Developments In NSW Contaminated Land Legislation

Proposed changes to NSW site clean-up Laws

The Contaminated Land Management Amendment Bill 2008 (Bill) follows a recent review of the Contaminated Land Management Act 1997 (NSW) (Act). The Bill was tabled in the NSW Parliament on 26 June 2008 and is likely to be passed in the next session of Parliament in September 2008. The changes are likely to increase the range of potentially liable parties and place responsibility for clean up on the party with the deepest pockets. It may also mean a rise in the number of contaminated sites regulated by the Environmental Protection Authority (EPA) in NSW.

The existing contaminated sites regime

The existing legislative regime in NSW establishes the following hierarchy of responsibility for contaminated land:

1. The polluter, or if this person is insolvent or cannot be found then
2. An owner of the land, or if this person is insolvent or cannot be found then
3. A notional owner of the land, for example a long term lessee, mortgagee in possession or a party who is responsible for the management of the land.

The contaminated sites regime in NSW is based on the 'polluter pays' principle. However, if a purchaser (who is not the polluter) changes the approved use of the land, for example, to a more sensitive land use, and this gives rise to a 'significant risk of harm', the purchaser is responsible for the contamination. The NSW EPA may make a finding of significant risk of harm where contamination has already caused harm to human health or the environment, the substances are toxic, there are exposure pathways to humans or other aspects of the environment, or the substances have migrated or are likely to migrate offsite.

Further, a vendor, who is the polluter, could be served with an investigation or remediation order by the EPA after the site has been sold. For example, if there is a change to the zoning of land which permits a more sensitive land use, the EPA may make a finding of significant risk of harm, declare the land a remediation site, and order the vendor to clean up. A person who carries out investigation or remediation under an order may claim the costs of the remediation from any person who is responsible for the contamination.

The fact that the polluter has entered into an agreement with the purchaser to allocate responsibility for the clean up of contamination away from the polluter, does not prevent the EPA from issuing an investigation or remediation order on the polluter. The Bill maintains the position that a person cannot contract out of contamination liability.

Proposed regime

The changes proposed by the Bill include:

• The current system of managing contaminated land through the declaration of investigation and remediation areas and the issuing of orders for those areas will be done away with. In its place, the Act will provide new terminology for the declaration of contaminated land as 'regulated land' and for the issuing of 'management orders' which may include investigating or remediating contamination.

• The EPA will have new powers to order a preliminary investigation of land to identify any contamination before the EPA publicly declares the land to be 'regulated land'.

• The 'significant risk of harm' test will be removed and the EPA will have power to regulate contaminated land if the EPA considers that the contamination is 'significant enough to warrant regulation'. The new test will be based on the same considerations as the 'significant risk of harm test' and therefore, may not necessarily cast a wider net in terms of what is considered contaminated land.

• In relation to the hierarchy of responsibility for contamination, more than one person may be served with a management order to clean up contamination. That is, a person who is principally responsible for the significant contamination of the land, the owner of the land and a notional owner of the land (eg a mortgagee in possession) may now be served with a clean up order. Under the proposed changes, the EPA will no longer have to pursue the principal polluter to take remedial action before action is taken against others. This may have the effect of shifting the liability for clean up to the new owner, and therefore could work in a polluter's favour.

• The Bill clarifies that the EPA can approve a voluntary management proposal unconditionally or subject to conditions and for one or more parties to the proposal.

• A set of clearer, more objective criteria will be introduced as a trigger for reporting contamination to the EPA. Landowners and occupiers (present and past) will be required to report contamination only if any of the following are true:

• The substance contaminating the land or any by-product has entered, or will forseeably enter, neighbouring land, the atmosphere, ground water or surface water unless it falls below a prescribed level.

• A guideline specifies a concentration of the contaminant in soils for a current or approved use of the land, and the level of the contaminant on or in any part of the soil on that land is equal to or above that specified in the guideline and a person, has been, or foreseeably will be, exposed to the contaminant or any by-product of the contaminant.

• The contamination meets any other criteria that may be prescribed by the regulations.

In light of these changes, there may be a legal obligation to report a contaminated site where there was previously no duty to report. Failure to report may result in prosecution and substantial penalties ($165,000 for a corporation and $77,000 for an individual).

• The EPA will be able to make an ongoing maintenance order for any contaminated land and to impose restrictions on the use of, or public positive covenants on, any such land.

• The Minister for the Environment will have power to enter into offset arrangements with a polluter in circumstances where it would not be practicable for the polluter to remediate the contamination within a reasonable time. This may include the provision of services to communities affected by the contamination.

Implications

If the Bill is passed, land owners, occupiers and polluters may be obliged to report a contaminated site where there was previously no duty to report. Also, given the scope of the EPA's discretion to regulate sites that it considers 'significant enough to warrant regulation', it is possible that land in NSW may be classified as significantly contaminated that previously was not so classified. Directors of companies should also be aware that they can no longer raise as a defence to a criminal prosecution that the actions of the company that gave rise to the offence occurred without the director's knowledge.

