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Earl Ferrers: My Lords, first, I take any point made by my noble friend Lord Peyton seriously, not least his comment that these "technical" Bills, as he put it, do not yield up their meaning easily on casual inspection. I could not more heartily agree with him on that. But that often happens in legal matters. When matters become legal and technical they are difficult to understand. I cannot apologise to my noble friend for the Bill's complexity or for it being relatively difficult to understand; that is the nature of the beast.

My noble friend Lord Peyton was concerned that the register was not accurate. He asked what the point was of putting something into the Bill and then saying that its accuracy could not be guaranteed. The point is that Amendment No. 78 provides for the person carrying out the remediation to provide such information as he can to be placed on the register. We believe that that is absolutely right. However, it is not right that the agency which runs the register should be held responsible for the accuracy of the information it contains. One assumes that it will be accurate, and I hope that it will be. But technically it is not possible to give a once-and-for-all guarantee that a site is no longer contaminated. The physical circumstances of the site can change over time and contamination may occur or containment works which have been undertaken may fail. It is appropriate that the register should say that such-and-such happened, that such-and-such has been done, and for the correct conclusion to be drawn from that.

My noble friend Lord Stanley expressed an appreciation for the way in which some of the points have been met, and I am grateful to him for that. He asked when the guidance would be made: how, when and who would be consulted. The best that I can tell him is that consultation will probably be carried out at the end of the year and is expected to be very wide.

My noble friend Lord Jenkin referred to the lenders. That is an important matter. However, it may be more appropriate to deal with it when we come to the next group of amendments, if my noble friend is happy for me to answer him at that time.

On Question, Motion agreed to.

35Clause 54, page 49, line 17, at end insert:
'"appropriate person" means any person who is an appropriate person, determined in accordance with section 78E below, to bear responsibility for any thing which is to be done by way of remediation in any particular case;'.

Earl Ferrers: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 35. It may be helpful to your Lordships if at the same time I speak also to Amendments Nos. 37, 38, 44 to 47, 49 to 57, 63 to 65, and 67 to 69.

The amendments in this group, particularly Amendment No. 56, make a number of significant changes to the enforcement procedures in the proposed contaminated land regime, and also re-work the provisions relating to liabilities. In many cases these amendments make changes which answer anxieties expressed by your Lordships in our earlier debates. We have introduced the important requirement for

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consultation to precede the service of any remediation notice, except in cases of urgency. My noble friend Lord Coleraine moved an amendment on this subject at Report stage.

Following on from this consultation, enforcing authorities will be precluded from serving a remediation notice if they are satisfied that appropriate remediation is or will be taking place without one. In such cases, a remediation statement will be included on the remediation registers to ensure that information about the site is not lost.

Amendment No. 67 strengthens the powers of enforcing authorities to undertake remediation themselves in appropriate circumstances. In particular, they will be specifically empowered to act in emergencies, where they have the agreement of the persons who would otherwise receive a remediation notice or where they cannot find any "appropriate person" on whom to serve a remediation notice. In such circumstances, the authorities would not serve a notice. They would, however, publish a remediation statement, which would go on the register.

Another important circumstance in which an authority would be precluded from serving a remediation notice would be where it considered that hardship would result from the service of a notice. The noble Lord, Lord Northbourne, the noble Earl, Lord Lytton, and my noble friend Lord Kinnoull moved amendments on this question of hardship at Report stage. Under the original provisions of the Bill, hardship would have been considered only in circumstances where the enforcing authority was actually seeking to recover costs incurred in undertaking remediation where the recipient of a notice had failed to comply with the requirements set out in that notice. In other words, a notice would have been served—and not complied with—before the question of hardship was considered. Under the terms of the new Sections 78EA and 78HH, however, if the authority decides that it would not seek to recover all of its costs were it to act itself, it is precluded from serving a remediation notice. This means that hardship must be considered before any notice is served.

Amendments Nos. 68 and 69 introduce a requirement that authorities should have regard to guidance from the Secretary of State in making decisions on questions relating to cost recovery and hardship. Amendment No. 56 is a substantial amendment and virtually re-writes the section which defines who is the "appropriate person" to be responsible for any remediation.

My noble friend Lord Jenkin was concerned that the provisions still seek to implement the "polluter pays" principle, with liability falling on any person who,

    "caused or knowingly permitted the substances ... by reason of which the contaminated land ... is such land to be in, on or under that land".

My noble friend Lord Coleraine expressed concerns about the meaning of the second element of this test—"knowingly permitted". He moved an amendment on Report. Concerns have also been raised by, among others, my noble friend Lord Jenkin, claiming that banks could be held liable as polluters by the act of lending money to polluting companies.

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We have considered the matter again since the Bill left the House. As your Lordships may be aware, the test of "causing or knowingly permitting" has been used in environmental legislation for more than 100 years and during that time there have been no cases where a bank lending money to a polluter has been held liable to be a "causer" or a "knowing permitter". I can also confirm that the National Rivers Authority has not brought such a case against a provider of finance under its current powers in the Water Resources Act 1991 which are based on "causing or knowingly permitting".

