New powers and increased penalties 10 min read
Major reforms to environment protection legislation in NSW are expected to commence soon, which will result in new powers being conferred on the NSW Environment Protection Authority (EPA) and a substantial increase in maximum penalties for environmental offences.
The reforms follow the passing of the Environment Protection Legislation Amendment (Stronger Regulation and Penalties) Bill 2024 (Bill) by Parliament on 21 March 2024.
The Bill proposes significant amendments to various pieces of environmental legislation1, relevantly including the Protection of the Environment Operations Act 1997 (NSW) (POEO Act), to:
'…provide for strengthened regulation, and increased penalties for offences, relating to the protection of the environment…'.
The Bill comes into existence following election promises made by the NSW Labor Government to strengthen environmental protections, and in light of the ongoing investigations into asbestos-contaminated mulch across 340 sites within NSW.
In this Insight, we examine some of the most significant changes proposed in the reform package which are expected to commence this month.
Key takeaways
The Bill proposes the following reforms:
- Substantial increases to the maximum penalties for a wide range of environmental offences. This includes the doubling of the maximum penalties for various offences under the POEO Act, bringing the maximum penalty for Tier 1 offences to $10 million for corporations and $2 million for individuals where an offence is committed wilfully.
- Expanded investigatory and regulatory powers of the EPA under the POEO Act, including the power to issue:
- Preliminary Investigation Notices to support early incident response;
- Recall Notices for substances that could pose potential risk of harm to human health or the environment;
- public warning statements to 'name and shame' poor environmental performers; and
- Clean-up Notices requiring a broader range of clean-up actions to be undertaken, including in relation to the illegal depositing of litter or waste pursuant to new illegal dumping offence provisions.
- The ability for the NSW Land and Environment Court to make a Prohibition Order to prohibit individuals from applying for, or holding, an environment protection licence or participating in scheduled activities.
- An increase to the maximum monetary penalty that the Local Court may impose in its summary jurisdiction for certain environmental offences to $110,000.
- Expanding the objectives of the EPA to include 'taking action in relation to climate change', and providing for general powers of the EPA to enter into arrangements or purchase property for the purposes of carbon neutrality or achieving net zero emissions.
Substantial increases to maximum penalties
The Bill proposes dramatic increases to the maximum penalties for a range of environmental offences, as a response to concerns by the NSW Government that the current penalties are no longer acting as a deterrent and do not reflect the seriousness or proportionality of the crime.
With respect to environmental offences under the POEO Act, the changes include:
- Doubling of maximum penalties for the most serious Tier 1 offences under Part 5.2 of the POEO Act, which will carry maximum penalties of $10 million for corporations and $2 million for individuals where an offence is committed wilfully, and $4 million for corporations and $1 million for individuals where an offence is committed negligently.
- Doubling of maximum penalties for a range of Tier 2 offences under the POEO Act for corporations and individuals. This includes Tier 2 asbestos-related waste offences under ss 142A, 143, 144, 144AAA and 144AAB of the POEO Act, which will carry maximum penalties of $4 million for corporations and $1 million for individuals. For those waste offences not involving asbestos, the maximum penalty for a corporation is doubled to $2 million for corporations and $500,000 for individuals.
- Increasing Penalty Notice fines, including higher penalties for repeat offenders.
- Increasing maximum penalties for resource recovery offences to $4 million for a corporation (if the offence involves asbestos waste) or $2 million (if the offence does not involve asbestos waste).
The Bill also proposes to increase the jurisdictional limit on the maximum monetary penalty that the Local Court may order for certain environmental offences to $110,000.
New offence provisions for illegal dumping
Under the proposed legislation, a new Part 5.6AA is to be inserted into the POEO Act, with new offence provisions and penalties for illegal dumping of litter or waste in an amount of more than 50L or 50kg in or on a public place or an open private place.
Higher penalties apply to illegal dumping of dangerous materials, including lit cigarettes or lit cigarette butts, e-cigarettes, lithium batteries, syringes, glass, oil, fuel, grease, paint or solvents.
The Bill further proposes that Clean-up Notices may be issued in respect of illegal dumping, as if the depositing of the litter or waste were a pollution incident.
Additional powers of the EPA under the POEO Act
The Bill proposes amendments to the POEO Act which will:
- create two new types of Environment Protection Notices, namely Preliminary Investigation Notices and Recall Notices;
- expressly provide that development consent or approval under the Environmental Planning and Assessment Act 1979 (NSW) is not required for the carrying out of any action required by a Clean-up Notice or Recall Notice; and
- enable the EPA to issue public warning statements if satisfied it is in the public interest to do so.
The Bill introduces a new power for the EPA to issue a Preliminary Investigation Notice if the EPA reasonably suspects that any of the following circumstances (Relevant Circumstances) may exist, or have existed, at premises:
- circumstances that may pose a potential risk of harm to human health or the environment from a substance or the deposit of waste or substances suspected of being waste; or
- a pollution incident.
A Preliminary Investigation Notice may be issued to an owner or occupier of the premises, or a person who has caused or contributed to the Relevant Circumstances that are the subject of the notice, and may require the person to 'assist the EPA' in its investigation into the Relevant Circumstances. The actions required by the notice may include, without limitation:
- collecting samples and having the samples tested and analysed;
- providing a report about the testing or analysis to the EPA; and
- preserving or preventing the disturbance of a specified substance or location at the premises for a period of time.
