An Overview of Japanrsquo;s New Soil Contamination Control Law –Has Superfund Come to Japan?
——By Ami Tanabe, David J. Freeman and Desireacute;e C. Giler
Introduction
Set forth below is an outline of Japanrsquo;s new Soil Contamination Control Law (dojyouosen-taisaku-hou, Law No. 53 of 2002, referred to here-after as the “Law”), that was pro-claimed on May 29, 2002 and will be effective on February 15, 2003. Prior to the enactment of the Law, Japan had no national law regulating soil contamination except that governing land for agricultural use. With the Lawrsquo;s enactment, there has been a significant increase in the level of sensitivity to potential environmental liability within the Japanese real estate industry and the financial community.
Many important issues with respect to how the Law will be implemented and administered remain to be settled through the adoption of Cabinet Ordinances and promulgation of regulations by the Ministry of Environment. On August 7, 2002, the Ministry of Environment released a draft outline of the Cabinet Ordinance and the Ministry of Environment Ordinance implementing the Law (collectively “draft Ordinance”). The final version of the Cabinet Ordinance and the Ministry of Environment Ordinance will be proclaimed in late October or November 2002 and will facilitate a clearer understanding of the impact of the Law on real estate and corporate transactions and on the liability of site owners for the cleanup of contamination.
It is instructive to compare the Law to the United Statesrsquo; Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 and Small Business Liability Relief and Brownfields Revitalization Act of 2001 (42 U.S.C. sect;9601-9675, referred to hereafter as “CERCLA”). The basic policy behind both CERCLA and the Law is to protect and preserve public health and the environment. The remediation of contaminated property through a publicly transparent process is the noble goal embodied by both CERCLA and the Law. Moreover, both statutes employ the “polluter pays” concept of liability, where those presumably responsible for the contamination of property bear the cost of remediation. However, there are some important distinctions between the two statutes which are discussed herein.
Soil Contamination Control Law: Overview and Comparison to CERCLA
1. Framework of the Law
The basic policy of the Law is to protect human health by (a) identifying areas where soil contamination poses a risk to human health, and (b) requiring owners, administrators or occupiers of contaminated land (collectively “Owners”) to take necessary measures to mitigate the risk of harm to human health.
The Law requires the Owner of land with a potential risk of contamination to conduct an environmental investigation at its cost and report the results to the relevant prefectural governor. If this report indicates contamination in excess of the levels set forth in the Ministry of Environment Ordinance, the prefectural governor must register the contaminated land on the prefecturersquo;s Designated Area Register, which is available for public inspection. Once the land is registered, the Owner is restricted from changing the physical nature of the land or removing the contaminated soil from the land.
If the prefectural governor deter-mines that there is actual damage to human health from the contaminated soil in a Designated Area, the governor may order the Owner to take measures necessary to prevent the spreading of the pollution (e.g., encapsulation) or any other necessary mitigation measures at the Ownerrsquo;s cost. However, if certain conditions specified in Article 7.1 of the Law (discussed in Section 5 hereunder) are met, the person who caused the contamination (“Polluter”), rather than the Owner, will be responsible for cleanup.
2. Applicability
The Law requires the Owner to investigate the existence of pollution of its land in the following two situations:
(i) where a Registered Factory ceases its operation and (ii) where the prefectural governor determines there is a threat to human health from the contamination.
In the first case, the Law applies to land that has been used as a factory or work place registered under the Water Pollution Prevention Law where certain Specific Harmful Substances (e.g., lead, arsenic, hexavalent chromium and trichloroethylene) were produced, used or disposed (herein, “Registered Factory”). However, the Law only applies upon the termination of use of the Registered Factory. The definition of use termination has not yet been fully developed, but one guideline from the Ministry of Environment implies that any change in use from industrial to commercial, residential or recreational would qualify. The Law does provide an exemption for land that poses little risk to human health based on its planned use. For example, if the site will be used for a warehouse in which the risk can be managed under another law, the Owner may, upon the approval of the governor, be released from the responsibility to perform the investigation.
In the second case, the Law applies where the land is located in an area in which the prefectural governor has determined that there is a risk to human health as a result of contamination. There is no clear guidance for the governor to follow in determining risk to human health. However, the Ministry of Environment has indicated two criteria for this category in the released draft Ordinance. The first element is a strong probability of existing soil contamination of the land (e.g., existing soil contamination of adjacent land or groundwater near the land). The second element is a strong probability of risk to human health as a result of such contamination (e.g., use of land by the ge
An Overview of Japanrsquo;s New Soil Contamination Control Law –Has Superfund Come to Japan?
