Malaysia – Guide To Contaminated Land.

7 November, 2015

 

Legislative framework

 

1 Do you have any statutes specifically relating to land contamination?

 

Land contamination is addressed in the Environmental Quality Act 1974 (“EQA”). The EQA is the primary legislation that addresses the prevention, abatement and control of pollution, as well as the protection of the environment in Malaysia. Section 24(1) of the EQA stipulates that a person will be liable if he or she pollutes, or causes, or permits the pollution of any soil or surface of any land in contravention of the acceptable conditions specified under the EQA.

 

Land contamination is also addressed in the Contaminated Land Management and Control Guidelines (“Guidelines”). The Guidelines are issued by the Department of Environment (DOE) and compliance with its provisions is only voluntary. The DOE is, however, seeking to make compliance with the Guidelines mandatory in due course. The Guidelines apply to the following:

 

• Any land that is currently being used or was previously used, to perform polluting activities with the potential to cause soil and groundwater contamination
• Any land that will change with regard to use, from polluting activities to non-polluting activities, or from non-polluting activities to polluting activities
• “Polluting activities” is defined in the Guidelines to mean any activity involving extracting, mining, manufacturing, storing, using, handling and disposing of chemicals, pollutants and scheduled waste in land as part of their operating processes. The Guidelines provide a list of industries that would potentially contaminate subsurface soil and groundwater.

 

2 Is there a definition of contaminated land in your laws?

 

There is no specific definition of “contaminated land” under the EQA. The EQA, however, defines “soil” and “pollution.”

“Soil” is defined under the EQA to mean earth, sand, rock, shale, minerals and vegetation in the soil.

 

“Pollution” is defined to mean an act or process, whether natural or artificial, resulting in the introduction of any pollutant into the environment in contravention of the acceptable conditions, as specified in the regulations made under the EQA.

 

“Pollutant” is further defined under the EQA to mean any natural or artificial substance, whether in a solid, semi-solid or liquid form, or in the form of gas or vapor, or in a mixture of at least two of these substances, or any objectionable odor or noise or heat emitted, discharged or deposited or is likely to be emitted, discharged or deposited from any source that can directly or indirectly cause pollution and includes any environmentally hazardous substances.

 

Further, the EQA provides that a person shall be deemed to pollute any soil or surface of any land if:

he or she places in or on any soil or in any place where it may gain access to any soil any matter, whether liquid, solid or gaseous; or

he or she establishes on any land a refuse dump, garbage tip, soil and rock disposal site, sludge deposit site, waste-injection well, or otherwise used land for the disposal of or a repository for solid or liquid wastes as to be obnoxious or offensive to human beings or interfere with underground water or be detrimental to any beneficial use of the soil or the surface of the land.

 

For purposes of the Guidelines, “contaminated land” has been defined to mean a site at which substances occur at concentrations that:

 

• are above natural occurring metal concentrations and pose or are likely to pose an immediate or long-term hazard to human health or the environment; or
• exceed levels specified in the Guidelines as “Site Screening Levels.”

 

Statutory responsibility for cleanup

 

3 Are there any cleanup or remediation laws with regard to contaminated land?

 

Yes, Section 31(1) of the EQA empowers the director general of the DOE (“Director General”) to issue a notice to the owner/occupier of land (“Notice”) requiring the owner/occupier of the land to take steps to reduce, mitigate, disperse, remove, eliminate, destroy or dispose of pollution within a period specified under the Notice.

 

Pursuant to Section 31A (2) of the EQA, the Minister of Natural Resources and Environment (“Minister”) may also, in his or her discretion, direct the Director General to issue an order that will require a person to cease all acts that have resulted in the release of environmentally hazardous substances, pollutants or wastes. The Minister may also direct the Director General to effect and render any machinery, equipment, plant or process inoperable if he or she considers that the operations of such machinery, equipment or plant is a threat to the environment, public health or safety.

 

The Guidelines prescribe a remedial plan in the event of a contamination. However, as discussed, compliance with the provisions of the Guidelines is not mandatory at this juncture.

