Israel – Response to Case 2008
Question 1: responsibility for cleaning up a polluted site
There is a new Bill specifically on the issue of contaminated land reclamation. The bill was approved by the cabinet in May 2008 as a government-initiated bill and is expected to be brought before Parliament (the Knesset) within the next few months. However, it is difficult to assess when such a bill will indeed be approved, and whether there will be major changes from the proposed bill. Therefore, I shall discuss two scenarios for the case: under current law; and according to the new Bill.
A. Under current law
Currently, there is no statutory law pertaining directly to contaminated land, nor is there a large body of case law to provide adequate legal direction. Key issues such as the division of responsibilities for cleaning contaminated sites remain legally unclear. The administrative responsibilities are also unclear: Which government body has the responsibilities and powers to demand evaluation and cleanup of contaminated sites? Who is to finance the evaluation and cleanup activities?
Until the new law is approved, authorities must rely on existing legal powers that are less effective because they are not directly dedicated to the contaminated land issue. The existing legal avenues do provide some powers and have in recent years been effectively used in some cases. I shall start with the less effective means and proceed to the more effective ones.
a) General law of damages (torts)
Israel’s law of damages is quite similar to British common law (codified in the 1940s). In theory, this legal avenue should enable either the authorities or injured parties to argue damages based on negligence and to obtain a court order directed at the responsible party to clean up or pay for the damages. However, in practice the law of damages is not a very effective instrument for cleanup of contaminated sites. As is the case in many other countries, taking action in the civil courts takes many years and can be very expensive. Furthermore: legally it is often not easy to prove who was the party responsible for the contamination. There have been very few such actions before the courts.
b) An agreement or condition according to the Planning and Building Law
The examples to date where major contaminated sites have been successfully cleaned up have relied on instruments related to planning law. The specifics of how this was achieved vary from case to case. However, the capacity of the planning bodies to require clean-up has several conditions:
1. There is a new initiative to redevelop the site which requires that the existing plan and its development rights be amended. If the new development can simply use the existing development right (from the previous plan) then the planning authorities have little leverage for placing new conditions. If for example, all that is required for re-using the contaminated site is a building permit (or even a variance on the existing permit) then the planning authorities have less legal leeway to place an additional condition on the developer. This legal situation is due to an entrenched legal doctrine whereby the legal validity of statutory plans never “sunsets” on its own and, usually, a landowner (or another interested party) may require that the authorities issue a building permit even if the plan is very old. However, a very recent High Court decision has, for the first time, shed some doubt on this legal doctrine. Normatively, I would recommend that plans should be able to automatically expire after many years, especially if the land use in question is substantively defunct. A contaminated site would, in my mind, constitute precisely such a case.
2. The value of the site and the new development would have to be very high in order for the prospective developer to be willing to accept the cleanup task as a condition for approval of the amendment to the existing plan. Cleanup operations – even the surveys to determine contamination – are very expensive.
3. The legal basis for imposing a condition or an “agreement” whereby a developer would be required to clean the site is within the “gray area” of the law. As in many other countries, Israeli statutory law does not officially recognize developer agreements. However, court decisions have not closed the door to such agreement, drawn either under planning powers as a condition for approving an amendment to a plan or under the contractual powers of local government. In practice, negotiated agreements and conditions are quite common in planning procedures. Because cleanup of contamination is such a clear pubic need I would assume that a challenge to the courts on this matter would not succeed. However, that may depend on the financial burden of the cleanup compared with the value of the proposed development. If the cleanup requirement is very expensive in comparison, and if the developer is also not the party that caused the contamination, an appeal to the courts based on the right to property might conceivably succeed.
c) A cleanup obligation imposed by the courts through a third-party appeal.
Citizen action is very common in Israel and has grown steeply in the past decade or two. The High Court of Justice and the district-level Administrative Courts are very open to such actions. The criteria for standing are very generous and almost any citizen group can have standing. The grounds for judicial review of administrative decisions including those of the planning bodies are quite broad in Israel and the courts may intervene not only on procedural grounds, but also on substantive grounds (“reasonableness”, “proportionality” etc.).
