Ripe for development: Remediating brownfield sites offers public benefits such as job creation
The recently clarified legal regime relating to contaminated land in South Africa provides a number of new business opportunities for those companies that are willing and able to exploit them.
This important fact has tended to get lost in the rash of recent articles that discussed the implications of the law and sought to provide guidance on how business should respond.
Most of the articles carried dire warnings about the dangers of noncompliance with the contaminated land rules, woeful lamentations on how the law will curtail the right to freely dispose of land that might be contaminated, and urgent advice to commence immediately with formal assessment of land that might be contaminated with a view to registering it with the government.
In the midst of all this, it is important to keep in mind that the legal regime relating to contaminated land is not a brand new law.
On May 2 2014, the minister of water and environmental affairs published a general notice in the Government Gazette formally bringing into effect the contaminated land legal regime provided for in the contentious part 8 [“Contaminated land”] of chapter 4 of the National Environmental Management: Waste Act 59 of 2008 (the “Waste Act”). In addition to the entry into force of the contaminated land legal regime in the Waste Act, the minister also published the National Norms and Standards for the Remediation of Contaminated Land and Soil Quality (the “Remediation Standards”).
The combination of the contaminated land legal regime and the Remediation Standards has introduced a more technical approach to the assessment of the status and risk posed by contaminated land, and the potential corollary duty to remediate significantly contaminated soil.
Another reason that this is not new law is that common law relating to the care of the environment has been in place in codified form since at least 1999 in South Africa.
This “environmental statutory duty of care” dictates that where a legal entity’s activities present risk to the environment, it is duty-bound to take measures to prevent or mitigate such risks.
Common law principles such as sic utere tuo ut alienum non laedas (use your property in a way that does not harm another) form the basis of this duty.
In the context of environmental law, this duty has been codified in various environmental statutes and imposes a duty to act with due care to avoid damage to others and to the environment or, where an impact is unavoidable, to mitigate such harm.
Examples of the statutory duty of care can be found in section 28 of the National Environmental Management Act 107 of 2008, section 19 of the National Water Act 36 of 1998 and various provisions of the Waste Act.
The reason for recent concern about the Act is that there will now be a greater regulatory focus on contaminated land.
While the concerns relating to non-compliance with the contaminated land rules are valid, the coming into operation of the new regime presents an important opportunity for business.
Many contaminated sites in South Africa are abandoned or underutilised commercial and industrial properties and it is in such abandonment and underutilisation that the active potential for commercial redevelopment of such sites is found.
These types of sites are commonly known as “brownfields”, meaning that the development of such a site is occurring on land in which the environment has already been transformed. Left idle and
unmanaged, brownfields represent a significant loss of economic opportunity. Remediating and redeveloping these sites offer such public benefits as job creation, new housing and business development, additional property tax revenues, lower municipal infrastructure costs, preservation of agricultural land and revitalised older neighbourhoods.
The term is used in contradistinction to a “greenfields” development, where the opposite is true.
South Africa does not have a system of grants to assist in the development of brownfield land, as is the case under the Brownfields Revitalisation Act in the United States.
However, the contaminated land legal regime nevertheless provides a business opportunity in the acquisition, remediation and on-sale (for profit) of contaminated land for redevelopment.
Local governments and the department of environmental affairs want land in their jurisdictions put to the most productive use, and are concerned about their potential liability when approving developments on contaminated land.
This is particularly the case in municipal areas such as Cape Town, where developable land is becoming a scarce commodity. Landowners and developers want to take advantage of business opportunities, but wish to avoid long-term liability for contamination and its effects.
Banks are reluctant to lend money for the development of contaminated land, fearing they may have to pay for site remediation if borrowers default on their loans.
To take full advantage of opportunities created by the new Act, a number of things need to happen. Government is going to need to engage the services of those professions that have skills in the remediation of moderate-risk sites to help, leaving the environmental affairs department’s monitoring and compliance directorate to focus on high-risk sites. Business can lobby to assist this. And the small business ministry needs to establish a brownfields redevelopment grant system.
Lloyd Christie and Andrew Gilder work for ENS