Cost Allocation in the Case of Contaminated Sites

Cost Allocation in the Case of Contaminated Sites

Swiss environmental law stipulates that sites polluted with waste must be investigated to determine whether they need to be monitored or remediated. The aim is to protect groundwater, surface water, air and soil. Pollution can be caused by landfilling activities, plants (e. g. in the chemical industry) or accidents. The remediation of contaminated sites is intended to eliminate harmful effects or nuisances on the environment or at least to avert the corresponding danger. As a rule, remediation of contaminated sites entails large-scale, interdisciplinary projects involving considerable financial costs.

The costs of remediation are borne by the person responsible for the pollution. The polluter may be obliged to guarantee the amount expected to be owed from the outset. Qualification as a polluter thus regularly entails considerable economic burden for the affected party.

Under environmental law, the polluter is considered to be, on the one hand, the person whose conduct causes the pollution in question (behavioural polluter) and, on the other hand, the owner of the site in question at the time of the remediation (status polluter). If there are several polluters, the costs are borne in proportion to their respective shares in the cause. Primarily, the person who caused the measures by his behaviour is liable to pay the costs. In contrast, the owner can be completely exempt from bearing costs if – exercising due care – he could not have been aware of the contamination. His share, on the other hand, is increased if he has obtained an economic advantage from the contamination, namely through a favourable purchase of the contaminated land. Usually, in the case of multiple polluters, the behavioural polluter(s) assume a cost share of 70-90% while 10-30% of the costs are allocated to the owner.

The differentiation between behavioural and status disturber is therefore highly relevant for the cost allocation in case of contaminated sites. Difficulties arise, for example, in the scenario of a transfer of use (especially renting) of industrial sites which later prove to be contaminated. Is it possible to include the landlord in the distribution of costs under contaminated sites legislation and, if so, in what role? By now, the Swiss Federal Supreme Court has clarified that the person who knowingly and in return for payment makes his property available for a potentially environmentally hazardous activity is not merely a status polluter but also a behavioural polluter and, therefore, has to bear the main share of the remediation costs in conjunction with the direct occupant of the land.

Specifically in the case of inheritance, clarification is required as to the extent to which heirs can become liable to pay under contaminated sites legislation. It has been established, that the obligation to pay the costs allocated to the behavioural polluter can be transferred to the legal successor on the basis of inheritance law. The prerequisite for this is that at the time of the inheritance there must have been a legal basis for the obligation to clean up and bear the costs and the heirs must have had the option of refusing the inheritance.

Finally, the question of liability for contaminated sites is of great practical relevance in the context of corporate succession. In principle, the remediation obligation remains with the part of the business that caused the contamination. Moreover, as soon as the business is actually continued, i.e. the transferee carries out the same activity as the predecessor with the same installations, he is also considered to be a behavioural polluter and will be liable to pay costs in the event of remediation.

Overall, the number of potential persons liable to pay costs in the context of the remediation of contaminated sites is larger than is generally known. Qualification as a behavioural polluter in particular is sometimes associated with considerable financial burdens. Those affected, whether companies or private individuals, must on the one hand protect their rights in proceedings under contaminated sites legislation. On the other hand, however, they must always take precautions by means of adequate safeguards in the event that costs are imposed. This refers in particular to the appropriate structuring of transfer of use or company takeover contracts and/or procuring an adequate insurance solution.