Ross Fairley outlines the 10 issues companies must consider if they are to effectively manage and mitigate the potential environmental legal risks of closing industrial premises.
The number of industrial plants closing in the UK continues to rise. Decommissioning an industrial site is a complicated business and dealing with environmental issues is usually a key factor. There are 10 issues that a business should consider in its advanced planning to manage and mitigate the potential environmental legal risks associated with decommissioning a site.
Consider confidentiality
It is essential to think about the environmental issues in advance, even though there is an understandable nervousness about information leaking prematurely to stakeholders, customers and the workforce, which may cause unnecessary concerns. It is wise for a business to consider legal support - whether internal or external - early on to ensure suitable confidentiality agreements are in place or to manage the process of protecting documents and plans from public disclosure.
Put together a team
There is no substitute for an experienced site closure team. The business should consider its in-house capabilities in areas such as surveying, environmental consultancy, valuation, legal and project management. There is often a strong case for buying in previous experience through external advisers, which may also help in limiting any damage in the early stages disclosure, such as the possible need for confidentiality.
When establishing this team, and particularly when appointing external advisers, consider carefully the scope of their role and their appointments. Often environmental reports will be relied on by potential purchasers or, in the case of a lease surrender, landlords, so it is important to get the scope right and ensure there are suitable warranties available to others in due course. The right team will know how to manage timescales, liaise with stakeholders and minimise ongoing liabilities.
Understand the plan
Is the site going to be closed and dismantled or is the plan to mothball it? Mothballing will entail the business keeping environmental permits live and could involve permit variation applications.
Supply and service contracts
Put together a list of customer supply and service contracts. Consider a legal review to understand what obligations the business is under to fulfil customer contracts because this may affect the timing of closure and identify potential liabilities.
Site ownership
Is it freehold or held under a lease? If it is leased, take legal advice to understand what, if any, surrender provisions there are in the contract. Any of these provisions, or the lack of them, will have an impact on timing and costs in terms of negotiations with the landlord or whether a landlord has to accept a surrender at all.
Future of the site
Clarify what the business plans to do with the site. Is it intending to hand it back to the landlord or sell it on? It may even decide to keep it as a "land-banked" site. Alternatively, the plan may be to obtain planning permission for redevelopment and sell it on for new uses. Each of these has different implications for environmental liabilities, permit surrender, new permit applications, timing and costs.
Consents and permissions
Find out what consents and permissions exist for the site? These will include the environmental permit, planning permissions and any other consents. Will closure lead to decommissioning obligations being triggered under the planning permission? Legal and technical advice will also be needed on the environmental permit surrender obligations and the techniques to meet the clean-up standards.
Know the stakeholders
Identify in advance the key players and individuals you will need to liaise with and convince. These may include a landlord, local planning authorities, the regulator, such as the Environment Agency, neighbours and customers.
Environmental reports
List all previous environmental reports for the site. The list will allow the advisers to hit the ground running by understanding the likely status of the site and developing an initial strategy for clean-up and mitigation of environmental liability.
Identify key workers
It is very helpful to have key workers with knowledge of the history of a site available throughout the closure and decommissioning phase. Consider agreeing contracts with them early in the process.
Permit surrender
The Environment Agency expects permit holders to adopt a "lifetime approach" to the protection of land and groundwater. This means preventing pollution, rectifying any problems at the time and keeping adequate records as an integral part of management systems - so evidence is ready for surrender of the permit. There are four tiers of surrender for non-radioactive substances facilities: notification - for Part B installations; basic - where activities are inherently low-risk to land and groundwater; low-risk - where activities could in principle pollute land or groundwater but the operator can show through records and pollution control measures it is leaving the site in a "satisfactory state"; and full - a detailed report is required, using monitoring data.
