28 July 2006
Key Points:
The highly publicised recent amendments to key pollution control laws in NSW, coupled with increasing emphasis in the courts on ecologically sustainable development, suggest that a much tougher line may be taken in prosecutions for environmental offences. The recent amendments also enhance the alternatives to prosecution for regulatory agencies, providing a lower cost enforcement mechanism. The legislative reforms and recent judicial comments highlight the importance of establishing good environmental management practices.
Recent amendments to the main pollution control statute in NSW - the Protection of the Environment Operations Act 1997 ("POEO Act") - which commenced on 1 May 2006, make environmental compliance considerably more challenging for business. The amendments included significant increases in maximum penalties, the removal of the "no knowledge" defence for directors and managers of a corporation who may be personally charged, and the introduction of a new, broad reaching "land pollution" offence.
We outlined these and other key amendments when the draft amending legislation was first made public and when Parliament passed the amending Act.
The amendments also introduced some significant alternatives to prosecution for potential offences under the POEO Act. The EPA can now require enforceable undertakings, and also has increased powers to issue penalty notices.
In this article we comment on these amendments in light of the practicalities of regulatory enforcement and some recent judicial statements, and what this means for environmental practice management.
The courts' approach to sentencing
The Land and Environment Court has recently indicated, in very clear terms, the seriousness with which it views environmental offences.
In Bentley v. BGP Properties Pty Limited [2006] NSWLEC 34, the defendant was charged with picking a threatened species contrary to section 118A of the National Parks and Wildlife Act 1974, as a result of clearing a significant area of coastal native vegetation. The maximum penalty for the offence at the time at which it was committed was $55,000.[1] A guilty plea was entered shortly after the commencement of prosecution proceedings.
The Court allowed a 20% reduction (ie. $11,000) from the maximum penalty for the early guilty plea, but found few other reasons to reduce the maximum penalty, and imposed a fine of $40,000.[2]
In comprehensive reasons for decision, Justice Preston focused on the importance of the principles of ecologically sustainable development ("ESD") and the integration of ESD in decision-making and practice. He highlighted the relevance of ESD to his own decision, emphasising the importance of the principle of internalising external environmental costs (which includes the "polluter pays" concept). The focus on ESD provides a powerful indicator of recent shift from viewing ESD as an "aspirational goal" to the use of ESD as a practical decision-making tool.
Justice Preston recently presented a paper at the Environmental Defender's Office Annual Conference sentencing for environmental offences, which indicates that this issue is presently high on the Court's agenda.
Increasingly, environmental legislation is giving courts additional sentencing options for environmental offences. The recent amendments to the POEO Act enhanced the measures available, such as requirements for financial contributions to environmental projects or even environmental organisations, and compulsory training programs.
One powerful sentencing option is requiring the offender to publicise the offence, including information about the circumstances in which it was committed. Publication orders have been made in recent months in relation to the pollution of waters and in relation to unlicensed treatment and processing of hazardous waste . The impact of such orders will only increase as members of the public become more aware of environmental issues and businesses make more use of environmental marketing strategies.
Alternatives to prosecution
Many factors affect prosecution rates for environmental offences. Among the most significant factors are the perceived risk of acquittal and the cost (and diversion of resources) involved in running a prosecution. It seems that governments are acknowledging the attraction of alternatives to prosecution by providing more alternatives in environmental legislation.
Many environmental statutes now allow the use of penalty notices for less serious environmental offences. Penalty notices provide a low cost enforcement option for regulatory agencies and, whilst the maximum fine allowed for a penalty notice is usually much lower than the maximum fine allowable on conviction for the same offence, the fact that a court challenge to a penalty notice opens the door to the higher maximum fine on conviction reduces the incidence of challenges.
Importantly, in NSW, payment of a fine under a penalty notice does not amount to an admission of guilt.
As a result of the recent amendments to the POEO Act, the EPA may now require a written undertaking by a person in connection with a matter to which the EPA has a function under the POEO Act, instead of commencing a prosecution. Similar powers have been available to the ACCC under the Trade Practices Act 1974 (Cth) and to ASIC under corporations legislation for many years.
The EPA may take court action to enforce an undertaking and the court in enforcement proceedings has been given a wide range of options in making orders, including powers to order the payment of monies to persons affected by the breach of the undertaking (including by way of compensation), the making good of any actual or likely harm to the environment caused by the breach, and orders to suspend or revoke any environment protection licence held by that person.
What does this mean for business?
The increasing maximum penalties for environmental offences, the introduction of additional sentencing options (including those which may cost more in real terms than a fine) and the tougher approach to sentencing indicated in some recent court decisions all provide powerful incentives to ensure environmental compliance.
The risk of enforcement action is also increasing, with the availability of low-cost alternatives to prosecution. However, this may provide good news for business too, because a regulator has more opportunities for non-prosecutorial responses to an environmental incident, where it considers that it must take some action but wishes to recognise the environmental credentials of those involved in the incident.
These developments underscore the importance of good environmental practices. Generally speaking, an organisation which devises and implements good environmental management systems is less likely to attract unwanted attention from regulatory agencies, less likely to suffer environmental incidents, less likely to be prosecuted if an incident occurs, and likely to fare better in court if a prosecution does occur.
[1] Justice Preston commented in that case that, shortly after the offence was committed, the Act was amended to provide for a additional penalty of 100 penalty units (currently $11,000) for each whole plant of an endangered species and that, in the present case, where 2,400 clumps (which could indeed comprise an even larger number of individual plants) of a threatened species of plant were picked, the maximum additional penalty would be $13,200,000! (See paragraph 166 of the judgment.)
[2] It is worth noting that the defendant's project manager, an individual, was also convicted of the same offence and fined $30,000.
For further information, please contact José Cofre and Nick Thomas.
