The Maori Affairs Select Committee is questioning whether South Island iwi, who are to receive an old dump site as part of a settlement, should have to pay to rehabilitate the land.
Hearings were held in Blenheim and Nelson on Thursday on the Tau Ihu Claims Settlement Bill, which involves eight iwi at the top of the South Island.
The bill, which includes $300 million compensation, passed its first reading in Parliament in June.
Labour's Maori Affairs spokesperson Shane Jones says it also includes the return of Puketawai reserve, near Motueka, which was once a tip site.
He says it's wrong that iwi should receive land back that might have some long term environmental liability, which may require them to meet clean up costs in the future.
Mr Jones says the committee will question both the Treaty negotiations unit and the Ministry for the Environment about the issue.