The issue of contaminated sites has been the subject of court decisions in several well-known cases in recent years. In one recent case in the northern town of Nahariya the planning authorities and the municipality were about to approve a plan for public buildings and recreation on land contaminated by an asbestos plant. An environmental citizen group petitioned the court and the plan had to be stopped until cleanup would be carried out. However, such citizen action has so far been successful largely to prevent development on contaminated land rather than to impose a duty to clean it up.
d) The revenue from the Betterment Levy
Israel’s Planning and Building Law makes it compulsory on local planning authorities to levy a “betterment levy” of 50% (!) of the increment in land value created by an amendment to a local plan (in practice, because there is a right to counter-appraisal, a shrewd landowner may bring this percentage down somewhat). Both alternatives in the case – reuse of the industrial site or a new development – may entail an increase in the property value after a new plan is approved. The money generated could conceivably be earmarked for the cleanup.
However, this sounds much more promising “on paper” than in real life. There are two reasons: First, in the contamination case, the cost of cleanup would have to be discounted from the calculation of the increment in land value and thus the tax income – if any – would be small. Second, the income from the betterment tax is part of the municipal budget. Having to “plough” it back into the ground for the cleanup means that the revenue will not be available for other public works, whether those related to the renewed industrial site, or those in other areas of the city. Thus in effect, financing the cleanup from the revenues of the betterment tax is tantamount to direct financing of the cleanup by the local authority from its own budget, rather from the developer’s. And of course, local government doesn’t usually have enough funds to carry out such works for the benefit of private landowners…
B. Additional Powers Under the proposed Bill on” Reclamation of Contaminated Lands”
The proposed law, if approved and implemented, would provide ideal answers to the issue at hand. Here are the key principles
1. Determining the party responsible for the cleanup: The Bill sets up a clear order of responsibility and capacity to pay. If the higher up party cannot be found of cannot pay, the next in line would be responsible: a) The party responsible for polluting; b) the landowner at the time of pollution; c) the present landowner d) other parties with an interest in the property
The Bill empowers the Ministry of Environment to issue orders to one or more of the above parties to carry out both the initial evaluation of the degree of contamination and the subsequent cleanup work. If the party does not abide by the order, the Bill empowers the courts to impose a large fine.
2. Financing the cleanup: If the owner (in this case also the party who caused the pollution) cannot pay for the cleanup, the Bill differentiates between an urgent and a regular cleanup. If the contamination might endanger the public and there is urgency to carry out the works, the Ministry of the Environment may order the works to be carried out and will pay for them in the interim. The local government too is empowered to undertake the necessary works. The landowner will, in theory, be required to reimburse the expenses incurred. In the future, once a Cleanup Fund is set up and has enough money to operate (see below) the Ministry may be able to receive part of the reimbursement from that Fund.
If the cleanup is not urgent, the responsible party would be required to undertake it. According to the facts of the case at hand, it may be possible to combine the planning-based procedures used today (a development agreement or condition on issuing a building permit). However, here too the feasibility of such an agreement depends on the degree of profit to me made from the new development. If the responsible party does not pay up, in theory a court might find them guilty plus there may be a fine which would go into the Fund. Under the Bill there will also be incentives for private parties to initiate the cleanup on their own, and in that case, to receive some incentive from the Fund.
3. Approving a new statutory plan: The Bill would alter some of the powers of the planning authorities compared to the current situation described above. On the one hand the Bill would grant the planning authorities more specific powers to require cleanup. The Bill states that the cleanup stipulations would automatically become part of the statutory plan approved for the site. On the other hand, the planning authorities would no longer be empowered to deposit a proposed plan for public scrutiny (a pre-approval stage) until the evaluation of contamination stage has been completed, and they would not be empowered to approve the plan until all the cleanup operation were actually fulfilled. In my view this is a somewhat extreme measure in that it might limit the capacity of the planning authorities to negotiate with the developer to clean up the property. If the landowner cannot see that the plan approval process is underway he or she may be reluctant to make the large investment required for a cleanup. The Bill is unrealistic in that, in reality, in most situations the majority of funding would still come from developers interested in new development rights. Instead, I would propose to shift the above constraint to the building-permit stage.
