This blog post provides a summary of the five main planning scenarios under which a developer or planning agency might encounter the issue of potentially contaminated land (refer to our blog post titled ‘What is Potentially Contaminated Land’ dated 15 November 2022 for the definition of what this is and how it is identified in the planning system).

Within the planning system, change of use and redevelopment of land are the primary triggers to consider the potential for contamination and mitigate any risks posed to human health, the environment or amenity.

There are various provisions within the planning system (essentially comprising the Planning and Environment Act 1987 (P&A Act) and the Victorian Planning Provisions (VPP) that require a responsible authority, i.e. Council, to take into account any significant effects (inc. contaminated land) which it considers the planning proposal might have on the environment or vise versa.

1. Planning Scheme Amendment

Under Section 12 of the P&A Act, potentially contaminated land has to be considered in the preparation of Planning Scheme Amendments (PSA) – whether led by a responsible authority or other applicant / proponent.

For PSAs that propose to allow, whether or not by permit, a sensitive use, i.e. residential, children’s playground or secondary school on land that is potentially contaminated, Ministerial Direction No.1 (MD 1), requires a planning authority to satisfy itself that the land is suitable for the intended use (via the environmental audit system (see point 5 below)) prior to development.

2. Planning Permit

A planning permit is required to redevelop or subdivide land and any application will be assessed by a responsible authority, i.e. Council, under the relevant provisions of the planning scheme, i.e. Section 60 of the P&A Act or Clause 56 of the VPP for residential subdivision.

The application assessment could include inserting a specific condition(s) requiring investigation into the potential for contaminated land on site (prior to development) into the permit in order for the responsible authority to satisfy itself that the land is suitable for the intended use. Typically, this would be restricted to a preliminary or detailed environmental assessment (ESA) but could also trigger the environmental audit process dependent on circumstances.

If divesting a site (once a planning permit has been granted for example), vendors are legally required (under the Duty to Manage as per the Environment Protection Act 2017 (the EP Act) obligations) to disclose any potentially contaminated land site condition information to prospective purchasers.

3. Property Due Diligence

Before purchasing land, it is recommended that a purchaser should undertake their own investigations to consider whether past activities, including the use of adjacent land, may have caused contamination at the site and whether this may prevent them from doing certain things to or on the land in the future.

If the property due diligence process does indicate contaminated land issues, this should allow the purchaser the ability to renegotiate the purchase price of the property or terminate the contract if the outcome of the enquiries are not satisfactory.

4. Property Leasing

It is important to understand a property’s contamination status prior to the commencement of a lease agreement (as a lessee or lessor) so that an appropriate risk allocation may be achieved and the associated liabilities are clearly established.

Lessee

Entering into a lease agreement without having undertaken some level of environmental due diligence may expose the lessee to a future clean-up liability and/or reputational risk.

Lessor

Understanding the contamination status of the land will enable a lessor to:

• Undertake full disclosure of known contamination to the lessee.
• Avoid leasing land for uses or activities that are incompatible with the contamination status of the property or which may present an unacceptable risk to the lessor.
• Establish the baseline condition in which the site needs to be returned to the lessor on the expiry of any lease and agree on any associated make good clauses in the lease agreement.

Investigations to inform lease arrangements may range from a visual inspection to sampling and analysis of soil and groundwater samples.

5. Environental Audit System

Planning proposals involving a sensitive use on potentially contaminated land, require a responsible authority to satisfy itself that the land is suitable for that use via the environmental audit system.

The audit system requirement can be triggered by multiple planning provisions including MD 1, the Environmental Audit Overlay (EAO) or Clause 13.04-1S of the VPP.

The environmmental audit system is legislated by the EP Act and provides for the appointment of independent technical experts, known as ‘environmental auditors’, by the EPA, who are then engaged by the planning proposal applicant (usually the site owner or sometimes by a purchaser) to undertake either a Preliminary risk screen assessment (PRSA) or a detailed Environmental audit.

For uses other than sensitive, i.e. retail or office, industry or warehouse, open space, agriculture, an alternative assessment /  management measure  is generally recommended to inform the need for further action; except for sites with a high potential for contamination, which may trigger an environmental audit.

Environmental Duties

The new Environment Protection Act 2017 (EP Act) and Environment Protection Regulations also establish a range of duties, powers and functions that may affect developers that manage or are in control of land that is potentially contaminated.

Under the EP Act, as a statutory referral authority, the EPA provides guidance to responsible authorities regarding the general environmental duty (GED), so that planning applicants may undertake action to minimise risk and steps to satisfy their statutory obligations.

As well as the GED which applies to all Victorians, developers have other duties (including the duty to respond to harm, duty to notify of incidents and duties relating to waste) under the EP Act not to pollute land, water and air during construction activities and not to cause or permit an environmental hazard. This means appropriate handling of industrial waste and preventing run-off, or any other uncontrolled movement of contaminated soil or water, from a construction site.

If you want more information on the subject of potentially contaminated land and how it might relate to your site, download our free guide ‘What Every Property Developer Needs to Know About Potentially Contaminated Land: the complete handbook’.

In here you’ll learn more about:

• What potentially contaminated land is and the associated risks to your business;
• What steps you need to take to mitigate potential risk and the entities you need to work with; and
• What the implications are from a cost and management perspective.