24 June 2020

NEXT: The Victorian Environment Protection Amendment Act 2018 – what should you be telling the Board?

This article was written by Mark Beaufoy and Michael Ashforth.

As a consequence of the COVID-19 crisis, the Victorian Government has delayed the implementation of The Environment Protection Amendment Act 2018 (the new Act). The EPA reform unit has announced that the new commencement date will be 1 July 2021.[1]

In the midst of business dealing with the COVID-19 pandemic and the associated economic impact, this will be a welcome relief. The delay provides business with more time to:

  • prepare for the commencement of the new legislation, including understanding the new duty-based regime and the associated policies and guidelines;
  • reviewing and updating risk assessments and environmental management procedures and systems; and
  • training staff and briefing management or the Board EHS or Risk Committee.

While 1 July 2021 looks like it will be the new commencement date, if we get through this COVID-19 crisis more quickly, that date could be brought forward.

The new regime moves away from the protection and prohibitions of the current Environment Protection Act 1970, aimed at dealing with impacts of pollution, and introduces positive duties and prevention mechanisms aimed at preventing pollution from occurring. The duty-based system is based on work health and safety legislation.

The key change is that ‘duty holders’ need to be proactive in complying with the new Act. An offence can be committed without actually causing pollution or mishandling waste. If you fail to have the systems in place to prevent risks to human health and the environment from pollution and waste, you will contravene this new legislation.

Company directors and officers can be held personally liable for the contraventions of their company, or for not being proactive in ensuring the business complies with the new duties under the Act.[2]

The new regime also introduces a new risk-based permissions system (registrations, permits, licences),[3] higher penalties for criminal offences,[4] as well as civil penalties and the new director and officer liability provisions.[5]

The EPA will be given more teeth by the introduction of new compliance and enforcement powers, including the power to compel attendance at an interview for investigating a breach of the Act, and to issue a range of remedial orders including ‘stop work’ and ‘prevention’ notices.[6]

The Victorian Government has invested a significant amount of money resourcing the EPA, including training more than 400 enforcement officers, and it is expected that the EPA will continue this current active compliance approach and proactively enforce compliance under the new Act.

The new duties

The new duties can be broadly grouped into two categories:

  1. duties that apply to a ‘person engaging in an activity’ (the general environmental duty and pollution and waste related duties); and
  2. duties that apply to the ‘person in management or control’ of land (contaminated land duties).

The ‘general environmental duty’

The centre piece of the new regime is general environmental duty (GED)[7], which requires that:

a person who is engaging in an activity that may give rise to risks of harm to human health or the environment from pollution or waste must minimise those risks, so far as reasonably practicable.

The GED imposes a positive obligation on entities engaging in activities that may give rise to risks of harm to human health or the environment from pollution or waste. Duty holders will need to the understand risks presented by their activity and identify how those risks can be controlled or managed. The GED applies to everyone - to industry in all sectors, manufacturers, mining and resources, energy producers and providers, real estate developers, contractors working on infrastructure projects, commercial, retail, and residential developments.

From experienced companies with extensive environmental, health and safety systems,[8] to mid-tier and small businesses which may need to adopt new environmental management systems to comply with this new duty. The EPA will be releasing guidelines and compliance codes to help business in these different sectors, but preparation should not wait for this.   

Once risks and possible controls have been identified, the duty holder is then required to implement ‘reasonably practicable measures’ to eliminate or reduce the likelihood of those risks eventuating.

General guidance on the concept of what is reasonably practicable’ is found in section 7 of the new Act, which provides that the following matters need to be taken into account:

  • the likelihood of those risks eventuating;
  • the degree of harm that would result if those risks eventuated;
  • what the person concerned knows, or ought reasonably to know, about the harm or risks of harm and any ways of eliminating or reducing those risks;
  • the availability and suitability of ways to eliminate or reduce those risks;
  • the cost of eliminating or reducing those risks.

Sections 25(4)[9] and 25(5)[10] of the new Act provides a non-exhaustive list of more specific ways in which the GED may be breached.

Other duties

In addition to the GED there are several other duties which are imposed on:

  • the person undertaking the activity; and
  • the person in management and control of contaminated land.

Compliance with these duties requires significant preparation. This should start now to be ready for 1 July 2021. These duties and the actions required a summarised in the table below.

 

Duty

Duty holder

Content

Action required

Duty to respond to harm and restore after an incident (section.31)

 

Person undertaking the activity

If a pollution incident has occurred that causes harm to human health or the environment, a person who is engaging in that activity must, so far as reasonably practicable, restore the affected area to the state it was in before the pollution incident occurred.

Ensure that your policies and procedures require appropriate reporting of and response to incidents that may give rise to a duty to respond and restore.

Ensure that incident reporting and response policies and procedures are being properly implemented and are effective

Duty to notify of certain pollution incidents (section.32)

Person undertaking the activity

The person engaging in the activity must notify the Authority, as soon as practicable, after the person becomes aware or reasonably should have been aware of the occurrence of the notifiable incident.

