Volatiles, PFAS and the Due Diligence Imperative
The Stakes Have Changed
Environmental due diligence has always been a critical component of property and corporate transactions involving industrial land. But the stakes have risen sharply. The combination of tightened PFAS guideline values under NEMP 3.0, a more active regulatory posture from state EPAs, and growing litigation activity means that transactions completed under due diligence protocols from even three to five years ago may have left buyers, lenders or equity holders exposed to liabilities that were not adequately priced or even identified.
Two contaminant classes are driving this shift more than any other: volatile organic compounds (VOCs) and PFAS. Both are highly mobile in the subsurface. Both have regulatory guideline values that have tightened in recent years. And both can generate off-site impacts (including to neighbouring properties, surface water and drinking water supplies) that significantly complicate liability attribution.
Volatile Organic Compounds: An Enduring Challenge
VOCs, including chlorinated solvents such as TCE, PCE and their degradation products, as well as petroleum hydrocarbons such as BTEX compounds, have been a fixture of contaminated land assessment for decades. What has changed is the sophistication with which regulators and courts expect them to be characterised.
Under Victoria's Environment Protection Act 2017, the duty to manage contaminated land places an obligation on those in management or control of land to identify contamination they know of, or reasonably ought to know of, and to manage the risks so far as reasonably practicable. 'Reasonably ought to know' is not a passive standard, it implies an active obligation to investigate where the nature of historic site use would put a reasonable person on notice.
For VOCs, this means that a Phase I desktop assessment identifying a former dry-cleaning operation, fuel depot, or industrial chemical user creates a clear obligation to conduct intrusive investigation. Relying on a desktop assessment alone, or on historic groundwater data that did not capture the relevant analytes or receptor pathways, will not satisfy this standard — and will not satisfy a regulator, a lender, or a court if contamination is subsequently discovered.
The vapour intrusion pathway deserves particular attention. Australian guidance on vapour intrusion assessment has matured significantly in recent years, and EPA Victoria has made clear that vapour risk to indoor air quality at nearby sensitive land uses must be explicitly addressed where VOC-impacted groundwater or soil is present. This is a pathway that earlier investigations frequently under-characterised.
PFAS in Due Diligence: No Longer Optional
Until relatively recently, PFAS was considered a niche contamination issue confined to defence sites, airports and major industrial firefighting operations. That perception is no longer tenable. PFAS have been identified at a much wider range of site types, including industrial facilities that used PFAS-containing cleaning agents, stain-resistant treatments or surface coatings; commercial laundries; waste management facilities; and sites that received PFAS-impacted biosolids or fill material.
The practical implication for due diligence is that the scope of Phase I assessments, and the trigger thresholds for Phase II investigation, need to account for PFAS exposure pathways that may not be immediately obvious from a site's primary land use history. A detailed review of historical chemical use, site management practices, and the provenance of imported fill material has become essential.
NEMP 3.0's revised guideline values mean that even low-level PFAS detections that were previously considered manageable may now require more active management or disclosure. Buyers and lenders who are not asking the right questions at the Phase I stage risk acquiring sites with undisclosed PFAS liabilities that will only become apparent when regulatory attention turns to the site, or when neighbouring landholders raise concerns.
What Good Due Diligence Looks Like in 2026
Effective environmental due diligence for industrial or formerly industrial land in 2026 requires:
- A Phase I assessment that explicitly addresses PFAS exposure pathways, not just legacy VOC and heavy metal contamination, including a review of historical chemical inventories, imported fill records and site drainage.
- Where PFAS or VOC risk is identified, a Phase II investigation scoped to NEMP 3.0 requirements, using current analyte suites and sampling protocols.
- Assessment of the vapour intrusion pathway where VOC-impacted groundwater is identified, with reference to current Australian guidance.
- An assessment of residual risk and management obligations under the relevant state EP Act framework, including, in Victoria, the duty to manage and duty to notify thresholds.
- A clear articulation of the remediation or risk management cost implications for transaction pricing, with appropriate contingency provisions.
PJRA's Role in the Data Centre Sector
PJRA provides comprehensive due diligence support across Phase I and Phase II investigations, risk assessment and regulatory negotiation. Our team works with buyers, sellers, lenders and their legal advisers to ensure that contamination risks are accurately characterised, appropriately disclosed, and factored into transaction structures before, not after, exchange.