4. The Cleanup Fund: The Bill proposes that the revenues for the new Fund would be based on new charges on distributers of oil products as well as on gasoline sales to consumers. There will also be a new charge on storage of dangerous substances. In addition, the Fund will receive the income from fines on disobedient landowners. The eligibility and distribution of Fund resources will be undertaken by a Ministry of Environment statutory committee. However the bill is not yet approved and even after it is approved, the Fund may be “wishful thinking” for many years.
Question 2: Approving a plan to convert farmland to industry
A. Alternative trajectories – depending on what levels of statutory plans apply here
The information in the case implies that only local-levels plans apply to the land in question. In the Israeli context, the facts of the case could go in more than one trajectory, depending on what levels of plans apply. Under Israel’s 1965 Planning and Building Law (as amended) local-level plans are usually the necessary level for issuing a building permit. However, there are also district-level statutory plans and national-level statutory plans. In the information provided for the case, there could be three alternative situations:
1) Only local-level plans are relevant to the case.
2) (Relevant especially to the second alternative): Where an extension of the built up urban area is requested, it may be necessary to propose an amendment not only to the local plan but also to the district (regional) plan. This is also likely regarding the conservation zone. However, there are situations where the district plan allows flexibility and would not apply in the cases described.
3) (Relevant especially to the second alternative) Expansion of the built up area of a city at the expense of agricultural land may also require a variance or an amendment to the general National Outline Plan (called NOP 35). However, there are situations where the national plan allows enough flexibility so that it would not apply in the cases described.
The number of “stations” and permissions that would be required to handle the case would vary greatly depending on which of the 3 trajectories would apply in practice. Obtaining amendments from district or national plans is a long process. For simplicity, I shall henceforth assume that the case concerns only a local-level plan.
B. Approval of a local (outline) plan to convert farmland to industry
A local plan that designates any new development or conversion from any one land use to another may be initiated by the local authority or by any party interested in the land. However, there is considerable central-government scrutiny. The local plan requires the approval of the District Planning and Building Commission composed largely of representatives of Central Government ministries. This takes considerable time because the district commissions scrutinize each local plan in depth and checks it against national and district policies. In addition, the Minister of the Interior may decide that he would like to see the plan before it is approved. The District Commission deposits the local plans for public scrutiny and hears objections (see Question 3 below).
Because the proposed plan converts farmland, it requires an additional approval stage. Before the District Commission decides to deposit such a plan, it must send it to the national Commission for the Preservation of Agricultural Land and Open Space (CPAL). The latter checks the plan and decides whether to approve the conversion. Without this Commission’s approval, the plan would be illegal.
Usually, an amendment plan such as this would be prepared with enough detail to allow the local authority to issue a building permit. The purpose is to avoid the need to prepare a further detailed plan subsequent to the outline plan .
C. Possible claims for compensation made by neighboring landowners
Israel’s planning law provides the right for landowners who are close neighbor to an amended plan to claim compensation from the local planning commission if their property values have been injured. My recent 13-country comparative research on this issue shows that Israel (and The Netherlands) has gone to extremes on this issue in favoring the rights of landowners. In the first alternatives regarding the contaminated site, if the new plan will reduce the value of the residential neighboring properties, they may have grounds for a compensation claim. For that to occur one must assume that even though the site is at present contaminated, the new industrial development would be worse for them. In the second alternative, if the value of farmland diminishes due to the extension of industry, the farmers would have ground for a claim. Even though the law specifies that the local commission is to pay the claim, in practice local authorities usually sign an agreement with the developer, whereby if a claim is successful, the developer will indemnify the local authority for the sum it had to pay.
