12 Feb 2014

What did you know - and when did you know it? Notifying pollution incidents

If a pollution incident from your operations causes or threatens material harm to the environment, your statutory duty to notify the appropriate regulator under NSW law applies when you are subjectively aware of the harm – not when you are aware only that a pollution incident has occurred.

That's the upshot from a recent NSW case which could have implications for similar laws around the country (Environment Protection Authority v Bulga Coal Management Pty Limited [2014] NSWLEC 5).

Bulga Coal discovers a pollution incident

On Sunday 9 October 2011 an employee of Bulga Coal, Mr de Groot, discovered tailings slurry was overflowing the small section of the embankment of the containment dam and had reached a dry creek bed. He followed internal procedures: he swiftly stopped the discharge, notified the manager, contained the discharge and fixed the dam.

The manager, Mr Bower, then phoned another employee, Mr Amidy, and inspected the site and arranged for water samples to be made and analysed. His second call to Mr Amidy confirmed what Mr de Groot had said: the spill had been fully contained and that there was no potential for any tailings to flow further downstream.

Mr Bower, Mr Amidy, and a third employee, Mr Hiatt, met early on Monday morning to go over their next steps. They then inspected the site together. As a result, they decided that the clean-up would cost more than the statutory materiality threshold of $10,000, and that the EPA should be notified, which was done that morning.

Notifying a pollution incident under the Protection of the Environment Operations Act 1997 (NSW)

If you are carrying on certain activities (which are set out in the Act and which include Bulga Coal's mine), and a pollution incident causing or threatening material harm occurs as a result, you must notify the appropriate regulatory authority immediately after you become aware of the incident (in 2011 the Act said "as soon as practicable", but nothing turns on that in this case): section 148(2). If you don't, it's an offence: section 152. The same obligation applies to the occupier of premises on which the pollution incident occurs.

Surprisingly, given that the Act has been in place for nearly 15 years, this is the first time a court has had to consider this issue.

The key question was which components of the offence under section 152 of the Act (failure to notify a pollution incident) are strict liability – that is, what exactly does the prosecution have to show the defendant was aware of?

The prosecution argued that the defendant need not be aware of the degree of threatened or actual harm – it was enough that it was aware of a pollution incident – so the defendant should have reported on the Sunday. Conversely, the defendant argued that it had to be aware of both the incident and that material harm was caused or threatened before it had a duty to report – so it should have reported on the Monday (as it did).

Subjective knowledge of the pollution incident and risk of material harm is required

The Court held that the offence under section 152 for contravening the obligation to notify under section 148(2) is not a strict liability offence.

The prosecution must prove, beyond reasonable doubt and as a subjective fact, that the defendant was aware of a pollution incident which caused or threatened material harm, which it failed to notify immediately.

The duty to notify under section 148 is not the only statutory duty to notify pollution or contamination in NSW. While the terms of the duties vary, the Court's decision in this case could influence the way in which those duties are understood.

In addition, all other Australian States and Territories (except Victoria) have pollution or contamination notification laws, and the decision in this case could influence the way in which some of those laws operate. For example, in Queensland, there is a statutory obligation under the Environmental Protection Act 1994 on a person who becomes aware of an event that causes or threatens serious or material environmental harm to notify the administering authority no later than 24 hours after becoming aware of the event, unless they have a reasonable excuse.

Victoria has the most limited pollution reporting obligation. The obligation to report pollution or contamination is limited to environmental auditors engaged to undertake a statutory environmental audit where there is an imminent environmental hazard, and under some waste discharge licences issued under the Environment Protection Act 1970.

What this means for your environmental compliance program

If the prosecution had been right, a defendant could have been guilty for failing to notify of a risk that only became apparent to it after the notification. Since pollution incidents can unfold and develop, the Court's decision is a sensible and practical result. In this case, Bulga Coal made an initial assessment, and then a fuller one – and as soon as it discovered the risk of material harm it picked up the phone to the EPA.

It doesn't mean, however, that a defendant can escape prosecution for failing to notify by turning a blind eye, or by taking a lackadaisical approach to pollution incidents.

What it does mean is that a strong, practical, proactive internal process can be followed and management can assess the situation properly to understand what, if any, risks have arisen.

The key action from this for anyone undertaking activities that could trigger a pollution incident and notification obligation, such as construction, manufacturing or mining, is to review your process and procedures for managing pollution incidents to ensure the right people internally are notified, a proper assessment is made as soon as possible, and any duties to notify are properly evaluated and, if needs be, actioned as part of that process.

If you get this right, you'll be ensuring you have an appropriate response to pollution, and that the EPA is notified immediately when it needs to be. If you don't, a court might consider you to be turning a blind eye.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.