Author's Note 22/3/2024: The Environment Protection Legislation Amendment (Stronger Regulation and Penalties) Bill 2024 (NSW) was passed by NSW Parliament without amendment and is now awaiting assent. Most of the provisions of the Bill will commence and become law "in the coming days" according to the EPA.
The Environment Protection Legislation Amendment (Stronger Regulation and Penalties) Bill 2024 (Bill) was introduced to NSW Parliament late last week to amend a range of environmental legislation administered by the NSW Environment Protection Authority (EPA).
NSW environmental laws have, for many years, contained a wide range of offences and powers to investigate, regulate and prosecute breaches. But that hasn’t stopped successive NSW governments from introducing legislative reforms to ‘get tough’ on environmental crime.
Late last week the NSW Government introduced yet another Bill to increase penalties and expand powers for environmental crimes in NSW. While it has been described by the current government as ‘the largest environment protection amendment bill since… 1991’, the Bill comes just 2 years after the last significant environmental reforms (under the previous coalition government) to increase penalties, add new offences, and expand the EPA’s powers.
This article outlines the key proposed reforms, which include:
- Radically increasing maximum penalties for many offences, including to introduce a maximum penalty of $10 million for corporations and $2 million for individuals for the most serious ‘Tier 1’ offences and to increase penalties even for offences that may be dealt with summarily by the Local Court;
- Increasing penalty notice fines for repeat offences;
- Empowering the EPA to:
- take action on climate change;
- issue ‘Preliminary Investigation Notices’ requiring the recipient to ‘assist’ the EPA with its investigations;
- issue ‘Recall Notices’ for contaminated materials;
- override the need for planning approvals by issuing clean-up notices or recall notices;
- require new clean-up actions in notices;
- issue ‘public warning statements’ to ‘name and shame’ poor environmental performers or practices or substances of concern;
- Creating a new power for the NSW Land and Environment Court to ban persons from holding an environment protection licence; and
- Moving offences regarding resource recovery orders from regulations to primary legislation, thereby increasing penalties, and introducing related amendments to waste regulations.
Given the recent discoveries of asbestos-containing mulch throughout Sydney and associated media interest, we expect the Bill to progress through Parliament relatively quickly and with few amendments. A proposed commencement date has not been included in the Bill, and has not otherwise been announced by the EPA or the Government.
The savings and transitional operations of the Bill propose to generally operate so that:
- the new powers and offences apply to circumstances and incidents that arise prior to commencement;
- new powers to grant court orders will apply to proceedings that have been commenced but not yet determined; and
- increased penalties for existing offences will only apply to offences commissioned after commencement.
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Description
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Analysis
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Example
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Radical increases to maximum penalties
The Bill doubles maximum penalties for a wide range of environmental offences including under the Protection of the Environment Operations Act 1997 (NSW) (POEO Act). This includes:
Notably, in the case of resource recovery exemption offences, the Bill proposes an increase in penalties more than tenfold. |
The proposed increases to maximum penalties would make the penalties for environmental crimes in NSW the toughest in the country. By way of comparison, maximum penalties for the most serious environmental offences Victoria and Queensland do not exceed $5 million (less than half of the proposed maximum in NSW). The most radical penalty increases proposed relate to compliance with resource recovery orders and exemptions (which, incidentally, is the regulatory framework that allows mulch to be applied to land as well as other matters such as the application of recovered fines). Failing to comply with the requirements of a resource recovery order (which generally includes requirements regarding testing and notification etc.) currently carries a maximum penalty of $44,000 for a corporation. The Bill proposes to increase this (for corporations) to:
Similar offences relating to record keeping and the provision of information and records to users of recovered wastes have been similarly increased. The EPA has said that this reform is required because ‘most NSW environmental penalties have not increased since 2005, including those for serious offences’. However, it is worth noting that:
If passed, the new maximum penalties would send a strong message to the public and NSW courts that there is a new ‘yardstick’ against which future environmental crimes will be measured. Overall, this would lead to more significant financial implications for targets of EPA prosecutions. |
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Increases to penalty notice fines for repeat offences
The Bill enables penalty notice fine amounts to increase by 50 per cent in the case of second or subsequent offences. |
This proposed amendment enables the EPA to issue larger penalty notices for second offences, where appropriate. This gives the EPA an opportunity to escalate the severity of enforcement action against an alleged repeat offender without needing to allocate significant resources and time to commence proceedings. Where a penalty notice is paid, no conviction is recorded and no prosecution will be commenced in respect of the offence that is the subject of the penalty notice. |
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New EPA powers to take action on climate change
The Bill proposes amendments to the legislation to empower the EPA to take action on climate change. It also proposes to empower the EPA to enter agreements and purchase property to achieve net zero emissions. |
