Our insights - Henry Davis York

Key changes under the new draft Site Auditor Guidelines

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17 November 2016

Last month the NSW Environment Protection Authority (EPA) released a draft version of the new Site Auditor Guidelines (the Draft Guidelines). The Draft Guidelines introduce new roles for EPA Accredited Site Auditors (Auditors), clarify the effects of different types of Site Audit Statements and provide some additional guidance in connection with Environmental Management Plans. Below we discuss some of the key changes.
 
New whistle-blower obligations for Auditors    
The Draft Guidelines impose disclosure obligations on Auditors. Importantly, if an Auditor becomes aware of any of the circumstances outlined in the table below, he or she must simultaneously notify in writing both the person who commissioned the audit (the Client), and the EPA. 

An Auditor must notify the Client and the EPA if the Auditor:
(a) concludes that a site should be notified to the EPA under Section 60 of the CLMA (ie because it is "significantly" contaminated);
(b) becomes aware of the potential for off-site migration of contamination;
(c) concludes there are risks associated with the vapour pathways; or
(d) concludes there are hazardous ground gases present under the audit site.


Waste

An Auditor must also simultaneously notify the client and the EPA if they become aware that waste is not being managed properly on the audit site.

Discussions with the EPA

If an Auditor is undertaking an audit of a site that has either been notified to, or is being regulated by, the EPA, the Auditor must contact the EPA to discuss the site before completing their audit.

What does this mean for you?

These changes signal a shift in the Auditor's role, and give Auditors a 'policing' obligation. Clients and their consultants will need to engage early and often with their Auditors to ensure there are no surprises and that the parties' expectations are aligned.

Site Audit Statements

The Draft Guidelines outline the following three forms of certification which an Auditor can provide.

If an Auditor certifies that ... then the Auditor declares that ...
a site is suitable for a specific use(s) subject to no conditions no further remediation or investigation or management of the site is needed to render the site fit for a particular use(s).
a site is suitable for a specific use(s) subject to an Environmental Management Plan there is sufficient information satisfying guidelines made or approved under the Contaminated Land Management Act 1997 (CLM Act) to determine that implementation of the environmental management plan is feasible and will enable the particular use(s) of the site without further investigation.
a site can be made suitable for a use(s) if remediated or managed in accordance with a specified plan there is sufficient information satisfying guidelines made or approved under the CLM Act to determine that implementation of the plan is feasible and will enable the particular use(s) of the site in the future.


What does this mean for you?

This new tripartite system signals a clear shift away from the current Section A and Section B Site Audit Statements. This will have implications for site audits currently underway, particularly where there is a contract for sale in place.

If your contract stipulates that a Section A or Section B Site Audit Statement must be obtained as a trigger to settlement, you may wish to consider approaching the stakeholders to discuss the impacts of these Draft Guidelines when they are implemented.

If you are negotiating a contract, the Site Audit Statement should be described in terms of outcome or result, and not by reference to whether it is a Section A or B Site Audit Statement, to remove any ambiguity.

Active and Passive Environmental Management Plans (EMPs)

The Draft Guidelines differentiate between passive and active systems to manage contamination under an EMP. Passive management systems require minimal management and maintenance (if any).

Active management systems may incorporate mechanical components or require ongoing operation, monitoring, maintenance and inspection. Active remediation systems are only to be considered where effective long-term management of the site is a feasible option.

Auditors are now required to include a statement in the Site Audit Statement noting whether any relevant EMP includes active or passive management systems.

What does this mean for you?

This change provides additional clarity about the nature and purpose of EMPs. It will also draw an incoming purchaser or occupier's attention to the type of ongoing management required on the site, especially if it is listed on the Section 149 certificate. This may have implications for property values, especially where there is an active EMP which may be regarded as a 'blight' on title given it is likely to include positive obligations.

We are grateful for the assistance provided by Sarah Hedberg, Law Graduate - Environment and Planning, in preparing this Insight.

Elizabeth Wild

Partner

61 402 890 655

61 2 9947 6610

elizabeth.wild@hdy.com.au

Anneliese Korber

Special Counsel

61 2 9947 6546

anneliese.korber@hdy.com.au