——By Ami Tanabe, David J. Freeman and Desireacute;e C. Giler
Introduction
Set forth below is an outline of Japanrsquo;s new Soil Contamination Control Law (dojyouosen-taisaku-hou, Law No. 53 of 2002, referred to here-after as the “Law”), that was pro-claimed on May 29, 2002 and will be effective on February 15, 2003. Prior to the enactment of the Law, Japan had no national law regulating soil contamination except that governing land for agricultural use. With the Lawrsquo;s enactment, there has been a significant increase in the level of sensitivity to potential environmental liability within the Japanese real estate industry and the financial community.
Many important issues with respect to how the Law will be implemented and administered remain to be settled through the adoption of Cabinet Ordinances and promulgation of regulations by the Ministry of Environment. On August 7, 2002, the Ministry of Environment released a draft outline of the Cabinet Ordinance and the Ministry of Environment Ordinance implementing the Law (collectively “draft Ordinance”). The final version of the Cabinet Ordinance and the Ministry of Environment Ordinance will be proclaimed in late October or November 2002 and will facilitate a clearer understanding of the impact of the Law on real estate and corporate transactions and on the liability of site owners for the cleanup of contamination.
It is instructive to compare the Law to the United Statesrsquo; Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 and Small Business Liability Relief and Brownfields Revitalization Act of 2001 (42 U.S.C. sect;9601-9675, referred to hereafter as “CERCLA”). The basic policy behind both CERCLA and the Law is to protect and preserve public health and the environment. The remediation of contaminated property through a publicly transparent process is the noble goal embodied by both CERCLA and the Law. Moreover, both statutes employ the “polluter pays” concept of liability, where those presumably responsible for the contamination of property bear the cost of remediation. However, there are some important distinctions between the two statutes which are discussed herein.
Soil Contamination Control Law: Overview and Comparison to CERCLA
1. Framework of the Law
The basic policy of the Law is to protect human health by (a) identifying areas where soil contamination poses a risk to human health, and (b) requiring owners, administrators or occupiers of contaminated land (collectively “Owners”) to take necessary measures to mitigate the risk of harm to human health.
The Law requires the Owner of land with a potential risk of contamination to conduct an environmental investigation at its cost and report the results to the relevant prefectural governor. If this report indicates contamination in excess of the levels set forth in the Ministry of Environment Ordinance, the prefectural governor must register the contaminated land on the prefecturersquo;s Designated Area Register, which is available for public inspection. Once the land is registered, the Owner is restricted from changing the physical nature of the land or removing the contaminated soil from the land.
If the prefectural governor deter-mines that there is actual damage to human health from the contaminated soil in a Designated Area, the governor may order the Owner to take measures necessary to prevent the spreading of the pollution (e.g., encapsulation) or any other necessary mitigation measures at the Ownerrsquo;s cost. However, if certain conditions specified in Article 7.1 of the Law (discussed in Section 5 hereunder) are met, the person who caused the contamination (“Polluter”), rather than the Owner, will be responsible for cleanup.
2. Applicability
The Law requires the Owner to investigate the existence of pollution of its land in the following two situations:
(i) where a Registered Factory ceases its operation and (ii) where the prefectural governor determines there is a threat to human health from the contamination.
In the first case, the Law applies to land that has been used as a factory or work place registered under the Water Pollution Prevention Law where certain Specific Harmful Substances (e.g., lead, arsenic, hexavalent chromium and trichloroethylene) were produced, used or disposed (herein, “Registered Factory”). However, the Law only applies upon the termination of use of the Registered Factory. The definition of use termination has not yet been fully developed, but one guideline from the Ministry of Environment implies that any change in use from industrial to commercial, residential or recreational would qualify. The Law does provide an exemption for land that poses little risk to human health based on its planned use. For example, if the site will be used for a warehouse in which the risk can be managed under another law, the Owner may, upon the approval of the governor, be released from the responsibility to perform the investigation.
In the second case, the Law applies where the land is located in an area in which the prefectural governor has determined that there is a risk to human health as a result of contamination. There is no clear guidance for the governor to follow in determining risk to human health. However, the Ministry of Environment has indicated two criteria for this category in the released draft Ordinance. The first element is a strong probability of existing soil contamination of the land (e.g., existing soil contamination of adjacent land or groundwater near the land). The second element is a strong probability of risk to human health as a result of such contamination (e.g., use of land by the general public or use of groundwa
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