 

4 If so:
4.1 Who is primarily responsible for the cleanup?

 

Section 31 of the EQA stipulates that the Notice (to clean up) is issued to the owner/occupier of the contaminated land. The Notice can still be issued to the owner or occupier even if he or she was not the owner/occupier who polluted the premises. The Guidelines state that the current land owner should be responsible for identifying the polluter if the current land owner claims that the contamination is not caused by its current on-site operations.

 

4.2 If it is the polluter, what happens if the polluter cannot be found? Is the liability passed on to the owner or the occupier?

 

The polluter, if convicted, will remain liable under the EQA. Such criminal liability is attached to the polluter and will not be passed on to the owner/occupier. As discussed in question 4.1, regardless of which party is responsible for committing the offense, the DOE may pursue the owner/occupier of the land, as opposed to the polluter (if he or she is not the same party), for purposes of issuing the Notice. If the owner/occupier contravenes the Notice, the owner/occupier will be liable for failing to comply with the requirements under the Notice.

 

4.3 If the polluters are both the owner and the occupier (e.g., the landlord and a tenant), how is the liability apportioned between them?

 

The EQA does not contain any provision apportioning the cleanup liability and responsibility between an owner and an occupier. 

 

We wish to highlight that Section 46E of the EQA allows a court to order a person convicted of an offense under the EQA to pay damages to a person who has suffered loss or damage to any property as a result of that offense.

 

4.4 Does the liability to clean up include historical contamination? If not, who pays for this cleanup?

 

The EQA is silent on historical contamination. In practice, the DOE will not undertake additional work and effort to identify the previous owner/occupier who caused the contamination. The current owner/occupier is ultimately liable for the cleanup under the EQA once the Notice is issued.

 

Cleanup standards

 

5 How is it decided whether cleanup is required? For example, are there regulations specifying limits to polluting substances that are permitted, or is some form of risk assessment carried out?

 

Section 21 of the EQA empowers the Minister to issue regulations that will specify the acceptable conditions for the emission, discharge or deposit of environmentally hazardous substances, pollutants or wastes, or the emission of noise into any area, segment or element of the environment. As discussed previously, there are currently no acceptable conditions and parameter standards that are imposed by the Director General in respect of the discharge of waste onto land. Pending the issuance of such conditions and standards, the circumstances in which a cleanup is required is decided on a case-by-case basis at the discretion of the Director General.

 

6 What level of cleanup is required?

 

The DOE may specify the cleanup level under the Notice. The cleanup level should satisfy the conditions imposed under the Notice.

 

7 Are there different provisions relating to the cleanup of water?

 

Section 25 of the EQA prohibits the emission, discharge or deposit of any environmentally hazardous substances, pollutants or wastes into any inland waters. The Environmental Quality (Sewage) Regulations 2009 and the Environmental Quality (Industrial Effluent) Regulations 2009 (“Regulations”) provide for the permitted levels of emission, discharge and deposit of hazardous substances into inland waters.

 

Similar to the cleanup of contaminated land, the Director General may issue a Notice to the owner/occupier to clean up contaminated water. Further, under the Regulations, an application can be filed with the DOE for a “contravention license,” i.e., a license for contravening the acceptable conditions of effluent discharge specified in the Regulations. The license will enable the owner/occupier to continue with its business operations while the owner/occupier remedies the contamination/pollution. As far as we know, the DOE has issued this license only in very limited circumstances.

 

Penalties, enforcement and third-party claims

 

8 Is it a criminal offense to contaminate land or to own contaminated land? If so, what are the penalties?

 

It is a criminal offense to contaminate or cause the contamination of any land. Note, however, that there are currently no acceptable conditions and standards under the EQA that have been imposed by the Director General in respect of land contamination. Nevertheless, the EQA does specify the acceptable conditions and parameter limits of effluent to be discharged from prescribed premises, such as premises occupied for processing crude palm oil and raw natural rubber, and the discharge of effluent and waste into Malaysian waters. Such conditions and environmental standards are set out in various regulations made pursuant to Section 51 of the EQA.