Ensure that your policies and procedures require appropriate reporting of incidents that may give rise to a duty to notify.

Ensure that incident reporting policies and procedures are being properly implemented and are effective

Duty to manage contaminated land (section.39)

Person in management or control

A person in management or control of land must notify the EPA if the land has been contaminated by notifiable contamination as soon as practicable after the person becomes aware of, or reasonably should have become aware of, the notifiable contamination.

Collect all environmental reports, data for all land under your management or control and engage an environmental consultant to review those reports and determine whether the contamination is ‘prescribed notifiable contamination’ that gives rise to a duty to notify and/or a duty to manage

Duty to notify of certain contamination (section.40)

Person in management or control

A person in management or control of land must notify the EPA if the land has been contaminated by notifiable contamination as soon as practicable after the person becomes aware of, or reasonably should have become aware of, the notifiable contamination.

In addition to undertaking the recommended action in relation to the duty to manage, ensure that the duty to notify of certain contamination is contemplated by your policies and procedures in relation to pollution incidents and the duty to restore.

 

New Permissions

The new Act will introduce a new, much broader, permissions regime. Works approvals and licences will be replaced by development and operating licences. The activities that will require permission under the new Act[11] expands on those listed in Environment Protection (Scheduled Premises) Regulation 2017. The number of activities for which permission is required will increase from around 51 to 78. The new Act also introduces new permit and registration requirements for activities that present a lower level of risk.

Businesses should be aware that under these new permission requirements, activities for which no permission is currently required may require permission under the new Act.

Regulation, Standards pushed back

Supporting the implementation of the new Act, exposure drafts of the Environment Protection Regulations and Environmental Reference Standards were released for public comment between 2 September - 31 October 2019. These were expected to be finalised in April or May 2020. It is anticipated that the finalisation of the Regulations and ERS will now be delayed.

There have been a number of other policies and guidelines released by EPA in draft in relation to the new duties, powers and requirements under the new Act. Finalisation of these policies and guidelines may also be delayed.

On 18 December 2019 the EPA released:

On 30 March 2020 the EPA released the following guidance on operating licences:

On 3 April 2020, in conjunction with the EPA, the Department of Environment, Land, Water and Planning (DELWP) released draft exposure amendments to the Victorian Planning Provisions and associated Ministerial Direction and Practice Note dealing with potentially contaminated land. Submissions on the proposed changes, which can be provided via Engage Victoria, were to be made until 5 May 2020. The public consultation period has been extended to 2 June 2020.

How to prepare – what do I need to do and what do I need to tell the board?

To ensure that you are prepared for the 1 July 2021, you should consider undertaking the following actions:

  • Establish a project working group responsible for ensuring the business is familiar with the new duties, permissions, powers and prepared for the implementation of the new regime.[12]
  • Review risks and hazards associated with the company’s operations including preparing a risk register.
  • Review current company policies, procedures and risk management processes. Ensure that those policies are updated to align with requirements of the new Act.[13]
  • Train staff on the new EP Act to ensure that existing and revised policies, procedures and processes are implemented appropriately.
  • Identify whether the business has any management or reporting obligations in relation to land under the management or control of the business;[14]
  • Consider need for any new permissions and start process of engaging with EPA early on application process.[15]

How to prepare – what do directors and officers need to do?

Similar to the approach required under OHS legislation, directors and officers have an obligation to exercise ‘due diligence’ and to demonstrate that a proactive approach to meeting the duties under the new Act is being taken by both them and their companies. This involves:

  • acquiring knowledge and keeping up-to-date about environmental matters;
  • understanding their businesses, including risks to human health and the environment;
  • ensuring the business has the right resources and processes in place to eliminate or minimise risks;
  • ensuring the business has the right processes to receive and respond to reports of incidents, hazards or other issues, and processes to comply with duties; and
  • verifying that the processes and resources set out above are being used.

Next steps

With the implementation of the new Act delayed for around 12 months, businesses now have an excellent opportunity to ensure they are prepared. Certainly, we expect the EPA will take the view that businesses will now have no excuse for not being ready. We recommend that businesses aim to have trained all staff, identified risks and hazards to the environment and human health in the business, made the necessary changes to policies and procedures, and undertaken appropriate investigations into land under the management or control of the business well in advance of the new Act coming into force.   


[1] See KWM update ‘COVID-19 delays new Victorian Environment Protection Act’ at https://www.kwm.com/en/au/knowledge/insights/covid-19-delays-new-victorian-environment-protection-act-20200422

[2] Failure to exercise due diligence (s 349): if a company commits and offence, s 349 will make an officer of that company liable for the same offence if that officer failed to exercise due diligence to prevent the commission of the offence by the company. This provision only applies in relation to certain specified offences such as the duty to notify of contaminated land, breaches of permission conditions, and unlawful deposit of waste. The onus will be on the prosecution to establish that the officer failed to exercise due diligence. When determining whether an officer failed to exercise due diligence, regard will be had to what the officer knew, or ought reasonably to have known, whether or not the officer was in a position to influence the body corporate; and what steps the officer took, or could reasonably have taken, to prevent the commission of the offence.