This reform was omitted from the EPA’s lengthy media release but is in the fine print of the Bill. Critically, if passed, the Bill would make action on climate change an ‘objective’ of the EPA which can then be validly taken into account by the EPA in exercising its statutory functions. The EPA is now embracing its role on climate change, following its loss to activist group Bushfire Survivors for Climate Action in court proceedings on this subject in 2021. The proposed new objective and powers are consistent with the EPA’s new Climate Change Policy and Action Plan, which includes a commitment to becoming a carbon-neutral organisation by 2030. It would allow the EPA to purchase property and enter into agreements for the purpose of achieving net carbon neutrality. This could potentially have implications for domestic carbon markets—especially if the EPA generates or facilitates the generation of large numbers of Australian Carbon Credit Units. |
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Preliminary Investigation Notices
A new class of environment protection notice is proposed. This new ‘Preliminary Investigation Notice’ could be issued where the EPA ‘reasonably suspects’ circumstances that may pose a potential risk of harm to human health or the environment or a pollution incident that may be occurring at premises. Such notices could be issued to any person who has ‘caused or contributed to, to any extent’ the circumstances the subject of the notice (or otherwise to an owner or occupier of premises). The substance of a Preliminary Investigation Notice would be to impose a legal obligation on the recipient ‘to assist the EPA to investigate… and determine the nature and extent of the relevant circumstances’ (that is, the potential risk to human health or the environment or the pollution incident). Examples provided include collecting samples, providing a report, or preserving evidence. Failure to comply would be a criminal offence. |
This appears to be a direct response to the recent asbestos mulch saga, where the EPA was responsible for tracking down all potential asbestos-contaminated sites within a short timeframe. The key problem that we see is that a Preliminary Investigation Notice as currently drafted in the Bill would legally require recipients to ‘assist the EPA’. The standard and content of this ‘assistance’ is unclear. However, if the recipient fails to meet this obligation, then the recipient commits a criminal offence. There is no exception where the person has a reasonable excuse. So, this means that a recipient will commit a criminal offence even in circumstances where it is unable to assist the EPA with its investigations (for example, because it does not have or is not able to engage consultants with the requisite knowledge, skills or expertise, or cannot provide requested information), which raises questions as to whether this constitutes a fair or just outcome. It is also unclear why it is considered appropriate for such a notice to be issued to persons who merely ‘caused or contributed to, to any extent’ the relevant circumstances. This could result in persons with only peripheral involvement being legally required to assist the EPA in its investigations even where the person has little if any involvement in any actual or potential offences. This issue was created by the 2022 reforms in relation to clean-up notices, and is equally applicable to the proposed new Preliminary Investigation Notices. |
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Recall Notices
The Bill introduces the power for the EPA to issue a ‘Recall Notice’. The grounds on which a Recall Notice may be issued are very broad and include where a substance poses a potential risk of harm to human health or the environment, or where any environment protection legislation has been contravened. The Recall Notice must:
Recall Notices apply across the entire supply chain for the relevant substance. A Recall Notice would override any need for development consent or approval under the Environmental Planning and Assessment Act 1979 (NSW). |
The concept of a recall notice exists in product safety laws at a federal level. For example, under the Australian Consumer Law, recall notices can be issued requiring suppliers to recall consumer goods. This reform empowers the EPA, as a State environmental regulator, to recall products posing a risk to human health or the environment—regardless of whether the substance is destined for consumers. This reform appears again to be a direct response to the recent asbestos mulch saga in NSW. However, more broadly, this power would enable the EPA to issue Recall Notices to combat contamination in the resource recovery space. This has been a challenge for the EPA in recent years particularly with products like ‘mixed waste organic outputs’ which it essentially banned in 2018 and with the current concerns regarding the recovered fines exemption. The economic and other implications of an EPA Recall Notice could be very significant for participants in the waste industry. For this reason, section 94B of the Bill provides that the EPA will only be able to issue Recall Notices with Ministerial approval. |
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Eliminate need for development consent for clean-up actions
The Bill proposes to eliminate the need for development consent or approval to be obtained under the Environmental Planning and Assessment Act 1979 (NSW) to carry out clean-up actions under a clean-up notice. |
This would allow the EPA to override planning laws in NSW to require regulated entities to take action in response to a pollution incident, even where this would ordinarily require planning approval. Currently, clean-up actions are generally subject to standard planning controls. The only exception is one specified clean-up notice identified in Schedule 2 of the State Environmental Planning Policy (Resilience and Hazards) 2021. This reform will facilitate compliance with clean-up notices within the timeframes set by the EPA, as it will remove any requirement to obtain development consent for any action that is required to be carried out under a clean-up notice. |
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Expanded definition of clean-up action
A new and more detailed definition of ‘clean-up action’ is proposed by the Bill. The new definition would include actions required to restore the environment to a state that is as close as possible to the state the environment was in immediately before the pollution incident, and actions to carry out or facilitate testing or monitoring and providing results to EPA. It would also specify that ‘clean-up action’ includes action to remove chemicals or products containing chemicals—not only that which is technically ‘waste’. |
This amendment further expands the EPA’s already broad powers to issue clean-up notices in response to suspected pollution incidents. |
