PART 4: Considerations Applying both to Class A & Class B Persons
E.18 The statutory guidance in this Part sets out considerations to which the enforcing authority should have regard when making any cost recovery decisions, irrespective of whether the appropriate person is a Class A person of a Class B person (as defined in Chapter D). They apply in addition to the general issue of the "hardship" which the cost recovery may cause to the appropriate person.
E.19 Subject to the specific guidance elsewhere in this Chapter, the enforcing authority should adopt the same approach to all types of commercial or industrial enterprises which are identified as appropriate persons. This applies whether the appropriate person is a public corporation, a limited company (whether public or private), a partnership (whether limited or not) or an individual operating as a sole trader.
THREAT OF BUSINESS CLOSURE OR INSOLVENCY
E.20 In the case of a small or medium-sized enterprise which is the appropriate person, or which is run by the appropriate person, the enforcing authority should consider:
(a) whether recovery of the full cost attributable to that person would mean that the enterprise is likely to become insolvent and thus cease to exist; and
(b) if so, the cost to the local economy of such a closure.
E.21 Where the cost of closure appears to be greater than the costs of remediation which the enforcing authority would have to bear themselves, the authority should consider waiving or reducing its costs recovery to the extent needed to avoid making the enterprise insolvent.
E.22 However, the authority should not waive or reduce its costs recovery where:
(a) it is clear that an enterprise has deliberately arranged matters so as to avoid responsibility for the costs of remediation;
(b) it appears that the enterprise would be likely to become insolvent whether or not recovery of the full cost takes place; or
(c) it appears that the enterprise could be kept in, or returned to, business even if it does become insolvent under its current ownership.
E.23 For these purposes, a "small or medium-sized enterprise" is as defined in the European Commission's Community Guidelines on State Aid for Small and Medium-Sized Enterprises, published in the Official Journal of the European Communities. This can be summarised as an independent enterprise with fewer than 250 employees, and either an annual turnover not exceeding £40 million, or an annual balance sheet total not exceeding £27 million.
E.24 Where the enforcing authority is a local authority, it may wish to take account in any such cost recovery decisions of any policies it may have for assisting enterprise or promoting economic development (for example, for granting financial or other assistance under section 33 of the Local Government and Housing Act 1989, including any strategy which it has published under section 35 of that Act concerning the use of such powers).
E.25 Where SEPA is the enforcing authority, it should seek to be consistent with the local authority in whose area the contaminated land in question is situated. SEPA should therefore consult the local authority, and should take that authority's views into consideration in making its own cost recovery decision.
E.26 Where the appropriate persons include persons acting as trustees, the enforcing authority should assume that such trustees will exercise all the powers which they have, or may reasonably obtain, to make funds available from the trust, or from borrowing that can be made on behalf of the trust, for the purpose of paying for remediation. The authority should, nevertheless, consider waiving or reducing its costs recovery to the extent that the costs of remediation to be recovered from the trustees would otherwise exceed the amount that can be made available from the trust to cover those costs.
E.27 However, as exceptions to the approach set out in the preceding paragraph, the authority should not waive or reduce its costs recovery:
(a) where it is clear that the trust was formed for the purpose of avoiding paying the costs of remediation; or
(b) to the extent that trustees have personally benefited, or will personally benefit, from the trust.
E.28 Since charities are intended to operate for the benefit of the community, the enforcing authority should consider the extent to which any recovery of costs from a charity would jeopardise that charity's ability to continue to provide a benefit or amenity which is in the public interest. Where this is the case, the authority should consider waiving or reducing its costs recovery to the extent needed to avoid such a consequence. This approach applies equally to charitable trusts and to charitable companies.
E.29 However, charities would be subject to similar exceptions to this approach as set out in paragraph E.27 above.
Social Housing Landlords
E.30 The enforcing authority should consider waiving or reducing its costs recovery if:-
(a) the appropriate person is a body eligible for registration by Communities Scotland as a social housing landlord;
(b) its liability relates to land used for social housing; and
(c) full recovery would lead to financial difficulties for the appropriate person, such that the provision or upkeep of the social housing would be jeopardised.
E.31 The extent of the waiver or reduction should be sufficient to avoid any such financial difficulties.
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