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  • As a result of the NSW Environment Protection Authority’s investigation into asbestos-contaminated mulch found in locations across greater Sydney, amendments were made to the environmental protection framework.
  • The EPA will now have more extensive powers to investigate and punish environmental offences.
  • The practical implications of some changes, most notably the removal of a number of significant procedural fairness and common law protections, has created considerable concern for industry stakeholders.

On 4 April 2024, the Environment Protection Legislation Amendment (Stronger Regulation and Penalties) Act 2024 (NSW) (‘Act) came into force. This legislation contains some of the most significant changes to environmental protection law seen in over three decades.

The Act has been characterised as an urgent overhaul following the recent investigations in which asbestos-contaminated mulch was found at 78 sites across NSW, including schools, hospitals and public parks.

The Act passed through both houses quickly, with no amendment or meaningful consultation. It has been promoted by the NSW Environment Protection Authority (‘EPA’) as essential to addressing ‘critical loopholes’ and ensuring it has better enforcement powers to deter environmental crimes and effectively respond to pollution incidents. A closer look at the Act reveals a number of very significant changes that were not widely discussed.

Key changes

The list of amendments to the environmental protection framework is extensive:

  • Doubling of maximum penalties for a number of offences under the Protection of the Environment Operations Act 1997 (NSW) (‘POEO Act’) and a hundred-fold increase for resource recovery order penalties.
  • Doubling of maximum penalties that may be imposed by the relevant local court.
  • Addition of new illegal dumping offences for the deposition of more than 50l/kg of litter or waste.
  • Increased fines that may be imposed under penalty infringement notices.
  • New EPA powers to issue recall notices, public warning statements and preliminary investigation notices.
  • Expansion of the Land and Environment Court’s (‘LEC’) power to issue prohibition orders for those convicted of environmental offences.
  • Changes to the EPA’s objectives to include taking action against climate change.
  • Introduction of a new waste classification scheme.
  • Removal of protections afforded under voluntary environmental audits.
  • Removal of the rule against duplicity for contraventions of environment protection legislation.
  • Extension of liability to ‘related entities’, including in relation to monetary benefits.

Bigger penalties for environmental offences

The Act’s primary amendment, and the one at the forefront of every media release, is the significant increase of the maximum penalties for a long list of environmental offences under the POEO Act. The maximum penalties for the most serious environmental offences (those that are committed either wilfully or negligently) have doubled to $10 million for corporations and $2 million for individuals. Relevantly, offences involving asbestos will now incur maximum penalties of $4 million and $1 million respectively, up from $2 million and $500,000.

The increases come in response to recommendations from the Legislative Council following its 2023 report into the impacts of mining on human and environmental health which found that penalties under the POEO Act were inadequate as a deterrent to large companies committing environmental offences.

NSW already had the toughest maximum penalties in the country, with Victoria a close second, prior to the changes brought in by the Act (at nearly $4 million for a corporation’s aggravated breach of the general environmental duty). While most accept that those who commit environmental offences should face appropriate punishment, pecuniary penalties were reported by the Australia Institute of Criminology to not be particularly successful in deterring offenders in these sorts of crimes.

Recall powers

The EPA is now able to issue recall notices where a particular substance poses a potential risk of harm to human health, or the environment or fails to comply with a standard prescribed by either the environment protection legislation or a national protection measure.

Recall notices can be given to any person within a supply chain which includes those in the production, processing and sale of a substance. The EPA can require a wide range of actions to be carried out by a recipient such as the recovery, control of the movement, testing and analysis of a substance as well as the publication of information about a substance. The introduction of these notices comes as no surprise in the context of the asbestos-contaminated mulch investigation.

Recall notices of this nature are not novel and are already used at a federal level in product safety. Nevertheless, the scope of actions that can be required is extensive and issues may arise for recipients in situations where it may not be practical or feasible for them to comply with a notice. While the EPA will require approval from the Minister, the issue of a recall notice cannot be administratively reviewed and cannot be stayed by an interlocutory order of a court or tribunal. This raises concerns about procedural fairness and accountability.

