Significant changes to the Contaminated Land Management Act 1997 (NSW) come into effect today. 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. From 1 July 2009, the remainder of the provisions take effect, 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
An owner or polluter must now report a contaminated site to the EPA under section 60 of the Act if that person 'ought reasonably to have been aware' of the contamination. This test 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.
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. Draft Guidelines on the Duty to Report Contamination were published in April 2009 but are currently being revised and are expected to be published shortly. 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 (formerly a voluntary remediation agreement).
HOW CAN DLA PHILLIPS FOX ASSIST YOU?
We can help your business by:
- Drafting lease and sale contracts to properly apportion responsibility for cleaning up contamination.
- Providing advice on whether or not you have a duty to notify the EPA about site contamination.
- Preparing voluntary management proposals and liaising with the EPA to negotiate the terms of voluntary management agreements.
- Assisting with the remediation process for the redevelopment of brownfield sites and obtaining the necessary development approvals.
- Defending action brought by local councils and the EPA for pollution incidents and the clean up of contamination.
Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.
This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.