In the Second Reading Speech, Minister Sharpe stated that the proposed Preliminary Investigation Notice was a tool to enable the EPA 'to act more quickly [so that] the potential impacts of contamination incidents can be mitigated. We do not want to have to wait until the pollution event has happened when it could have been prevented in the first place'.
The Bill proposes that failure to comply with a Preliminary Investigation Notice is an offence, with a maximum penalty of $2 million for a corporation (with a further daily penalty of $240,000 for each day the offence continues). In addition, if a corporation does not comply with a notice, the EPA may issue a notice to a current or former director or a related body corporate.
The Bill proposes a new power for the EPA, with the approval of the Minister, to issue a Recall Notice if:
- a substance (or a particular use of, or activity involving the substance) poses a potential risk of harm to human health or the environment;
- a substance does not comply with a prescribed standard; or
- environment protection legislation has been contravened.
A Recall Notice will be required to identify the substance the subject of the notice, state the reason the Recall Notice has been issued, identify the persons or class of persons (supply chain participants) who are the subject of the notice, give information or advice about how to minimise the risk of potential harm from the substance, and state the actions required to be taken by the supply chain participants who are subject to the Recall Notice.
A Recall Notice may apply to any supply chain participant involved in the supply chain of the substance. Some of the actions that may be required under a Recall Notice may include, in part:
- stop supplying the substance, or a particular batch of the substance;
- take action to recover the substance from another person and return the substance to a specified location;
- sample, test, remediate or dispose of the substance;
- give information and records to the EPA about the supply chain for the substance;
- publish warnings in relation to the substance;
- control the movement of the substance;
- not produce the substance; and
- dispose of the substance.
The notice must be published on the EPA's website and in the Government Gazette. The notice may also be published in other ways if the EPA considers it necessary to do so to bring the notice to the attention of members of the public generally or in a particular part of the state.
The Bill proposes that failure to comply with a Recall Notice, without a reasonable excuse, is an offence, with a maximum penalty of $2 million for a corporation (with a further daily penalty of $240,000 for each day the offence continues). In addition, if a notice has been issued to a supply chain participant that is a corporation and the corporation does not comply with the notice, the EPA may issue a notice to a current or former director of the supply chain participant or a related body corporate.
The Bill will also provide to the EPA broad 'name and shame' powers to make and issue public statements giving warnings or information where the EPA is satisfied it is in the public interest to do so.
The information that may be included in a public warning statement may include information about:
- substances or activities the EPA reasonably suspects of contributing to a pollution incident;
- an activity the EPA reasonably suspects is being carried out in an environmentally unsatisfactory way;
- an activity, person, substance or other matter that, in the EPA's opinion, is of environmental concern;
- regulatory action taken against a person, including specifying the nature of the regulatory action and, if the person is a corporation, identifying the directors of the corporation and any related body corporate; and
- complaints received by the EPA under environmental protection legislation.
In issuing a public warning statement, proposed exclusion of liability provisions will apply where the statement is made or issued in good faith.
A new definition of 'clean-up action' is also proposed, expanding the range of actions that may be required by a Clean-up Notice.
This includes enabling a Clean-up Notice to require 'actions 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'.
Prohibition Orders
A new s253B is proposed to be inserted into the POEO Act which would enable the EPA to commence Class 4 proceedings in the Land and Environment Court, seeking that the court issue a Prohibition Order to prohibit a relevant person from applying for, holding or being involved in activities that require an environmental protection licence, for either a specified period or indefinitely.
The EPA may commence such proceedings if the EPA considers that the person:
- is likely to engage again, or continue to engage, in unlawful conduct; or
- is not a fit and proper person to hold, or continue to hold, an environment protection licence.
A Prohibition Order cannot be sought in relation to a public utility that provides an essential service, meaning the Federal Government, Sydney Water Corporation, Hunter Water Corporation, a local authority or another person or body prescribed by the regulations.
In addition, the Bill proposes a power for the court to make a Prohibition Order in connection with an offence that has been found to be proved by the court. In making such an order, the court must have regard to the offender's record in failing to comply with the POEO Act or regulations, any previous convictions under environment protection legislation and the circumstances surrounding the commission of the offence.
EPA action on climate change
The Bill proposes to amend the Protection of the Environment Administration Act 1991 (NSW) to introduce a new objective of the EPA—namely 'taking action in relation to climate change'.
In particular, it is proposed to include an express power of the EPA to:
- enter into arrangements, including commercial arrangements, in relation to carbon neutrality or achieving net zero emissions; and
- purchase property for the purposes of, or in relation to, carbon neutrality or achieving net zero emissions.
Next steps
The Bill was passed by both houses of the NSW Parliament on 21 March 2024. The EPA has indicated that it anticipates the new legislation will commence this month.
Given the significant implications of the proposed new powers, offence provisions and penalties, it will be of critical importance for organisations to have strong environmental governance measures and systems in place to manage compliance with environmental protection laws.
Footnotes
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Contaminated Land Management Act 1997 (NSW), Dangerous Goods (Road and Rail Transport) Act 2008 (NSW); Pesticides Act 1999 (NSW); Plastic Reduction and Circular Economy Act 2021 (NSW); Protection from Harmful Radiation Act 1990 (NSW); Protection from Harmful Radiation Regulation 2013 (NSW); Protection of the Environment Administration Act 1991 (NSW); Protection of the Environment Operations Act 1997 (NSW); Protection of the Environment Operations (General) Regulation 2022 (NSW); Protection of the Environment Operations (Waste) Regulation 2014 (NSW).