Charmian Barton

by Charmian Barton

Significant changes to the Contaminated Land Management Act 1997 (NSW) came into effect on 1 July 2009.  Businesses who own, lease or manage contaminated land in New South Wales may find themselves liable for contamination where they previously had no responsibility.

Changes under the Contaminated Land Management Amendment Act 2008 (NSW) relating to the removal of the ‘no knowledge’ defence, a new offence of providing false or misleading information, and the introduction of offset arrangements came into force on 10 December 2008.  The remainder of the provisions took effect on 1 July 2009, including the removal of the ‘significant risk of harm’ test.

The changes give the NSW Environment Protection Authority (EPA) broader powers to issue investigation and clean up orders and cast a wider net in terms of those with responsibility for reporting contamination in New South Wales.

‘Significant risk of harm’ test replaced

The EPA now has power to regulate contaminated land if it considers the contamination is ‘significant enough to warrant regulation’. The new test will give the EPA greater discretion to regulate contaminated land which may see it issuing more management orders for the investigation and clean-up of contamination. However, the EPA will have to apply the same considerations under the former ‘significant risk of harm’ test when deciding whether or not to declare land to be regulated land.

Change in terminology

New terminology is adopted for the declaration of contaminated land as ‘regulated land’ and for the issuing of management orders which may include investigating or cleaning up contamination. The use of the terms ‘investigation order’ and ‘remediation order’ is dispensed with.

Responsibility for clean-up

In deciding whether to issue a management order, the EPA is only required to follow the former ‘hierarchy’ of responsible persons as far as is practicable. In addition, the EPA has power to issue a management order to investigate and/or clean up contamination against more than one person. This means the EPA does not have to pursue the polluter in the first instance, but can serve orders on the polluter, land owner and notional owner simultaneously. As a consequence, land owners may be subject to more management orders, and find they are responsible for cleaning up contamination caused by their tenants.

Preliminary investigation orders

The EPA now has power to serve a preliminary investigation order (PIO) to determine whether land should be declared regulated land. The power is substantially broader than the power to issue a management order. It may catch a person who carries out activities on land which generate the same contaminant as specified in the order, even if there is no evidence that the contamination was caused by that person. It would be prudent for tenants to obtain a baseline report before entering into a lease in order to determine the extent of contamination. If you are a landlord, you may wish to include a clause in your lease requiring the tenant to cover the cost of complying with a PIO if it is associated with their activities. Substantial penalties apply for non-compliance with a PIO (AU$68,750 for a corporation with an additional penalty of AU$33,000 for each day the offence continues, and AU$33,000 for an individual with an additional daily penalty of AU$16,500 for a continuing offence).

Duty to notify

If contamination is likely to migrate off-site, or meets or exceeds criteria set out in the Regulations or Guidelines, then an owner or polluter is obliged to notify the EPA if that person is aware or should reasonably have become aware of the contamination.  New Guidelines on the Duty to Report Contamination were published by the NSW Department of Environment, Climate Change and Water in July 2009.

Whether or not a person has a duty to report requires consideration of various factors including the person’s abilities, experience, qualifications and training, whether the person could have reasonably sought advice that would have made them aware of the contamination, and the circumstances of the contamination. Where your knowledge of a site or your ability to seek advice from experts could lead to a conclusion that you should have been aware of site contamination, then a duty to notify may arise. As a consequence, those with greater financial resources or expertise may be expected to proactively investigate past or potential contamination.

Failure to report may result in prosecution and substantial penalties (AU$165,000 for a corporation with an additional daily penalty of AU$77,000 for each day the offence continues, and AU$77,000 for an individual with an additional daily penalty of AU$33,000 for a continuing offence).

Voluntary management proposals

The concept of a ‘voluntary investigation proposal’ has been removed and a ‘voluntary remediation proposal’ has been replaced by a ‘voluntary management proposal’ (VMP). The EPA can now serve a management order on a party to a VMP where the party has not complied with the proposal, the contamination was not adequately addressed by the proposal, or the proposal was given on the basis of false or misleading information. In addition, the EPA may recover any or all of its costs associated with approving and implementing a VMP from a person who is a party to the VMP. Because of the EPA’s new powers to serve a management order and recover its costs, there is less certainty under the new regime for parties to a voluntary management agreement.

Charmian Barton is Partner, Environment & Climate Change with DLA Phillips Fox

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