The handshake agreement

Waste Management Review speaks with Gavin Shapiro, Hones Lawyers Partner, about changing regulation in the C&D sphere.

After a spate of regulatory changes, the NSW EPA published two guidance documents to help the construction and demolition industry strengthen procurement and contract processes around waste disposal.

While not legally binding, the documents serve as a compliance guide for procurement officers and construction principals, with the aim of ensuring appropriate construction and demolition (C&D) waste disposal.

General guidance points include understanding waste streams, questioning quotes that appear too low, checking council development consent and environment protection laws and having clear roles and responsibilities for operators managing waste.

Gavin Shapiro, Hones Lawyers Partner and environmental law specialist, says while the guidelines don’t hold regulatory weight, they do offer useful instruction.

“There’s sound advice in the documents, and while I don’t agree 100 per cent with everything, I think it’s a good effort from the EPA to jolt industry in a positive direction,” he says.

“That said, from my experience, the only thing that pushes parties towards compliance is legal penalties and consequences. Legislation is the big stick the EPA has to wave around to incentivise compliance.”

Gavin notes that the guidelines, Construction and Demolition Waste: A Management Toolkit and Owner’s Guide to Lawful Disposal of Construction and Demolition Waste, follow earlier revisions to C&D waste standards in NSW.

Coming into effect 15 May 2019, the EPA’s Standards for Managing Construction Waste were designed to ensure waste facilities handling C&D implement appropriate processes and procedures to minimise human health and environment risks posed by asbestos.

Under the revised standards, waste facilities dealing with C&D are required to implement a two-stage inspection process to ensure unpermitted waste does not enter the facility.

In an additional layer of legal complexity, the May 2019 standards followed another set of revisions from November 2018.

As the more substantive of the two, the 2018 amendments include restrictions on exhuming waste at current or former landfills and increased penalty notice amounts for asbestos waste offenders.

As reported in Waste Management Review, the standards were devised after multiple investigations and industry feedback, and data analysis revealed a range of ongoing issues in the C&D waste sector.

In a 2016 consultation paper, the NSW EPA noted “poor processes” pose a risk to the community and resource recovery rates.

Issues highlighted include poor inspection and screening processes that failed to remove contaminants from mixed C&D, negligent handling and unprocessed waste sent for non-compliant disposal.

The quick succession of regulatory reforms, paired with the “need” to release detailed guidance documents, highlights an issue of scale for one of Australia’s fasted growing resource recovery sectors.

STRONG RECOMMENDATIONS

Tip three of the EPA’s owner’s guide “strongly recommends waste owners enter into a written contract with the contactor that established waste transport and disposal requirements”.

Tip three goes on to suggest that owners ensure any subcontractual arrangements are in accordance with the contact. While it may seem straightforward, according to Gavin, dodgy waste contracts are a significant issue in the construction sphere.

“There’s two problems. First, construction site principals often sign one contract with the head contractor. The head contractor then subcontacts to a demolition contractor, and the demolition contractor sub-subcontracts to a waste transporter,” Gavin explains.

“It’s very uncommon for the principal to contract with a waste transporter, and realistically, I don’t anticipate that the EPA’s new guidelines will change that – it’s just not how these projects work.”

The second and potentially more challenging problem, Gavin says, is demolition contactors and waste transporters often don’t sign written contracts.   

“It’s often a handshake agreement, which is something I’ve always advised clients against,” he says.

“Pushing parties to sign written contracts and subsequently seeing clear, stringent requirements enforced would be a big positive.”

Despite efforts to encourage to written contracts, Gavin says the “handshake agreement” is an ingrained part of construction culture.

“It’s just the thing that’s always been done – there’s a feeling that if an operator needs a written contract, they don’t trust the other party,” he says.

“But with so many incidents of waste offences and high potential liability, it’s a part of the culture that needs to change.”

Under the NSW Protection of the Environment Operations Act (POEO), waste generation from C&D sites, including soil and demolition waste, must be disposed of or reused lawfully.

As such, waste owners and waste transporters may both be guilty of an offence when waste is transported to a place that cannot lawfully function as a waste facility. This is the most common form of noncompliance and subsequent prosecution in the waste industry, Gavin says.

The POEO provides a defence for waste owners if the owner can establish the offence was due to causes out of their control and that they exercised due diligence.

Gavin notes however that no-one has successfully argued that defence in NSW for 30 years. He jokes that to successfully mount that defence, an owner would have to prove someone broke into their property, took materials offsite and transported them.

“In all seriousness, a waste owner would have to demonstrate such a high level of due diligence and best practice, plus prove they had no ability to control the waste management process,” he says.

“Fulfilling both those criteria is exceedingly difficult.”

While he believes much of the guideline advice is sound, Gavin cautions against the idea that principals should develop direct contractual relationships with waste transporters. He adds that given the scale of many of the projects in question, direct contracts can introduce untenable legal liability.

Another issue, Gavin says, is that recent C&D reforms have significantly increased risk for facility operators.

“It’s a tug of war between a genuine desire to see environmental protection through heavy regulation and growing resource recovery rates,” he says.

“Finding a middle ground between the two is the million-dollar question.”

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