If you are looking to buy, sell or redevelop a site that may be contaminated, DLA Phillips Fox understands the potential sources of liability and can provide practical, strategic advice to facilitate the remediation process.

New NSW laws relating to underground petroleum storage tanks

The Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2008 (NSW) (UPSS Regulation) commenced on 1 June 2008. The purpose of the UPSS Regulation is to enable the early detection of leaks from underground petroleum storage systems (UPSS) to avoid long and costly clean up operations.

The UPSS Regulation imposes obligations on those persons who have management and control of a UPSS, that is, the person responsible for the system. For example, this may include land owners, lessees and operators of service stations. Penalties apply for non-compliance with the requirements of the UPSS Regulation. This is on top of any penalties imposed under the POEO Act where a person is found to have polluted waters or land by allowing petroleum or other substances to escape from a UPSS.

The UPSS Regulation applies to tanks and associated piping which are completely or partially buried and contain petroleum. Specifically, a UPSS is defined as a storage system that does not include vent or vapour recovery piping, but does include:

• One or more tanks which are completely or partially buried in the ground and contain, or are intended to contain, petroleum.

• Any piping to, from or associated with the tanks, to the inlet port of any dispensers.

'Petroleum' for the purposes of the UPSS Regulation means any fuel that consists predominantly of a mixture of hydrocarbons derived from crude oil, whether or not the fuel includes additives (such as ethanol), and includes used oil.

New storage systems and modified systems

Under the UPSS Regulation, a new or modified system cannot be commissioned unless is it properly designed, installed and equipped with pollution prevention equipment, such as non-corrodible secondary containment tanks and overfill protection devices. The UPSS must be designed by a duly qualified person and the designer must provide the person responsible for the system with a list of standards used in the design, and a copy of the design specifications.

In addition, groundwater monitoring wells must be installed and the samples analysed within 30 days of well installation, for the discovery of a leak or the discovery of groundwater contamination. Testing of groundwater monitoring wells must continue at least every six months.

Before the system is used, equipment integrity testing must be performed and certified by a duly qualified person and an environmental protection plan developed. An environmental protection plan must contain the following: " A loss monitoring procedure.

• An incident management procedure.

• A maintenance schedule.

• The contact details of the person responsible for the system.

• A site specific plan and current 'as built' drawings.

• A list of the industry standards complied with and specifications adopted for design and installation.

If any modification to a UPSS involves the removal or replacement of any tank, then a validation report must be provided to the local council within 60 days of completing the work. The validation report should be drafted in accordance with the 'Guidelines for consultants reporting on contaminated sites' (EPA, 1997).

Old systems

All of the requirements of the UPSS Regulation apply to storage systems that were commissioned before the UPSS Regulation came into force on 1 June 2008, except those relating to the requirement for an environmental protection plan and the installation of groundwater monitoring wells. Old systems will require an environmental protection plan from 1 June 2009, and the installation of groundwater monitoring wells from 1 June 2011.

Repair and decommissioning

Both new and old systems that are repaired following the discovery of a leak require integrity testing before use. A validation report must be prepared for systems that are decommissioned and a copy of the report provided to the local council within 60 days of decommissioning or within 60 days of the remediation of the site if contamination has occurred. The validation report should be drafted in accordance with the 'Guidelines for consultants reporting on contaminated sites' (EPA, 1997). Failure to notify the NSW Department of Environment and Climate Change (DECC) of a pollution incident, where material harm to the environment is caused or threatened, is an offence under the POEO Act.

Exemptions

Exemptions are available to the person responsible for the UPSS from complying with certain requirements of the UPSS Regulation. The 'UPSS Regulation Exemption Plan' which lists the classes of exemption available can be found on the DECC website at: www.environment.nsw.gov.au/clm/upss.htm

Record keeping

The 'as built' drawings and documents produced as part of the design and installation of the UPSS must be kept for the life of the UPSS. A record of significant modifications, incident logs, groundwater monitoring reports, environmental protection plans and validation reports for the decommissioning of a tank must be kept for seven years from the date of decommissioning. All validation reports for the modification of a tank and records of any loss detection investigation must be kept for seven years from the date the document was created. If the person responsible for the UPSS changes, then all documents including the environmental protection plan must be transferred to the new person responsible for the UPSS.

The DECC will be the appropriate regulatory authority (ARA) for matters arising from the UPSS Regulation until 31 May 2012. After that date, local councils become the ARA.

New UPSS

Old UPSS

Conclusion

To assist those responsible for a UPSS, the NSW's DECC has prepared 'Guidelines for Implementing the UPSS Regulation'. The guidelines are available in draft form on the DECC website at www.environment.nsw.gov.au/clm/upss.htm

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