The test of "causing" requires some active participation in the operation or chain of operations resulting in the pollution. This has been well established in leading cases, including by the House of Lords in Alphacell Ltd. v. Woodward and by the Court of Appeal in Attorney-General's Reference (No. 1 of 1994). Accordingly, whether a lender could be held to have caused substances to be in, on or under the land will depend on whether it took some active participation in the operation or chain of operations resulting in those substances being in, on or under the land. The act of lending per se does not amount to such active participation.

The test of "knowingly permitting" would require both knowledge that the substances in question were in, on or under the land and the possession of the power to prevent such a substance being there. I am advised that there is no judicial decision which supports the contention that a lender, by virtue of the act of lending the money only, could be said to have "knowingly permitted" the substances to be in, on or under the land such that it is contaminated land. This would be the case if for no other reason than that the lender, irrespective of any covenants it may have required from the polluter as to its environmental behaviour, would have no permissive rights over the land in question to prevent contamination occurring or continuing.

Amendment No. 56 revises the definition of the "appropriate person", as regards polluters, in two important respects. First, we have introduced a limiting condition that any "polluter" can only be required to carry out any remediation which is to any extent referable to the substances for which he is responsible. He is, therefore, not liable for dealing with unrelated problems. This, I hope, will remove some of the concerns surrounding the issue of joint liability. The noble Lord, Lord Northbourne, the noble Earl, Lord Lytton, and my noble friend Lord Kinnoull moved an amendment on this matter at Report stage.

Secondly, we have clarified the provisions relating to the question of joint liability, confirming that two or more persons can be required jointly to do the same things by way of remediation, with the costs of so doing being apportioned between them by the enforcing authority in accordance with the guidance to be issued by the Secretary of State. Amendment No. 63 gives a specific defence against any prosecution for non-compliance with a remediation notice where the sole reason for non-compliance was the refusal or inability of another person to comply who was expected to bear a proportion of the costs.

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Where no "polluter" can be found, after reasonable inquiry, the owner or occupier of the land in question becomes the "appropriate person". In this, the contaminated land provisions follow directly the equivalent arrangements in the statutory nuisance regime in Part III of the Environmental Protection Act 1990. However, as my noble friend Lord Ullswater promised in our Third Reading debate, the Government have looked again at the operation of this provision with respect to liabilities for water pollution. Amendment No. 56 ensures that a person who is identified as an "appropriate person" solely by virtue of his ownership or occupation of land cannot be held liable for any remediation needed to deal solely with water pollution. This reflects the fact that there is no liability in respect of water pollution falling on owners or occupiers per se under Section 161 of the Water Resources Act 1991.

Amendment No. 56 also addresses the question of the potential overlap between these provisions and the provisions in the Water Resources Act dealing with water pollution from abandoned mines. Concerns in this area lay behind a number of amendments moved by the noble Earl, Lord Kintore, at Report stage. We have resolved those by copying into these provisions the exemption from liability which applies with respect to water from abandoned mines under the Water Resources Act.

Amendment No. 56 removes entirely two means by which liability might have fallen on owners or occupiers of land under the original provisions of the Bill. The first of these concerns "transfers of liability". The provision which would have allowed for polluters to have transferred their liabilities to new owners or occupiers of land—which the noble Lord, Lord Northbourne, the noble Earl, Lord Lytton, and my noble friend Lord Kinnoull sought to amend at Report stage—has been deleted. Having looked closely at the matter, the Government have concluded that it would be more practical to leave this question to be dealt with through the normal contractual means of guarantees and indemnities rather than to attempt to make detailed statutory provisions.

The other issue concerns the circumstances in which a person is required to do things by way of remediation with respect to particular contaminated land notwithstanding that he may not be entitled to do them. In order to resolve this problem, under the original provisions of the Bill the consent of the occupier of the land was needed before any remediation notice could be served. Any refusal on the part of the occupier to give such consent would have made the owner or the occupier of the land himself liable for the remediation.

These provisions have now been substantially restructured. There is now a requirement that, except in cases of urgency, any person whose consent might be required to enable remediation to be carried out should be consulted before a remediation notice is served concerning any rights which he might be required to grant. That person is then required to grant, or join in granting, the necessary rights of access. But any person required to grant rights in this way will be entitled to apply for compensation from the "appropriate person".

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Regulations will prescribe the procedures for applying for compensation and the manner in which the amount of any compensation will be determined.

I hope that these improvements will make the contaminated land problems a great deal easier to deal with and that the contaminated land regime will operate better in practice, both in terms of the mechanics of the regime and the equity and fairness of the arrangement relating to liabilities. I apologise for the length of my speech but this is an important matter and one about which many of your Lordships were concerned. I thought it appropriate to try to point out in the best and clearest way possible and in some detail how we have sought to meet the concerns expressed by your Lordships.

Moved, That the House do agree with the Commons in their Amendment No. 35.—(Earl Ferrers.)

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