Requirements and responsibilities under the EPA Act's new contaminated land regime

In brief

In part three of our series on the Victorian environmental reforms, we explore the new contaminated land regime introduced into the Environment Protection Act 2017 (Vic) by the recently passed Environment Protection Amendment Act 2018 (Vic). The duties to notify the EPA of and manage contamination, the statutory power to serve a remedial notice on the landowner, and the new audit framework represent major departures from the current environmental protection regime. Partner Jillian Button, Associate Isabella Kelly and Paralegal Simon Chiarelli provide an overview of these key changes and the practical implications for those who own or occupy contaminated land in Victoria. 

Overview

The Environment Protection Amendment Act 2018 (Vic) (EPA Act) makes a number of significant changes to the existing land contamination regime, including the introduction of new positive duties to report contamination to the Victorian Environment Protection Authority (EPA) and manage site contamination. The reforms also introduce a new contaminated land audit framework, and expand the categories of people who can be served with clean-up notices (renamed 'environmental action notices') to include the current owner of land or the owner at the time the contamination arose. These reforms may change the way contaminated sites in Victoria are treated within a company's portfolio, including in relation to the nature of contractual clauses assigning liability for costs associated with contamination, and the development and implementation of site contamination protocols.

The duty to notify the EPA of contamination

When a person in 'management or control' of land becomes aware or 'reasonably should have become aware' of a 'notifiable contamination', the new section 40 of the Environment Protection Act 2017 (Vic) (EP Act) will require the person to notify the EPA of the contamination 'as soon as practicable'.

The concept of 'notifiable contamination' will be further developed in regulations. If the regulations do not detail what constitutes 'notifiable contamination' for the particular contaminant, 'notifiable contamination' will be contamination that is likely to cost more than $50,000 to remediate.¹

In determining whether a person reasonably should have been aware of contamination, regard will be given to the person's skills, knowledge and experience, whether the person could practicably seek advice regarding contamination, and any other circumstances of the contamination.²

A corporation's failure to notify contaminated land to the EPA will attract a penalty of $96,714 under current penalty units.

The duty to manage contaminated land

The duty to manage contaminated land is included in the new section 39 of the EP Act, which provides that that 'a person in management or control of contaminated land must minimise risks of harm to human health and the environment from the contaminated land so far as reasonably practicable'.

The EP Act provides guidance on how a person can comply with the duty to manage contaminated land. In this regard, the new section 39 provides that minimising risks of harm to human health and the environment from contaminated land includes (but is not limited to) carrying out any of the following:

1. identification of any contamination that the person knows or ought reasonably to know of;
2. investigation and assessment of the contamination;
3. provision and maintenance of reasonably practicable measures to minimise risks of harm to human health and the environment from the contamination, including undertaking clean-up activities where reasonably practicable;
4. providing adequate information to any person who might be affected by the contamination; and
5. providing adequate information to any person who is reasonably expected to become a person in management or control of the contaminated land.

Minimising risks of harm so far as reasonably practicable

The extent and nature of a person's actions to manage contaminated land will be largely controlled by the practicability of those actions. When determining whether a person has carried out what is reasonably practicable in response to particular risks posed by contaminated land, the EPA will have regard to the following considerations:

1. the likelihood of those risks eventuating;
2. the degree of harm that would result if those risks eventuated;
3. what the person concerned knows, or ought reasonably to know, about the harm or risks of harm and any ways of eliminating or reducing those risks;
4. the availability and suitability of ways to eliminate or reduce those risks;
5. the cost of eliminating or reducing those risks.³

In this way, it is anticipated that the duty to manage contaminated land will be dynamic in nature, rising and falling in response to the facts and circumstances of any particular case. Occupiers of higher risk sites (for example, sites that are subject to highly hazardous contamination, have clear exposure pathways, are a host to sensitive uses, and/or which are in proximity to sensitive receiving environments), will bear a greater burden than occupiers of lower risk sites.

There is no penalty for failure to appropriately manage/control contamination, but a failure to comply with the duty can have knock-on effects down the line, including empowering the EPA to suspend or revoke an EPA licence (or an 'operating licence' under the new regime), refuse to consent to the surrender of a licence, or to issue a remedial notice in respect of the contamination.

Who is responsible?

As noted above, the duties to notify the EPA of contamination and to manage contamination attach to the person in 'management or control' of the land. This will generally be the occupier of the land. However, the new reforms specifically empower the EPA to issue a clean-up notice (renamed 'environmental action notice') in respect of such contamination to the current owner of the land, or the owner of the land at the time the contamination arose.⁴ This is a significant departure from the current regime, under which the EPA is able to issue a notice to a polluter or occupier of land only. This change seeks to assist the EPA by providing a broader pool of parties on which to impose clean-up responsibilities, and reduces the risk of 'orphan sites'.

Once the reforms commence in 2020, landowners (particularly those who are perceived to be well-resourced and capable of managing land contamination) can expect increased attention from the EPA in relation to leased sites, particularly where tenants are uncooperative or unable to meet clean-up costs themselves.

We note that the EPA Act retains existing mechanisms for persons in occupation of a site who are served with remedial notices to apply to for a court order to recover those costs from the original polluter (that is, any person/s who caused or contributed to contamination of the land).⁵  However, the EPA Act does not provide for a similar cost-recovery mechanism for landowners of leased sites to recover costs from the polluter, unless the owner is also in 'management or control' of the site. Landowners should ensure that leased sites are subject to appropriate risk allocation in relation to contamination.

The audit framework

Currently, remedial notices issued in respect of contaminated land will often include a requirement that an environmental audit be conducted. This is likely to continue under the new remedial notices regime, however, noting that the EPA Act will abolish the 'section 53V' and 'section 53X' audit system for contaminated land. Instead, it introduces a flexible two-stage process, comprised of: 

1. 'Preliminary Risk Screen Assessments' (PRSA): under the new system, businesses can engage auditors to conduct a statutory PRSA, which uses a desktop study and site inspection to determine the need for and likely scope of a full environmental audit.
2. Scaled audits: these are full environmental audits to assess and manage the risk of harm to human health and the environment, and inform land use planning decisions. While there is no requirement that a PRSA be conducted prior to the scaled audit, the PRSA would likely assist environmental auditors to focus the scaled audits on more material risks.

We consider the more nuanced auditing framework to be a positive step, particularly as it should enable resources to be brought to bear in relation to more material issues, although the greater degree of flexibility could increase the scope for disputes between the EPA and landowners/occupiers as to the scope of the auditing process. The removal of the section 53X audit process and the well-recognised commodity of a Statement of Environmental Audit will also be an adjustment for those involved in the redevelopment of contaminated sites.

Conclusion and next steps

The below table summarises the new duties to report and manage contaminated land, and further details the new audit and remedial notices regime.

The contaminated land reforms introduced by the EPA Act will transform the way in which contaminated land is managed in Victoria. Owners of leased sites should prepare for increased EPA attention, and should review the current lease arrangements for potentially contaminated sites to ensure that the appropriate risk allocation provisions are in place. Occupiers of leased sites should develop site-contamination protocols to ensure that obligations under the duty to notify, and the duty to manage, contaminated land can be met.
We will continue to bring you more information about the reforms as draft regulations and EPA guidance material is released. If you require advice on the potential impact of the new contaminated land regime or the EPA Act on your business more broadly, please contact Jillian Button.