NEW environmental legislation in Victoria has significantly shifted the regime of risk associated with soil containing asbestos, PFAS and other chemicals on major property and infrastructure projects, which could see developers and contractors fined and slapped with multi-million-dollar clean-up bills.
Amendments to the Environment Protection Act (2017) that came into effect on 1 July 2021 have replaced the old system that governed liability for polluted soil and given the Victorian Environmental Protection Agency (EPA) new powers to enforce compliance across the sector.
As a result, landholders, property developers, contractors, sub-contractors and third parties can be held to significantly higher levels of accountability for actions that are harmful to the environment or community. On top of that, their liability now extends for decades beyond their direct involvement with the project in question.
Rather than the end-user being saddled with rectification costs, the new regime transfers the lion’s share of liability to parties involved in the delivery of new residential communities, apartments and townhouse developments, commercial and industrial sites, as well as major road, rail and other government-tendered infrastructure projects.
Further, this liability extends well beyond the design, construction and commissioning of these assets, with the new legislation granting the EPA powers to impose multi-million-dollar fines on individuals and organisations responsible for environmentally destructive practices, such as soil contamination.
The environmental watchdog still carries the historical legacy of multi-million-dollar clean-up bills from decades of chemical contamination of soil across Greater Melbourne. However, the agency’s ultimate focus remains the proactive protection of the environment and human health.
These regulatory changes make it essential that all parties active in land-based development undertake appropriate due diligence to identify risk as related to the presence of contaminated soil.
Understanding the extent of the contamination, if any, is the first step toward the implementation of appropriate, proactive soil remediation systems on site prior to the commencement of works.
For many of these operators, acting early could be the difference between a healthy business balance sheet and extensive post-construction remediation costs, including relocation and cartage of contaminated soil, legal fees, reputational damage and a seven-figure fine. For many operators, these unforeseen additional costs could prove fatal.
Importantly, the reforms are expected to create better economic, environmental and community outcomes for Melbourne and Victoria as the city and state continue to grow. However, a lack of general understanding and public resources around the complex issue of soil contamination means calling in the professionals to advise and assist is ideal.
The rules offer greater clarity around the apportionment of responsibility for environmentally harmful actions during the delivery of major projects and, while they are still in their infancy and yet to be tested in the courts, should give developers and contractors the push they need to engage qualified environmental consultants early in the life of the project.
Given the changes, developers and contractors with active projects on land of which they are unsure of contamination levels should seek expert advice. Ideally, engagement should occur at the commencement of scoping and design works. If possible, developers should engage expert advice prior to the appointment of the project delivery team and contractors should ensure engagement has taken place prior to the release of tenders for government-funded infrastructure projects.
However, even on projects that are well into the design phase, or have commenced construction, it’s never too late to act.
Early involvement of soil contamination experts will identify any additional costs associated with remediation works and, for the majority of projects, this cost can be built into the overall cost of the project during the tendering process, meaning no surprises and no court battles, legal fees or project delays. Greater clarity and a well-defined framework for shared risk also lays the footings for a more collaborative approach to infrastructure delivery between governments and infrastructure providers, helping maximise value for clients, contractors and communities.
Getting on the front foot and getting help setting out a clear plan is the best way to tackle uncertainty and risk. In most cases, only simple and relatively inexpensive works are required to solve the problem. It’s important to remember that any additional layer of cost identified during soil testing isn’t necessarily due today or tomorrow: the earlier businesses understand the situation, the more scope they have to allocate budget and amortise costs over the short, medium and long-term.