Property developers and construction contractors are facing growing exposure to environmental pollution risks. These risks can arise at any stage of construction, including excavation and demolition. Pollution incidents may involve discovery of previously unknown legacy contamination, disturbance or release of hazardous materials on-site and failures in waste management. Such incidents can be detrimental resulting in:
- public and media scrutiny,
- financial losses,
- legal penalties from environmental regulators,
- remediation orders, and even
- third-party litigation.
In July 2025, a pollution contamination incident linked to four construction contractors on the North East Link Project generated significant media publicity when part of Banyule Creek turned bright blue. The contamination was traced to a dust‑suppressant polymer used on site which entered a nearby drain and flowed into the creek, causing vivid discolouration. Following an investigation by the Environment Protection Authority (EPA) in Victoria, remediation orders were issued alongside a $10,000 fine for each company.
On 18th September 2025, the NSW Parliament passed the Environmental Legislation Amendment Bill 2025 (the Bill) with the initial provisions of the Bill now in operation. These reforms will ultimately strengthen the existing Protection of the Environment Operations Act 1997 (POEO Act) by targeting a wide range of business operations including those involved in land use, property development, waste and remediation.
The key changes under the Bill will impose stricter compliance for pollution incident reporting, including increased enforcement and penalties for waste and chemical offences as well as the following:
- Increased monetary trigger for notifiable incidents: The monetary threshold to notify pollution incidents causing ‘material harm’ to the environment will rise from $10,000 to $50,000. A ‘pollution incident’ includes a leak, spill or escape of a substance, or circumstances in which this is likely to occur. Material harm includes on-site harm, as well as harm to the environment beyond the premises where the pollution incident occurred.
- Penalties for non-compliance of chemical use notices issued under POEO Act: A new offence has been introduced that prohibits activities involving chemicals listed on the NSW Industrial Chemicals Environmental Management Standard (IChEMS) Register (this includes PFAS chemicals) unless the business holds a valid Environment Protection Licence (EPL). Companies face penalties of up to $2M plus an additional $120,000 for each day the offence continues. Company directors may also be held personally liable if they knowingly permit or fail to prevent the offence. Claims may also be brought against the company entity for Environmental, Social and Governance (ESG) breaches, see our articles:
- Tougher penalties for repeat waste offences: Companies that commit a second waste offence within five years of a prior conviction will face the maximum monetary penalty under the POEO Act being $2M, up to two years’ imprisonment, or both. The Bill also broadens the definition of repeat waste offences to include new categories, such as failure to hold an Environment Protection Licence (EPL).
- On-site asbestos waste remediation: To allow the reuse or recycling of asbestos waste during on-site remediation, lifting the current blanket ban. The change means the prohibition will only apply to asbestos waste brought in from off-site, allowing limited on-site reusage if the activity is part of approved remediation work under new regulations.
- Establishment of a publicly accessible register: to empower the NSW EPA to create a publicly accessible register of Environmental Management Plans (EMPs) to serve as a central platform for documenting how contamination is managed, mitigated, and monitored at specific sites. This approach will enhance regulatory transparency and improve compliance with post-remediation obligations.
- Registration of prohibition notices on property or land title: The Bill grants the EPA power to register clean-up and prevention notices on the title of a property. This measure is designed to improve transparency and ensure that future owners are made aware of any environmental notices previously issued to the former owner or occupier.
Risk management approach for businesses
With these new environmental legislation reforms coming into effect, businesses involved in construction activities including the manufacturing, use, or handling of chemicals and hazardous waste, should proactively implement robust risk management measures as part of their operational practices.
The following action points are recommended:
- Conduct regular reviews of the IChEMS Register to identify any listed chemicals used by the business, and ensure your EPL adequately covers all relevant chemical activities.
- Update internal procedures and ensure regular staff training to align with the latest environmental legal requirements, including obligations for incident reporting.
- Regularly review pollution incident response management plans and on-site procedures to maintain accuracy and ensure compliance with updated environmental regulations.
- Undertake due diligence before commencing any works on-site by engaging qualified experts such as environmental consultants and engineers to:
- Conduct geotechnical investigations and assess soil, groundwater, and historical land use.
- Detect hazardous materials or legacy pollutants that may trigger legal obligations or cleanup costs.
These early insights will allow businesses to plan appropriate mitigation strategies, comply with environmental regulations, avoid potential EPA penalties, fines and project delays.
Insurance risk transfer considerations
Businesses should assess their current insurance coverage and consider appropriate risk transfer solutions to protect against potential legal liability claims and remediation costs arising from pollution incidents, regulatory breaches, or environmental damage. Purchasing an Environmental Pollution Liability Insurance policy is essential for managing such exposures, safeguarding against financial loss, and ensuring business continuity.
Where contractual agreements are in place, negotiate provisions that clearly allocate environmental risk and require counterparties to carry appropriate insurance including tailored extensions where required (e.g., full pollution legal liability, remediation cost coverage) in the event of gaps in their existing cover.
Contact a Bellrock Advisor for more advice.
