Case law
Court decisions handed down in the past few months show, yet again, that buyers of former industrial sites should be cautious. By ruling dated November 23, 2011, the Conseil d’Etat held that the owner of a property may be required to dispose of any waste and remediate the site in its capacity as holder of the waste within the meaning of Article L.541-2 of the French Environmental Code. The reason for this decision is that under the “waste” regulations applicable at the time (Article L.541-3 of the French Environmental Code), mayors were authorized to give the owner of a contaminated property formal notice to clean up the site. When it came into force, the Order (ordonnance) of November 17, 2010, stripped the mayor of this “waste” police power; Article L.541-4-1 of the French Environmental Code now excludes unexcavated contaminated soil from the scope of this police power. Does this mean that mayors will no longer have the authority to order remediation measures? Nothing is less certain. The Order of November 17, 2010, has introduced special police rules for contaminated sites and soil, pursuant to which the “police authority” may, in certain circumstances, compel the person “responsible” for a property to clean it up. But Article L.556-1 of the French Environmental Code, which sets out this new rule, does not identify the “police authority” empowered to issue remediation orders and offers no clarification of the term “responsible”. We will have to wait for the case law interpretation of this new provision to know, among other things, whether or not mayors may still compel property owners to clean up their contaminated sites. This notwithstanding, it should be noted that the draft decree implementing Article 188 of the Grenelle II Act, which is in the process of being passed, provides that only the préfet has authority to order the measures described in Article L.556-1 mentioned above, when the contamination or risk of contamination affects the location of a facility classified for the protection of the environment. In a ruling dated July 19, 2011 (published in the Lebon collection), the Administrative Court of Appeal in Douai ruled that the signatory of a public property occupancy agreement could not claim reimbursement from the other party for the clean-up costs it had to incur to carry out its project, since (i) it had failed to prove that the other party knew that the property had previously been used to operate a thermal power plant or that the subsoil was still contaminated and (ii) before signing the agreement, it had not conducted the necessary surveys to ascertain the condition of the soil, although it had had the opportunity to do so. The Court also held that the appellant could not reasonably rely on the other party’s breach of its obligation to provide a survey report before the signature of the agreement, when (i) it had not proved that “it was technically possible to survey the entire property before that date” and (ii) it had signed the occupancy agreement without arranging to have the property surveyed beforehand. With this ruling, the Court of Appeal in Douai has reaffirmed not only the principle that the burden of proof lies with the appellant, but also that to protect its rights, the signatory of a public property occupancy agreement must exercise due diligence in seeking information as to the condition of the soil before contracting.
Reforms
The draft decree implementing new articles L.125-6 and L.125-7 of the French Environmental Code, relating to the information to be provided to the buyers or lessees of properties regarding the risk of site contamination and its consideration in planning documents, is currently in preparation. This draft under discussion requires the owner or lessor, upon selling or letting the property, to disclose the information established by the prefectures on the risk incurred in the area where the property is sited. In this respect, two areas would be introduced: ‘alert’ areas (zones de vigilance) (sites with known soil or groundwater contamination or where operations deemed highly polluting were previously conducted) and ‘information’ areas (zones d’information) (sites with potential soil or groundwater contamination). Three draft decrees (arrêtés) are pending, pursuant to which the operation of certain facilities classified for the protection of the environment (installations classées) is subject to the provision of financial guarantees to ensure that adequate funds will be available to secure and, if necessary, remediate the site in the event of cessation of operation. It should be noted that Decree no.2011-2019 of December 29, 2011, reforms the contents and scope of the study of the environmental impact of proposed works, constructions or facilities. These new rules apply to projects for which permission, approval or enforcement is sought on or after June 1st, 2012. It should also be noted that the implementing decree dated December 30, 2011, specifying the provisions of the environmental schedule to the lease (or “green lease”), was published in the Official Gazette last December 31 and applies as of January 1st, 2012. This decree organizes the relationship between the landlord and the tenant under the green lease and will take effect in two stages: on or after January 1st, 2012, for new or renewed leases; on or after July 14, 2012, for current leases.
