12 Jun 2014

Expanded powers and tougher penalties for environmental offences in NSW

by Claire Smith, Brendan Bateman

Under proposed NSW Government reforms, the NSW EPA and the Land and Environment Court will have increased powers to scrutinise and punish polluters and non-compliant operators.

On 28 May 2014, NSW Environment Minister Rob Stokes announced a range of measures aimed to strengthen the Environment Protection Authority (EPA) and provide it with more robust regulatory tools.

Under the proposed reforms, compliant companies will be rewarded, while operators who ignore, neglect or forget their environmental obligations will face increased punishment and scrutiny from both the EPA and the Court.

The reforms will also augment compliance tools for contaminated sites, eliminate an environment protection licence holder's right to advance notice of a licence revocation and bolster penalties – with the amount of some penalties to increase tenfold.

Increased on-the-spot fines for environmental offences

Under the proposed amendments, the Minister has identified the "10 most serious environmental offences", which will attract on-the-spot fines up to 10 times greater than under current legislation.

The ten most serious environmental offences under the Protection of the Environment Operations Act 1997 (POEO Act) that the new penalties will apply to are:

  • Pollution of land;
  • Pollution of waters;
  • Exceeding air impurities standards (air pollution);
  • Failure to hold an environment protection licence (EPL) for scheduled activities (premises-based);
  • Failure to hold an EPL for scheduled activities (not premises-based);
  • Failure to comply with conditions of an EPL (however, this would exclude failing to submit an annual return);
  • Unlawful transportation or disposal of waste (asbestos or hazardous);
  • Use of land as a waste facility without lawful authority;
  • Failure to comply with a clean-up notice; and
  • Failure to comply with a prevention notice.

The maximum on-the-spot fine for any of these offences is $1,500 in the case of a corporation; this would be increased to $15,000.

For 19 other less serious environmental offences dealt with through penalty infringement notices, the proposed penalty amounts will also increase significantly to $8,000 for corporations when those notices are issued by the EPA, and $4,000 when issued by a local council (reflecting the fact that councils deal with the less serious offences).

The stated aim of these strengthened penalties is to remove any incentive for business to simply regard penalty infringement notices as just another cost associated with doing business. These reforms will grant the EPA with power to impose the highest on-the-spot penalties available to any environmental regulator in Australia.

Land and Environment Court – alternative approaches to sentencing

Presently, the Land and Environment Court is empowered to make an environmental service order which requires a person to restore or enhance the environment by carrying out a specified project.

A further proposal is to allow the Land and Environment Court to exercise a more consultative rehabilitative approach to sentencing known as "restorative justice" by allowing it to impose actions on offenders that will directly benefit those impacted by the offence.

Communities whose health or livelihood have been impacted by an environmental incident will be entitled to participate in the sentencing response to that incident, including in the formation of a tailored remedy. An example of this may be providing community facilities in a local park, or swimming facilities near a local river that has been affected by pollution.

Extended EPA powers

The proposed reforms will allow the EPA to enter into enforceable undertakings as a way of resolving alleged breaches of the Contaminated Land Management Act. An enforceable undertaking is an alternative to court proceedings where there has been a serious breach of legislation and is a written undertaking by a company or individual to take action to deal with an actual or potential breach. The EPA currently has this power under the POEO Act and can use it as a basis for negotiating environmental improvement and restoration measures.

The EPA is also currently conducting consultation on a new draft waste regulation that aims to crackdown on rogue waste operators and reduce illegal waste stockpiling and rorting of the waste levy system through strengthening its regulatory powers. The proposed changes will require increased reporting for waste operations, introduce new tracking requirements for asbestos, waste tyres and waste moving out of NSW, and change the waste levy framework, but not the amount paid.

Reduced regulation and fees for model operators

As we've already seen, compliant operators will be rewarded with a reduction in their fees and level of regulation. Conversely, poor performers will pay significantly higher fees for the privilege of operating, with potentially higher degrees of regulatory scrutiny. The proposed increase in the amount of on-the-spot fines will also add to the incentive to comply.

Closure of liquidation loopholes

Previously, corporate licence-holders may have utilised voluntary liquidation provisions which enabled them to liquidate the company in order to avoid prosecution for breaches, including breaches of conditions of an EPL. A stated aim of the reform is to close that liquidation loophole by eliminating a licensee's right to be provided with advance notice of an intention to revoke or suspend their licence.

Implications

As a consequence of the proposed carrot and stick reforms, there will be more incentive than ever for regulated industries to improve their environmental compliance. The combination of potential reduction in licence fees to reward compliance and the higher on-the-spot penalties for environmental offences mean that polluting activities, unauthorised waste dumping and EPL breaches can no longer be treated as operational risks.

It is, however, important to remember that the EPA may elect to prosecute (as opposed to issuing penalty infringement notices or negotiating enforceable undertakings) for the most serious offences, and if successful, fines under the POEO Act could potentially reach a maximum of $5 million for tier 1 (intentional/negligent) offences and $1 million for tier 2 (strict liability) offences. A pre-emptive strategy of strong environmental compliance will allow EPL holders to avoid potentially tough financial penalties and more onerous regulation and avoid a revocation or suspension of their EPL without warning.

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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.