 

The EQA further provides that a person who attempts to commit an offense punishable under the EQA or supports the commission of such offense shall be penalized accordingly.

 

On the other hand, it is not a criminal offense under the EQA to own contaminated land. However, under the EQA, the Director General is empowered to issue a notice requiring the owner/occupier to take steps to reduce, mitigate, disperse, remove, eliminate, destroy or dispose of pollution within a period specified under a notice issued by the DOE.

Section 24(3) of the EQA provides for the following penalties where a person is found liable for land contamination:

 

A fine not exceeding MYR100,000 or imprisonment for a period not exceeding five years, or both penalties

 

A further fine not exceeding MYR1,000 a day for every day the offense is continued after a notice from the DOE is served on the owner/occupier

 

9 Is it a criminal offense not to comply with the requirement to clean up? If so, what are the penalties?

 

Where a person fails to take steps to reduce, mitigate, disperse, remove, eliminate, destroy or dispose of pollution in respect of environmentally hazardous substances, pollutants or wastes within a period specified under the Notice, that person shall be guilty of an offense and the penalties are as follows:

 

• A fine not exceeding MYR25,000 or imprisonment not exceeding two years, or both penalties
• A further fine not exceeding MYR1,000 a day for every day the offense is continued after the offender is served the Notice

 

Where an offense is committed by a body corporate, the director, manager or officer of that body corporate shall be deemed to be guilty of that offense unless he or she can prove that the offense was committed without his or her consent or connivance and that he or she had exercised all diligence to prevent the commission of the offense.

 

10 What authority enforces cleanup?

 

The Director General who issues the Notice is responsible for the enforcement of the cleanup. In practice, this is delegated to and carried out by the Enforcement Division of the DOE.

 

11 Are there any defenses?

 

While there are specific defenses to offenses under the EQA (for example, in respect of discharge of oil into Malaysian waters), there are no specific defenses to offenses relating to land contamination/soil pollution. However, as in any prosecution of an offender of a criminal offense, the prosecutor must prove beyond reasonable doubt that the offender committed the offense.

 

12 Can third parties / private parties enforce cleanup?

 

Third parties may seek to claim damages through common law claims of negligence, nuisance or trespass. In bringing a claim, the third party must show that the contamination is an unlawful interference with his or her use of, comfort in, enjoyment of or interest in his or her land. For example, if contamination was to “migrate” from the owner’s land to an adjoining owner’s land and:

 

• the contamination causes damage to the adjoining landowner’s property or business;
• the owner is shown to owe the adjoining landowner a duty of care; and
• the owner is shown to have breached that duty, (e.g., the owner’s failure to appropriately monitor the contamination or take steps to prevent its “migration” to the owner’s land),
• then the adjoining landowner may be able to bring an action against the owner for damages and hold the owner liable for remediating the adjoining, effected land.

 

13 Can third parties claim damages?

 

Please refer to our response to questions in paragraphs 4.3 and 12.

Acquisition of contaminated land

 

14 Is it a legal requirement in your jurisdiction to conduct investigations for potential contamination in connection with the sale of property?

 

There is no such legal requirement.

 

15 Can a party responsible for cleanup under statutory law pass on its cleanup liability to the purchaser?

 

15.1 Under the general law?

 

The EQA imposes liability on the polluter of land. If the polluter sells the land, such sale will not absolve him or her of the liability. Also, as discussed, the cleanup obligations rest with the owner/occupier of the land even if he or she is not the party who caused the contamination.

 

15.2 Contractually?

 

It is possible to contractually provide that the buyer should accept and undertake any cleanup obligations. However, in our experience, it would be fairly uncommon for a purchaser to take on contractual responsibility for contamination for which it was not responsible, unless it has confirmed the level of contamination (if any) and has been compensated appropriately for taking on that liability (e.g., by adjustment of the purchase price).

 

16 Is there anything else about contaminated land that you would bring to the attention of a potential purchaser of that land?

 

Apart from the issues discussed above, we do not see any other issue that we would highlight when talking with a potential purchaser of land in respect of land contamination/liability attached to land contamination in Malaysia. 

 

 

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