‘Name and shame’ statements

A significant extension of the EPA’s powers comes with the introduction of ‘public warning statements’ that can be issued to identify and give warnings about a broad range of issues if it holds the view that it would be ‘in the public interest’. These issues may include:

  • substances or activities the EPA ‘reasonably suspects’ of contributing to a pollution incident, including details about the providers of the substances or activities;
  • regulatory action taken against a person, including 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.

The EPA is protected from liability where statements are found to be incorrect or inaccurate, on the basis that it was made ‘in good faith’.

It is not uncommon for the EPA to issue press releases on its prosecutions, fines issued and pollution incidents as a way of warning the community of potential environmental issues. The EPA often requires those convicted of environmental offences to publish their own public notices in the press. It also maintains a publicly accessible register of a wide range of enforcement actions it has taken.

Any person or business undertaking scheduled activities in NSW now faces a higher level of risk in terms of potential EPA action, particularly where those activities involve asbestos.

Preliminary investigation notices

The EPA can now also issue ‘preliminary investigation notices’ if it reasonably suspects that either:

  • there are circumstances where a substance or deposit of waste poses a potential risk of harm to human health or the environment; or
  • there is a pollution incident that may be occurring at premises.

Preliminary investigation notices can be used to require a recipient to ‘assist the EPA’ in its investigation and determination of the nature and extent of a potential risk. This can be by collecting and testing samples of substances and preserving the ‘disturbance of a specified substance or location’.

They can be issued orally or in writing to an owner or occupier of premises and any person the EPA suspects ‘has caused or contributed to, to an extent’ circumstances under investigation.

This new power is interesting for several reasons:

  • It will effectively require those suspected of having committed an environmental offence to take active steps in gathering evidence in relation to that potential crime which it will then have to turn over to the EPA. This constitutes a notable erosion of the accusatorial system applied in NSW, a fundamental legal principle that the High Court has recognised in a number of important decisions in the last decade (X7 (2013) 248 CLR 92; Lee v NSW Crime Commission (2013) 251 CLR 19).
  • Failure to comply with a preliminary investigation notice is an offence in itself. The EPA has already been afforded broad powers to require the production of documents and provision of information. There is also no right to silence, and the privilege against self-incrimination is only available in limited circumstances.

Expansion of liability for the recovery of monetary benefits.

A number of legislative instruments within the environmental protection framework contain provisions enabling a prosecutor to seek an order for the recovery of any financial benefits derived from the commission of an offence. Previously, only directors, related bodies corporate and directors of related bodies corporate could be the subject of such an order.

The Act now permits the recovery of a monetary benefit from ‘related entities’ as opposed to ‘related bodies corporate’, a substantial broadening which is defined to include the relatives of directors, shareholders, beneficiaries of trusts and their relatives as well.

As it is a strict liability offence under the POEO Act to receive, acquire or accrue a monetary benefit as a result of the commission by a corporation of a proved offence, a broad range of people could now have a monetary benefits order made against them or be liable for committing such an offence.

Removal of voluntary environmental audits and protected documents

One change revealed upon close examination of the Act is the removal of voluntary environmental audits (‘VPA’) from the POEO Act. This includes the protections afforded to documents prepared in the course of undertaking a VPA. If a document fell within the category of a protected document, it could not be inspected, copied or otherwise accessed by the EPA for any reason connected with its enforcement powers.

The protected documents provisions encouraged individuals and companies to carry out their own investigations into how their environmental performance could be improved, without fear that any documents created in that process could be accessed and used by the EPA against them. Clients and practitioners may now be at risk, especially as the protection provisions do not carry over to documents already prepared where proceedings have yet to be commenced.

Key takeaways

The changes brought in by the Act will significantly alter the legal landscape of environment protection in NSW. Most concerning is the removal of a number of procedural fairness and common law protections previously afforded to persons conducting activities in NSW, with little to no warning or consultation with key industries.

Beyond a general ability to take further action and seek higher penalties following an environmental incident, it is unclear how many of these changes will address the root causes of the asbestos-contaminated mulch problem under investigation by the EPA.

Any person or business undertaking scheduled activities in NSW now faces a higher level of risk in terms of potential EPA action, particularly where those activities involve asbestos.

Madeleine O’Connor
is a Solicitor at Beatty Hughes & Associates.