LAND PROVISION IN THE WASTE MANAGEMENT BILL: IMPLICATIONS FOR LAND OWNERS AND SALE OF BUSINESS TRANSACTIONS BY CLAIRE TUCKER AND TWAAMBO MULEZA

Introduction
 
The National Environmental Management: Waste Management Bill (“Waste Bill”)[1] is now well on its way to becoming law. The Waste Bill was passed by the National Assembly on 23 October 2008 and is to be submitted to the President for assent.
 
The Waste Bill has been the subject of considerable concern from various sectors throughout its legislative process. The general public and experts have expressed a number of concerns relating to the Waste Bill, including:
 
·         overlaps with other statutes;[2]
·         failure to directly address the importation of hazardous waste;[3] and
·         provisions on contaminated land.[4]
 
Some of these concerns have been addressed in the form of amendments to the Waste Bill. However, the Contaminated Land provisions remain, and will pose significant difficulties if left in their present form.
 
Overview of the Contaminated Land Provisions
 
Part 8 of Chapter 4 of the Waste Bill is concerned with contaminated land. Most notably, the Waste Bill provides that Part 8 of Chapter 4 applies to the contamination of land even if the contamination occurred before the commencement of the Act. [5]
 
The Waste Bill also allows the Minister of Environmental Affairs and Tourism (“the Minister”) or the relevant Member of the Executive Council (“MEC”) [6] to identify investigation areas. Investigation areas include land on which high-risk activities have taken place or are taking place, that are likely to result in land contamination; or land that the Minister or MEC, on reasonable grounds, believes to be contaminated. [7] An area can only be identified as an investigation area after the Minister has consulted with the Minister of Water Affairs and Forestry and any other concerned organ of state. Notice of land identified as an investigation area must be given in the Gazette by the Minister or relevant MEC. [8] In terms of the Waste Bill, before publishing a notice declaring certain land to be an investigation area, the Minister or MEC must conduct a consultative process. [9]
 
The Minister or MEC may order a site assessment of land identified as an investigation area. Alternatively, the Minister or MEC may by notice direct the owner of the investigation area; or the person who has undertaken or is undertaking the high risk activity; or activity that caused or may have caused the contamination of the investigation area; to ensure that a site assessment is conducted by an independent person, at the owner’s cost; and to submit a site assessment report to the Minister or MEC within a period specified in the notice.[10]
 
If an investigation area is contaminated and requires remediation, the Minister or MEC must declare the land to be a remediation site and make a remediation order to neutralise the risk.[11]
 
It should be noted that Part 8 of Chapter 4 has far-reaching implications for land owners and sale of business transactions. We consider these implications below.
 
Retrospective Application of the Bill
 
The provisions of Part 8 of Chapter 4 of the Waste Bill will apply even to contamination which occurred before the commencement of the Act. Accordingly, when the Waste Bill is implemented into law, it will have retrospective effect. This means that the current owner of contaminated land will be liable for any measure he or she is ordered to undertake by the Minister or MEC, even if the contamination occurred in the past, prior to the commencement of the Act. In cases where parties who contributed to the contamination cannot be traced, the current owner may be the only person who will be responsible for risk assessment and remediation, where this is required.
 
It is not clear from the Waste Bill how the Minister or MEC will determine who will be liable for undertaking remediation under a remediation order. The Waste Bill does not set out the manner in which such a determination should be made. The person responsible for such remediation may be the previous polluter, or the current land owner, or the State. There will be significant disruption to present day activities on the land especially if the responsible person is the previous owner who has no interest in carrying out the remediation expeditiously. The Waste Bill is unfortunately silent on how such conflicts would be dealt with. 
 
In the case of Bareki No v Gencor Ltd [12], the court held that section 28 of the National Environmental Management Act [13] (“NEMA”) had no retrospective effect. In the course of this interpretation the court made several findings regarding the unfairness of the retrospective application of the law, especially in instances where the liability is founded on strict liability.
 
