As part of our ongoing series on the new 2023 edition of 3910, we look at a change in the 2023 revision to introduce a ‘Protection of the environment’ clause. This clause sets out obligations that Contractors should be aware of when contacting under the new edition.

Environmental protection clause

While the 2013 version of NZS 3910 did not include a general environmental protection clause, this type of clause has become an increasingly common additional special condition in construction contracts.

Reflecting that, the 2023 includes a new standard clause that imposes on the Contractor a new and specific duty to take all reasonably practicable steps to ensure that no act or omission:

• results in the discharge of any contaminant into the environment, causes any adverse effect on the environment, or exceeds any boundary noise levels;
• is a breach of any resource consent, Resource Management Law, or any regional or district plan;
• results in or is likely to result in the issue of any statutory notice or enforcement proceedings against the Principal, the Contract Administrator, the Contractor, or any Subcontractor;
• endangers or compromises any consent held by the Principal or any other party in relation to the Contract Works; or
• is inconsistent with the Principal or Contractor being able to comply with any relevant resource consent.

Clause 5.21.1 describes both the mandatory notification period and the procedure that must be followed by the Contractor when it becomes aware that an act or omission will, or is likely to, give rise to one of the circumstances described above. The Contractor must immediately notify the Contract Administrator, once it becomes aware of the relevant act or omission, and then follow the Instructions of the Contract Administrator.

The basis of fault affects a Contractor’s entitlement to a Variation, an additional payment, or an Extension of Time. Where the relevant act or omission is the Contractor or any Subcontractor’s fault, then the Contractor must bear the pain. The word ‘fault’ is a broad term and lacks clarity. It may be wise to seek to amend this clause (5.21.2) so that it is only where the Contractor has not complied with clause 5.21.1 (i.e. not taken all reasonable practicable steps) that the right to a Variation is lost.

Relationship with Resource Management Act 1991 (RMA)

The extent to what is ‘practicable’ has not yet been established. However, we expect ‘practicable’ to be interpreted as it is more generally at law both domestically and internationally. That being, what actions are available and capable of being done after taking into consideration cost, existing technology, and logistics in light of the overall project.

In terms of the relationship of this clause with the RMA, the requirement at 5.21.1(a) to avoid ‘any adverse effect on the environment’ is overly broad. If taken literally, almost anything has an ‘adverse effect’ in RMA terms (even if lawful/authorised by a consent). The clause may well be read as an adverse effect that is not permitted but this may be a point worth clarifying/tagging when dealing with the 2023 revision. 

Otherwise, the requirements of this clause are not inconsistent with and likely less onerous than a Contractor’s obligations at law under the RMA. For example, under s 338 of the RMA, it is an offence to contravene or permit contravention of any of sections 9 (restriction on use of land), 11 (restriction on subdivision of land), 12 (restriction on use of coastal marine area), 13 (restriction on certain uses of beds of lakes and rivers), 14 (restrictions relating to water) and 15 (discharge of contaminants into the environment).

The above are strict liability offences with only limited defences in s 341 (e.g. the defendant must show that the action or event to which the prosecution relates was necessary for the purposes of saving or protecting life or health or preventing serious damage to property or avoiding an actual or likely adverse effect on the environment or that the action or event to which the prosecution relates was due to an event beyond the control of the defendant, including natural disaster, mechanical failure, or sabotage). It is possible that a Contractor could take all reasonable practicable steps under clause 5.21 but still have a liability under the RMA.

Duty to notify

As described above, the Contractor must notify the Contract Administrator once it becomes aware of any act or omission that will, or is likely to, give rise to one of the circumstances nominated by the clause. The purposeful insertion of the words ‘is likely to’ confuses the point at which a Contractor is reasonably seen to have become aware of the relevant act or omission.

Notification requirements can be a point of contention in construction dispute resolution so the use of the words ‘is likely to’ is unfortunate in creating some uncertainty. However, the timing of notification is unlikely to be a significant issue under this clause, as it should be relatively obvious when relevant events that have to be notified have occurred under this clause.  

How can a Contractor protect itself?

Overall, the scope of the Contractor’s obligations under this clause are uncertain. Contractors should seek to mitigate this uncertainty by ensuring that they have a clear understanding of what obligations they have to meet.

So, for example, requiring the Principal, who should be familiar the with boundary noise levels, conditions in any relevant resource consents and in any regional or district plan, to advise what those requirements and limits are. This is to ensure the Contractor is aware of the relevant requirements and can plan and manage the work to avoid any of the consequences set out in clause 5.21. 

Related to the above, parts of this clause could be tagged with a requirement either that the Principal must disclose all environmental requirements that may apply to the work or the site, including all applicable consents, and/or that the Contractor’s obligations in relation to specific consent conditions and similar only arises where the specific consent and consent conditions have been advised by the Principal to the Contractor. 

Otherwise, Contractors (and Principals) are already required to comply with the provision of all statutes, secondary legislation, instruments and bylaws under clause 5.11.1 in the 2013 edition and, under the revised 2023 edition, also all Consents that may be applicable to the Contract (revised clause 5.14.1).  Again, as above, the Contractor should tag this clause to ensure that the Principal is at least required to disclose all applicable consents related to the work and the site that the Contractor must comply with. 

However, what clause 5.14.1 (and clause 5.11.1 in the 2013 edition) means is that in many ways the new clause 5.21 does not add materially to obligations Contractors already had at law – it just makes more express obligations that at law, and under the Contract, Contractors already had.  That is ultimately a positive thing, as it should encourage discussion and disclosure as to what precisely are the relevant environmental standards and conditions that could apply to the work and the site to ensure there are no RMA breaches.

This article was written by Ezekiel Hudspith (Partner) and Brendan Cash (Partner) in Dentons’ Major Projects and Construction and Environment and Planning teams in New Zealand, and was originally published by Contractor Mag.

Further reading

Fault based liability and limited liability for contractors a new standard in the NZ market

Changes to the role of the Engineer under NZS 3910:2023

NZS 3910:2023 - The new target price provision

The new dispute resolution scheme in NZS 3910:2023