A recent decision by the New South Wales Land and Environment Court (“the Court”) in the case of Kempsey Shire Council v Slade is a timely and important reminder of the legal risks associated with land contamination for businesses and company directors.

Petroleum businesses in NSW, and every State and Territory, have strict obligations related to the prevention, management and reporting of contamination. Environment protection agencies across Australia have broad powers and can impose substantial penalties on petroleum businesses for land contamination. In some circumstances, those penalties can be extended to company directors.

In the Kempsey Shire Council v Slade case, the Court found the company directors personally liable for the land contamination and required them to pay the clean-up costs. This case shows how critical it is for petroleum business operators and company directors to be aware of their obligations and compliance requirements.

In this article, Moulis Legal’s Alexandra Geelan, who specialises in petroleum and contaminated land in Australia, has outlined the regulation of contaminated land in NSW and the obligations on petroleum businesses.

Regulation of contaminated land in New South Wales

Contaminated land in New South Wales is managed by the Environment Protection Authority (‘EPA’) exercising its powers under the Contaminated Land Management Act 1997 (NSW).

The EPA maintains two contaminated land lists. Sites listed on the ‘List of NSW contaminated sites notified to the EPA’ indicate that the notifier considers the site contaminated but the EPA has not assessed the site. Sites listed on the ‘Contaminated Land: Record of Notices’ have been issued with a notice under the Contaminated Land Management Act 1997 (NSW).

Liability for land contamination

Throughout Australia, contaminated land liability is based on the polluter pays principle. This means that the business or individual responsible for contamination is responsible for any associated costs including clean-up costs, compensation and any penalties.

Where the polluter cannot be identified or found, or it is not practicable to hold the polluter responsible, liability can be shifted to the owner or notional owner (in that order).

A person will be responsible for land contamination if that person:

1. caused the contamination;
2. performed an act that caused a substance which does not usually cause contamination to become a substance that does;
3. the person is the owner or occupier and knew, or ought reasonably to have known, that contamination would occur and failed to take reasonable steps to prevent the contamination; or
4. carried on activities that create or consume the same substance(s) that caused the contamination or substances that can be converted into substances the same as those that caused the contamination.

Contracting out of contaminated land liability

In New South Wales, a person responsible for contamination will remain responsible regardless of any contract or arrangement.

Reporting and notification obligations

Duty to notify of land contamination

A person whose activities have contaminated land, and owners of land that has been contaminated, have a duty to notify the EPA, in writing and as soon as practicable, that the land has been contaminated. The duty to notify will arise if contamination has or is likely to transfer to neighbouring sites, or meets or exceeds any criteria set out in the Contaminated Land Management Regulation 2013 and any applicable guidelines.

Under the Guidelines on the Duty to Report Contamination under the Contaminated Land Management Act 1997 released in July 2015, whether or not a person is obligated to notify of contamination will depend on a range of factors including:
• the person’s background;
• circumstances of the contamination; and
• whether the person could have reasonably sought advice that would have made them aware of the contamination.

When in doubt, land owners and occupiers should seek advice from land contamination experts and, in some cases, business operators may have a duty to proactively investigate potential land contamination issues.

Reporting to the EPA

The EPA is phasing in new reporting requirements. From 1 July 2017, all reports submitted to the EPA must be prepared, or reviewed and approved by a certified contaminated land consultant.

Investigation of contaminated land

If the EPA reasonably believes that land is contaminated, and that the contamination is significant enough to warrant regulation, the EPA may declare the land to be ‘significantly contaminated land’. Any person may then make submissions to the EPA on whether a management order should be served (see below for further information).

Land that is not ‘significantly’ contaminated

If the EPA determines that a contaminated site does not present a risk to human health or the environment and does not require EPA regulation, the contamination issues should be addressed by the owner or occupier and the local council under the Protection of the Environment (Operations) Act 1997 (NSW).

Preliminary investigation order

The EPA may issue a preliminary investigation order (‘PIO’) on a person for the purpose of determining whether land should be declared regulated land. A PIO directs the person to investigate whether the land is contaminated, and the nature and extent of any such contamination and requires that the person report back to the EPA with the testing results.

Site Audits

A site audit is a review of actual or possibly contaminated land to determine:
• the nature and extent of any contamination;
• the suitable use of the land;
• what management is required; and
• the suitability of a plan of management.

A site audit must be carried out by an accredited site auditor. At the end of the audit, the site auditor will produce a site audit statement outlining the conclusions of the audit and provide a comprehensive report on their findings.

Remediation and management of contaminated land

Voluntary management proposals

A person may submit a voluntary management proposal to the EPA for approval which outlines the actions the person proposes to take to remediate or manage significantly contaminated land. The EPA can either approve the proposal as submitted or impose additional conditions. If the terms of the approved proposal are not carried out, the EPA may then serve a management order on the person.

Management Orders and Ongoing Management Orders

If the EPA is satisfied that land is significantly contaminated, it may direct a person to carry out certain actions to manage the land and/or submit a management plan to the EPA for approval. The EPA can also require the person to provide a financial assurance or guarantee of funding for carrying out the required action. Once served with a management order, the person must not, without reasonable excuse, fail to comply with the order.

The EPA may also serve an ongoing management order on a person requiring them to:
• carry out ongoing monitoring and maintenance of the land;
• provide reports and inform the EPA of any changes in occupancy; and/or
• not use the land for specified purposes.

More than one order or notice may be served on the same person or in respect of the same land.

Please email Alexandra Geelan at alexandra.geelan@moulislegal.com for your free copy of Moulis Legal’s national contaminated land guide for petroleum businesses in each State and Territory. Moulis Legal’s petroleum law team advises Australian and international businesses on downstream petroleum issues, including retail, production, trade and sales, transport and distribution, regulatory compliance, land contamination, and the management and transfer of petroleum assets.

The material contained in this article provides an overview and commentary of the subject matter. It is not provided in the context of a solicitor-client relationship and no duty of care is assumed or accepted by either Moulis Legal or ACAPMA. It does not constitute legal advice