D. Environmental Impact Statement
Preparation of an EIS is determined by Regulations to the Planning and Building Law. In the case at hand, an EIS is not obligatory (it is mandatory only regarding major installations such as power plans, airports, waste disposal sites etc.). However, the local or district planning commissions do have the authority to demand that such a document would be prepared. Under both alternatives in the case, the planning bodies are likely to require the preparation of an EIS, whether at their own initiative or as a response to citizen opinions.
The guidelines for the preparation of the EIS would be issued by the district officer of the Ministry of the Environment. The local or district planning commission must specify the time frame for completion of the EIS – 3 years maximum. The findings of the EIS must be prepared before a plan is deposited for public review.
An issue often raised by environmental groups and the Ministry of the Environment is whether the EIS adequately assesses the “no development” alternative. In the case at hand, this would be to leave the land in its farmland and conservation use. A 2003 amendment to the Regulation explicitly empowers the planning bodies to require that an EIS would assess this option too. But of course, this would not change the reality because so long as the developer is the party in charge of preparing the EIS, the information provided is to some extent colored by the developer’s interest. Environmental bodies would like the EISs to be financed by the developer but the experts to prepare the EIS would be selected and paid directly by the Ministry of the Environment. At present, the developer is permitted to select the consultant (among a number of authorized offices).
E. Length of time and costs
Because there are several approval stages (and many opportunities for the public to be heard and to appeal – see below), approval of any significant plan such as to convert farmland to industry would require several years – at least 2, usually more. The costs of preparing an amendment to a local plan would vary, but certainly in the 10’s of thousand EU’s. In reality, if the plan is then contested and the developer must defend himself or herself in appeals, the cost would include more legal and other consultant costs. Because the planning bodies – and developers – are perceived as taking too long to prepare EIS, the 2003 amendment to the Regulations inserted deadlines for each and every stage in the EIS process. It still takes time – and in the eyes of developers and some central government ministries – takes too long.
Question 3: Court Challenges to planning decisions
1. The legal standing regarding challenges to planning decisions:
Israeli case law has over the years greatly expanded the right of the public to challenge administrative decisions. Of course, before accessing the courts, the interested party must first exhaust the administrative remedies. This may require more than one “stop”. The reason is that Israeli planning law allows any party who feel that they are injured by a planning decision not only to file an objection to the plan during the deposit stage, but also to request the right to appeal all the way up to the National Planning and Building Board (but not all are granted this right). The rules for the right to submit an objection are extremely broad. Empirical research we recently completed (Carmon and Alterman) shows that there are in fact no barriers to those who may object and thus also no barriers to those who may petition the courts.
2. Scope of judicial review:
Israeli courts are criticized by some for their “judicial activism” (I personally am in favor of it). The High Court of Justice, and since 1995 also 6 District Administrative Courts, exercise extensive judicial review (in comparative terms). Although the courts declare that they do not “substitute for the administrative bodies” they do in fact often evaluate such decisions, using judicial review criteria. The number of petitions and appeals to the courts on planning matters has increased steeply over the years, and today planning cases occupy a major part of the adjudication before the Administrative Courts. The decisions of the District Administrative Courts may be appealed to the Supreme Court and the number of these is increasing as well.
3. Remedies:
The courts may issue an interim injunction, not to proceed with the approval of a plan or building permit. The court may decide to return the plan for further assessment by the planning body, under new instructions from the court, such as an extended EIS or to consider a specific element. Or the court may order the planning body to repair some procedural fault in the plan, such as to re-deposit for public review. In some cases the court may order that the plan not be approved at all (in that case in some situations the process may be started again under new considerations).
4. Illegality:
The question of whether the process has been “illegal” depends on what type of fault was found and whether it can be remedied. Some types of fault cannot be remedied and are distinctly illegal: For example, if a local plan is found to be in contradiction to a higher level plan, this would be regarded as an endemic illegality. The Israeli planning system requires strict adherence among the levels of plans and building permits (unless flexibility is built into the plans themselves). Where there is an illegal divergence, any building permit issued under an illegal plan would be illegal as well. This would constitute a very serious infringement that cannot be remedied through the payment of damages.
Rachelle Altermann, Israël