The retrospective application of Part 8 of Chapter 4 of the Waste Bill is unfavourable for the following reasons:
 
·         The objective of a regulation is to cause people to act in a particular way. Penalising past behaviour that was not unlawful when it was undertaken will not realise this objective;
·         Punishing present occupiers for contamination that they were not responsible for also does not have the effect of moderating polluting behaviour;
·         Land that was contaminated before there was legislation preventing this conduct should be remediated by the State, possibly through funds from an insurance scheme into which present day industrial and commercial operators contribute. In the United States of America, for example, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”)[14] provides for the creation of such “Super Funds” which are, used for remediation costs in respect of contaminated land. [15]
 
Payment for remediation or other related order
 
Section 38(4) of the Waste Bill provides that, unless otherwise directed, a remediation order or an order to take measures must be complied with at the cost of person to whom the order is issued.
 
The Waste Bill does not explain what will happen in a situation where the person to whom the order is issued is unable to pay for remediation or related measures. It is in circumstances like this that a Super Fund would be useful because the Fund would be used to cover the cost of remediation where the person to whom the order is issued does not have the funds to pay for the remediation costs.
 
Restrictions on transferring contaminated land
 
Section 40(1) of the Waste Bill prohibits the transfer of contaminated land without first informing the person to whom that land is to be transferred that the land is contaminated. Where the land in question is the subject of a remediation order, the Waste Bill prohibits its transfer without notifying the Minister or MEC. The Minister or MEC may impose conditions which must be complied with before the transfer can proceed. 
 
These restrictions will certainly delay any transfer of land. There is also the possible danger of “clean land” being affected by this prohibition, primarily because the Waste Bill requires the Minister to notify the Registrar of Deeds of any land that has been declared as a remediation site, this information must then be entered against the land described on the Deeds Registry. Significant problems may arise where the land is incorrectly described.. [16] 
 
Conclusion
 
When the Contaminated Land provisions in the Waste Bill become law, they will have a big impact on the due diligence investigation required before a sale of business is undertaken. For example, it will be important to establish whether or not the land is contaminated. The importance of this will now no longer only be for the determination of the price, but also for liability reasons as the purchaser (on becoming an owner) may be liable for assessment and remediation costs, even if contamination occurred before the acquisition of ownernership.
 
Where a sale of business transaction is dependent on the transfer of the land, the transaction will be delayed. This will especially be the case where the land is a remediation site because the Minister or MEC will have to be informed of the pending transfer and then determine the conditions under which the transfer must be permitted.
 
The Contaminated Land Provisions in the Waste Bill do not provide adequately for contaminated land related problems. In stark contrast, countries such as the United Kingdom have extensive provisions related to contaminated land. The United Kingdom’s Environment Protection Act, 1990: Part IIA Contaminated Land has extensive provisions on contaminated land including provisions relating to the determination of the appropriate person to bear responsibility for remediation; appeals against remediation notices; and the powers of the enforcing authority to carry out remediation and to recover costs for such remediation..
 
It is recommended that our laws dealing with contaminated land, especially historical pollution or contamination be revisited to deal with liability issues more carefully.
 
 

[1] B39B - 2007

[2] T Winstanley “National Environmental Management: Waste Management Bill” De Rebus April 2007

[3] M Kidd “National Environmental Management: Waste Management Bill” Environmental Law Sibergramme 1/2007 dated 21 February 2007 at 10

[4] C Tucker “New Waste Management Bill Contains Far Reaching Retrospective Provisions Regarding Contaminated Land” Engineering News 13 April 2007 at 29.

[5] Waste Bill, section 35(a).

[6] A Member of the Executive Council appointed by the Premier in each South African province to serve on the Premier’s executive council, which functions as cabinet at a provincial level. Members of the Executive Council are accountable individually and collectively to the legislature.

[7] Waste Bill, section 36(1).

[8] Waste Bill, section 36(1) and 36(2).

[9] Waste Bill, section 36(3).

[10]          Waste Bill, section 37(1)(a) – (b).

[11] Waste Bill, section 38(2)

[12] 2006 (1) SA 432 (T).

[13] 107 of 1998.

[14] 42 USCA section 9611.

[15] See Tucker (n4)

[16] Waste Bill, section 40 (2)(a).