19 Dec 2013

Will WA consultants face duty to report contamination?

by Claire Smith, Brad Wylynko, Mark Etherington

If the new duty to report is implemented vendors and purchasers will need to carefully consider the scope of any due diligence investigation carried out on a site and the environmental consultant's duty to report.

Environmental consultants engaged to investigate or remediate sites in Western Australia will have a new duty to report known or suspected contamination if the Department of Environment Regulation (DER) implements the recommendations of its review of the Contaminated Sites Act 2003.

Background

DER has released a discussion paper as part of the final consultation process for the statutory five-year review of the Act and its underlying regulations. The discussion paper seeks specific feedback on four issues:

  • the duty to report;
  • the site classification scheme;
  • mandatory disclosure arrangements; and
  • the role and procedures of the Contaminated Sites Committee.

Proposed changes

Currently the Act imposes a duty on the following persons to report known or suspected contaminated sites to the chief executive officer of DER:

  • an owner or occupier of the site;
  • a person who knows, or suspects, that he or she has caused, or contributed to, the contamination; and
  • an auditor engaged to provide a report that is required for the purposes of the Act in respect of the site.

The DER is intending to extend this duty to environmental consultants engaged for investigation or remediation purposes. DER suggest that the onus should be on the environmental consultants' "Project Manager" to report any known or suspected contamination and that the reporting obligation would not apply to other professionals such as the field technician sampling wells, a laboratory technician or someone conducting a survey at the site.

The discussion paper also proposes a new 10-week time limit (from the call for submissions on a site) for providing information to the Contaminated Sites Committee (CSC) which determines responsibility for remediation. The rationale for this is to reduce delays regarding disputes over who pays for remediation arising out of the time taken to provide the CSC and other interested parties with documents. In addition, the DER is proposing to extend the offence of providing "false or misleading information" to include making a written submission to the CSC in connection with a decision on responsibility for remediation and require the CSC to publish its reasons for each decision on responsibility for remediation.

Other proposed changes include clarifying the definition of "owner" and "completion of a transaction" in relation to the mandatory contamination disclosure requirement prior to a sale, lease or registration of a mortgage of particular classifications of contaminated land or land subject to a regulatory notice.

The DER has rejected a proposal to introduce a new preliminary site classification of "contaminated – investigation required" in favour of providing clearer guidance on what the existing classification of "possibly contaminated – investigation required" means.

The DER is also seeking comments on whether or not the State Administrative Tribunal should be given the jurisdiction to review the CSC's primary decisions (eg. on responsibility for remediation) and should replace the CSC's existing merits review function to hear appeals against site classifications or notices issued by the DER.

Implications

A key concern raised during the original consultation about the extended duty to report was the potential for environmental consultants to breach existing confidentiality agreements and terms of engagement. The discussion paper states that the new duty to report would not be applied retrospectively and that any new contract would need to account for the new duty to report.

If the new duty to report is implemented vendors and purchasers will need to carefully consider the scope of any due diligence investigation carried out on a site and be mindful of the environmental consultant's mandatory duty to report to the DER. Environmental consultants already have an existing, albeit more limited, duty to report contamination in South Australia under the Environment Protection Act 1993. Query whether other States and Territories will consider imposing a similar duty.

If the 10-week time limit and extension of the offence of false and misleading information is imposed, parties involved in a CSC determination regarding responsibility for remediation will need to act promptly on receiving a call for submissions in order to avoid potentially missing the deadline or providing false or misleading information.

What's next?

Comments on the discussion paper must be received by the DER no later than 9am on 24 February 2014.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.