New South Wales environmental laws to be strengthened in new bill to tackle unscrupulous business models and improve enforcement and accountability

On November 24, 2021, the government of New South Wales presented Parliament with the Bill to amend 2021 environmental legislation. The bill, if passed by Parliament, will mainly make changes to the Environmental Protection Operations Act 1997 (POEO Law), the Contaminated Land Management Act 1997 (CLM Law), the Pesticides Act 1999, the Radiation Control Act 1990, and the Environmental Protection Administration Act 1991.

The main objectives of the bill are to improve enforcement, increase penalties and empower legal persons and related persons concerned (or formerly concerned) in the management of a business. Some of the changes are significant given that appeal rights and defenses, including due diligence defenses, do not always apply.

During the presentation of the bill, it was noted that “certain industrial sectors, businesses and individuals have established practices which allow them to deflect liability and avoid the costs of cleaning and compliance by putting in place structures complex business…. To remedy this, the bill proposes several amendments to break these unscrupulous economic models ”. While it is not unusual to find that directors are liable, this is a significant extension as it includes related legal persons, current directors and directors of related legal persons.

The significant changes proposed are summarized below.

EPA has increased powers to issue opinions and orders

Currently under the CLM law, the EPA can only issue a clean-up or prevention advisory for heavily contaminated land, as determined by the EPA. Since it may take some time for this finding of “significance” to be made, the EPA, under this new authority, could issue clean-up and prevention notices immediately after a homeowner landowner or an occupant has voluntarily reported to the EPA that their land may be significantly contaminated under Section 60.

The proposed changes to POEO Law empower the EPA to:

  • Issue clean-up advisories not only to the person who is reasonably suspected of having caused the incident, but reasonably suspected of having contributed to it, in any extent. There is no right of appeal with respect to cleanup notices (including when the extent of the cleanup is greater than that person’s contribution) and the reasonable suspicion requirement is a low threshold test. . While the recipient of a cleanup notice may seek to recover their costs from others who caused or contributed to the incident, this may be of limited help when those people are nowhere to be found or have no money. Under the bill, the EPA can also seek to recover its costs of complying with a cleanup notice, from those who did not contribute to the incident to any extent.
  • Issue prohibition notices beyond specific activities at a specific site relating to a specific incident, class of premises or specific activity in a class of premises or to request a specific class of people to ban their activities. The second reading speech notes that: This power could be used to prevent those who have repeatedly committed crimes from moving to different premises and continuing their bad behavior. “
  • Record positive public restrictive covenants under Section 88E of the Conveyancing Act of 1919 to reflect obligations arising from abandoned or revoked license conditions that continue to apply to lands that were previously authorized or that exhibit residual contamination. In addition to this, the EPA may impose additional requirements such as requirements for:
    • inform the EPA of a change in ownership or occupation of the land,
    • not to carry out specified activities in the field.

It is important to note that the EPA is specifically empowered to enforce the restriction or covenant not only against the owners or tenants, but also against the mortgagee of the land.

Officers, directors and related legal persons are now open to a wider range of offenses and liability for the acts of the company or related legal person (RBC)

Through the various environmental laws mentioned above, a new offense will be created making any director (including those affected in management), former director, RBC or director or former director of an RBC, who receives a monetary benefit of an offense, deemed to have committed the underlying offense with the same maximum penalty as the underlying offense.

The EPA may initiate such a proceeding no later than 12 months after the predicate offense has been committed and this new offense may apply to offenses currently charged but not yet concluded. There is no defense for directors, managers and RBC under this new provision.

Under the POEO, if a company has been found guilty of an offense, then the EPA can seek a monetary benefits order (representing the amount of monetary benefits accrued as a result of the offense) not only against the company but against the directors, former directors (at the relevant time), RBC and the directors of RBC. The EPA can also seek a restraining order against those dealing with the proceeds of crime until the EPA completes its collection process.

In addition, when a company does not comply with notices or orders issued by the EPA, under the bill, the EPA can require directors (former and current), RBC and directors of the RBC that they comply with the notice or order. This new provision would apply to notices and orders issued before the law was amended.

Vehicle owners responsible for the waste transported to them

Currently, the person transporting or the owner of the waste in a vehicle is responsible for its illegal transport. Since it can be difficult to prove who drives a vehicle or where the waste comes from, the bill proposes a new offense that makes the owner of a vehicle that illegally hauls waste liable. There is no defense for this offense.

EPA enforcement breach

The bill also imposes new offenses relating to:

  • Providing any information to the EPA that is false or misleading in a material respect. This now includes information provided voluntarily. This is a defense if the person took all reasonable steps to ensure that the information was not materially false or misleading. The maximum penalty is $ 500,000 or $ 1M if the person knew the information was false.
  • Delay, hinder, assault, threaten or intimidate an authorized officer in the exercise of his powers.

The bill, if passed, demonstrates the importance directors and companies must place on environmental compliance and ensure that their dealings with the EPA are honest.