Defence of diligence (s 350): where a company commits an offence, an officer of that company is also deemed to have committed the same offence. This provision applies in relation to, among others, the duty to notify of certain pollution incidents and in relation to the GED. A defence is available where an officer can prove that they exercised due diligence to prevent the commission of the offence by the body corporate. When determining whether the officer exercised due diligence, regard will be had to the matters outlined above (knowledge, influence, reasonable steps).

Accessorial liability (s 351): an officer liable for offences committed by a company where the officer was authorised or permitted the commission of the offence by the company or was knowingly concerned in any way (whether by act or omission).

[3] The number of activities for which a permission is required is increasing from around 51 under the Environment Protection (Scheduled Premises) Regulations 2017 to around 78 under the exposure draft Environment Protection Regulations.

[4] The penalty for breaching the GED will be 2,000 penalty units (currently $330,000) for individuals and 10,000 (currently $1.6 million) for corporations. This is twice the maximum penalty for any offence under the current legislation.  For aggravated offences those fines double and for individuals may also result in up to 5 years imprisonment. In addition to increased penalties for criminal offences, the new regime will introduce new civil penalties. We consider that lower standard of proof required to prove contravention of a civil penalty provision (compared to the criminal standard of proof), will result in an increased number of matters prosecuted by the EPA.

[5] The new Act also introduces new provisions that, in certain circumstances, allow the EPA to direct obligations (such as environmental action notices or site management orders) to company officers.

[6] New notices include improvement notices (s 271), prohibition notices (s 272), notices to investigate (s 273), environmental action notices (s 274), site management orders (s 275) and non-disturbance notices (s 278).

[7] When issuing or varying a permission, the EPA or a council, may take into account measures the applicant has taken to comply with the GED, and may impose a condition requiring the permission holder to undertake specific measure to comply with the GED (Sections 54 & 69 of the new Act). The EPA or council may refuse to consent to the surrender of a licence if the licence holder has contravened the GED when engaging in the licensed activity.

[8] Some companies may already have environmental management systems (EMS) accredited to ISO 14001:2015 Environmental Management Systems or prepared in line with that standard. However, this is only a starting point or a framework for compliance and work needs to be done to align the that EMS with the duties and requirements of the new Act.

[9] S 25(4): the GED is contravened where a person fails to do the following in the course of business so far as reasonably practicable: use and maintain equipment, processes and systems in a manner that minimises risks of harm to human health and the environment from pollution and waste; use and maintain systems for identification, assessment and control of risks of harm to human health and the environment from pollution and waste that may arise in connection with the activity, and for the evaluation of the effectiveness of controls; use and maintain adequate systems to ensure that if a risk of harm to human health or the environment from pollution or waste were to eventuate, its harmful effects would be minimised; ensure that all substances are handled, stored, used or transported in a manner that minimises risks of harm to human health and the environment from pollution and waste; provide information, instruction, supervision and training to any person engaging in the activity to enable those persons to comply with the GED.

[10] S 25(5): A person conducting a business or undertaking and engaging in an activity that involves the design, manufacture, installation or supply of a substance, plant, equipment or structure contravenes the GED where they fail to do the following so far as reasonably practicable: minimise risks of harm to human health and the environment from pollution and waste arising from the design, manufacture, installation or supply of the substance, plant, equipment or structure when the substance, plant, equipment or structure is used for a purpose for which it was designed, manufactured, installed or supplied; provide information regarding the purpose of the substance, plant, equipment or structure and any conditions necessary to ensure it can be used in a manner that complies with the GED.

[11] See schedule 1 of the exposure draft Environment Protection Regulations.

[12] This may include briefing the Board / Board HSE risk committee to ensure that they are aware of, and understand the proactive requirements of, the new duties, permissions, powers, as well as the new Director and Officer liability provisions.

[13] Businesses will need to ensure that its policies promote proactive identification of risks associated with the activities of the business and implementation of reasonably practicable measures to eliminate or reduce the likelihood of those risks eventuating. Business and their officers will also need to ensure that the implementation of its policies and procedures are regularly reviewed to ensure that they are being implemented appropriately and are effective.

[14] This may require collecting all environmental reports, data for each site, and engage an environmental consultant to review those reports and determine whether the contamination is ‘prescribed notifiable contamination’ that gives rise to a duty to notify and/or a duty to manage.

[15] As the number of activities for which a permission is required is increasing from around 51 to 78 activities for which no permission is currently required may require permission under the new Act. Regard should also be had to the new environment reference standards that may impose new thresholds for activities that currently require permission, which may have the effect of triggering a permission requirement under the new Act.

Key contacts

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NEXT: Business, the Environment and Safety today

Businesses are facing the weight of community, investor and regulatory expectations amid the greatest upheaval of modern times associated with the COVID-19 pandemic.

Our experts are here to help. Welcome to NEXT.

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