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New power for Court to ban a person from holding a licence
The Bill empowers the court to ban a person who commits an environmental crime from applying for or holding a licence or being involved in activities required to be licensed (either for a specified period or indefinitely). The court must have regard to the offender’s compliance record, previous convictions and the circumstances of their offending. The new Bill also provides a new power to the EPA to apply to the Court to obtain such an order. |
This new power would empower the Court to punish offenders by banning them from carrying out work that requires an environment protection licence (such as operating a large waste facility or mine). But the NSW Land and Environment Court has been reluctant to deny businesses environment protection licences, even where they have been involved in prior offences. For example, last year the NSW Land and Environment Court granted a licence to a corporate applicant where its sole director was previously convicted for an environmental offence: see Crush and Haul Pty Ltd v Environment Protection Authority [2023] NSWLEC 1367. The EPA opposed the grant of the licence, and unsuccessfully appealed the Court’s decision. Nevertheless, the applicant was granted a licence by the Court and that decision was upheld on appeal. In any event, the EPA already has broad compliance and enforcement powers and can vary, suspend or cancel licences at any time. With this in mind, we expect that this new power will rarely (if ever) be used. |
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Offence regarding resource recovery orders
Offences relating to resource recovery orders are proposed to be moved from the Protection of the Environment Operations (Waste) Regulation 2014 (NSW) (Waste Regulation) directly into the POEO Act. The reforms would:
The maximum penalties for these offences have been considered by the EPA to be too low for some time to be an effective deterrent, however they are constrained by the maximum penalties permitted to be set by a regulation under the POEO Act. The EPA already has broad powers under the POEO Act and the Waste Regulation to make and amend resource recovery orders and exemptions. |
The EPA makes resource recovery orders and exemptions, which exempt suppliers and consumers of wastes that meet certain requirements from offences under the POEO Act. While resource recovery orders have facilitated the creation of markets for waste products that divert these wastes from landfill, in some cases, these orders have resulted in unintended consequences for the EPA including inappropriate and potentially unsafe uses of wastes subject to these orders (such as the current mulch saga). The Bill makes significant increases to the maximum penalties for the existing offences of:
We also anticipate that the EPA will be reviewing and making comprehensive amendments to existing resource recovery orders and exemptions as a result of recent events to increase sampling and testing requirements and make other changes. |
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Name and Shame Powers
New ‘name and shame’ powers referred to as ‘public warning statements’ are a key feature of the Bill. This would enable the EPA to issue public statements about particular substances, activities or persons where it is in the public interest to do so. The ‘name and shame’ powers are linked to a proposed new exclusion of liability in the Protection of the Environment Administration Act 1991 (NSW) for statements made in good faith in accordance with the new power. |
Currently, the EPA already has a practice of seeking publication orders from the Court in respect of environmental offences, which are intended to have the effect of deterring environmental crimes. The EPA also regularly publishes matters of relevance to the public and issues media releases. The new powers are therefore largely symbolic in nature, but do provide the EPA with additional exclusions on liability in relation to statements made by the EPA in good faith and in accordance with the power. This could enable the EPA to take a bolder approach in making statements and issuing warnings about matters where the facts are not entirely certain, and based on its suspicions. Such statements and warnings could potentially be legally protected even where the EPA’s statements are not able to be proven as true. Similar provisions already exist under fair trading and food safety legislation in New South Wales. |
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Waste classifier accreditation scheme
A new power is included in the Bill to make regulations for a waste classifier accreditation scheme ‘to classify or assess waste, including waste the subject of a resource recovery order or a class of waste’. |
The EPA has said that this new waste accreditation scheme ‘will protect the integrity of recycling streams by targeting the source of contamination. Regulatory effort will be focused upstream towards the waste generator, providing greater visibility and control over supply chains.’ Again, this type of reform is geared towards perceived integrity issues in the resource recovery industry arising from products such as the asbestos-contaminated mulch, mixed waste organic outputs (now banned) and recovered fines. The details of the proposed scheme have not yet been released but would be contained in new regulations under the POEO Act. |
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Conclusion
The proposed Bill proposes significant reform which the NSW Government has said is just the ‘first step in strengthening environmental regulation’ in NSW.
If passed, the Bill will make NSW environmental laws the strictest in the country and will further expand the EPA’s powers to target individuals and corporations, even those who are merely ‘reasonably suspected’ of wrongdoing or having contributed ‘to any extent’ to wrongdoing.
The NSW Government has indicated that the Bill is designed to target only ‘those who feel they can operate outside the law’ but the effect of the legislative reforms is that the law applies to everyone.
The EPA’s extreme legislative power will only be constrained by its regulatory discretion and by careful analysis of the express and implied legal constraints on its power.
Therefore, it has never been more important to identify and take action to mitigate environmental risks and seek legal advice at an early stage should an environmental issue arise.
