NSW passes legislation that expands director/manager liability for environmental offences

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The NSW parliament has now passed the Environment Legislation Amendment Bill 2022 (the Bill). The Bill expands director and manager liability for environmental offences in NSW and provides the EPA with wider powers, such as the power to recover proceeds of environmental crime from current/former directors and related bodies corporate if a corporation is found guilty of an offence.

Key Takeaways

The Bill will provide regulators with more options to hold corporations responsible irrespective of corporate structuring. Therefore, consideration should be given to ensure that there are robust compliance procedures consistent with relevant industry standards in place, including such things as compliance monitoring, relevant staff training (including those responsible for dealing with the EPA), ensuring appropriate plant, equipment, work systems are in place and creating and maintaining a compliance culture.

We outline below the key amendments set out in the Bill, in particular, the key amendments to the Protection of the Environment Operations Act 1997 (NSW) (PEO Act) and the Contaminated Land Management Act 1997 (NSW) (CLM Act).

Key amendments to the PEO Act

  • Increased liability for directors, managers and related entities through:
    • Issuing supplementary clean-up notices to current/former directors and related bodies corporate if a company does not comply with a clean-up notice. However, a person issued with a supplementary clean-up notice can recover costs from the person who caused/contributed to the incidence.
    • Recovering proceeds of environmental crime from current/former directors and related bodies corporate if a corporation is found guilty of an offence (for more detail see “Proceeds of crime amendments” below).
  • Wider EPA powers, including:
    • the ability to issue a clean-up notice to persons reasonably suspected of having contributed to (rather than causing) a pollution incident; and
    • the ability to pursue related bodies corporate (similar to what is already occurring in QLD) so that a corporate structure cannot be used to avoid environmental liabilities.
  • Broader consideration of the meaning of ‘fit and proper person’ so that the conduct of current/former directors, related bodies corporate and current/former directors of related bodies corporate is relevant in determining whether a corporation is “fit and proper” when considering licencing decisions.
  • Expanding the offence of providing false and misleading information so that it also covers situations where false/misleading information was provided unknowingly. This offence has been prescribed as an executive liability offence.
  • Increasing certain penalties to bring them up to contemporary community expectations, including an alternative maximum penalty of 18 months imprisonment if a person is found guilty of providing false and misleading information.

Key amendments to the CLM Act

  • Increasing the EPA’s responsiveness to contamination events by enabling the EPA to give clean-up notices and prevention notices as soon as the EPA is notified of contamination of land. This means that land may need to be remediated prior to the land being declared ‘significantly contaminated’.
  • Extending existing financial assurance provisions, enabling the EPA to require financial assurances under ongoing maintenance orders, restrictions and public positive covenants.

Proceeds of crime amendments

The Bill makes it an offence under various environmental laws for current and former directors, managers and related corporate bodies of a convicted offender to have received monetary benefits from a crime committed under the relevant Act.

The Bill also facilitates the recovery of proceeds of crime by enabling the EPA or the prosecutor of an offence to recover the amount of monetary benefits acquired by the following persons as a result of the commission of the offence by a corporation:

  • the director of the corporation at the time of the offence;
  • a related body corporate; and
  • a person who is, or was at the time of the offence, a director of a related body corporate.

The Land and Environment Court Act 1979 will also be amended to give the NSW Land and Environment Court jurisdiction to hear and dispose of proceedings to recover monetary benefits from any of the abovementioned persons.

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