Our insights - Henry Davis York

The EPA's site audit statement revolution - are you ready?

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The NSW Environment Protection Authority (EPA) is planning to increase the number, and change the types, of Site Audit Statements (SASs) that can be issued under the Contaminated Land Management Act 1997.

The EPA's proposed changes will have widespread implications, including for past, current and future transactions and developments involving contaminated land.
 
The proposed changes are relevant to landlords, tenants, developers, consent authorities and lenders who deal with contaminated land.

What is likely to change?

Currently, there are two types of SASs, namely:

  1. Section A SAS: used to certify that a site is suitable for a particular use. Currently, statements can be issued with or without conditions; and
  2. Section B SAS: commonly used by Site Auditors to certify that a site can be made suitable for a particular use, subject to compliance with a remediation action plan, or other form of management plan.

These two types of SASs are known and well understood by those who regularly deal with contaminated land. However, they are poised to change.
 
The EPA is discussing with key stakeholder groups, including Site Auditors, the introduction of a new approved form for SASs which will contain three sections, which are summarised below.

Site Audit Statement

When can this be used

Section A

Section A is only to be used when a site is suitable for a specified use, without the need for compliance with any conditions. As a practical matter, this will severely restrict a Site Auditor's ability to issue a Section A SAS, particularly for complex sites.

 

Section B

In addition to certifying that a site can be made suitable for a specified land use, Section B will now allow a Site Auditor to provide a broad range of certifications, including in relation to:

 

  • the nature and extent of contamination;
  • the appropriateness of investigation/remedial action/management plans;
  • whether or not there has been compliance with a voluntary management proposal or management order; and
  • the appropriateness of a site testing plan to determine if groundwater is suitable for its intended use.

Section C

Section C is to be used when a site is suitable for a specified land use, subject to compliance with an Environmental Management Plan (EMP).

 

There does not appear to be any scope for conditions to be imposed other than by way of an EMP.
 
This means that EMPs will need to be developed, when previously simple conditions could have been used.  

 

What does this mean for you?

The EPA's proposed changes will transform the current system of Site Audits, as well as the meaning of previously well understood, and frequently used, terms.
 
This means that:

  • Vendors and purchasers need to review and, in some circumstances, amend any agreements for the sale of contaminated land which contain a requirement that a Section A SAS be obtained prior to settlement.
  • Landlords and tenants should consider if the change in terminology has the potential to  increase the scope of any remediation works required at the end of their lease.
  • Consent authorities need to re-think their policies and standard conditions of consent for the development and remediation of contaminated land and set out the circumstances in which the new Section C SAS will, and will not be, acceptable.
  • Developers need to carefully review existing and future consent conditions requiring a Section A SAS in light of the proposed change in terminology. For many sites it will be extremely costly and time consuming, and in some cases just not possible, to obtain the "new" Section A SAS.
  • Lenders frequently require a Section A SAS as a pre-condition to financing. However, under the new system this standard may be too high. Lenders will need to develop policies for when the new Section C SAS will, and will not be, acceptable.

Elizabeth Wild

Partner

61 402 890 655

61 2 9947 6610

elizabeth.wild@hdy.com.au

Sarah Mansfield

Senior Associate

61 416 181 173

61 2 9947 6607

sarah.mansfield@hdy.com.au