Australia: The Law Behind The Headlines: Dewatering Queensland’s Coal Mines and What Happens Next

Last Updated: 30 January 2011
Article by Rebecca Hoare

Introduction


Water. It is one word. Yet for Queenslanders it is a word heavy with meaning - never more than at this moment. After years of drought, by mid January 2011, 75 per cent of Queensland was declared a disaster zone because of heavy rains and flooding. Even Australia's third largest city, Brisbane, has been significantly impacted by this natural disaster.

The impact on lives, homes and businesses is far reaching and often heartbreaking. The broader impact on the economy is already being felt and will continue to be felt for years to come. The purpose of this article is to focus on one sector which contributes significantly to the economy through employment, investment in local industries and communities and through the payment of substantial royalties: the resources sector, particularly the coal and coal seam gas industries in the Fitzroy and Burdekin Basins.

In particular, I will look at the environmental law consequences of recent events, consider the legislative and policy context and offer practical tips for dealing with an environmental incident.

Background

In early 2008, severe flooding in the Fitzroy Basin caused the unauthorised release of contaminated water from local coal mines into nearby creeks and rivers causing significant impact on downstream users. One mine in particular released 138,000 L of water into the Nogoa River.

In the 2008/2009 wet season, the Fitzroy Basin again experienced heavy and sustained rainfall. As a result of unauthorised releases of water from several mines during this period, which allegedly caused significant contamination of nearby creek and river systems, the Queensland Department of Environment and Resource Management (DERM) prosecuted five mines for breaches of environmental authority conditions and for causing serious environmental harm. It also issued several emergency directions and transitional environmental programs (TEP) (both of which are discussed below) to allow the release of water from some affected mines.

History nearly repeated itself in the 2009/2010 wet season when 22 coal mines reported unauthorised water releases due to heavy rainfall. While six penalty infringement notices were issued to five mines (each carrying a fine of $2,000). Eleven warning notices were also issued after an investigation of all unauthorised discharges. No prosecutions were undertaken by DERM. The reasons for this are discussed further below.

Legislative and Policy Response

As a result of the major localised flooding in early 2008, the Queensland Government commissioned Emeritus Professor Barry Hart to renew water quality issues in the Fitzroy Basin and (amongst other things) to recommend any changes that might be made to environmental authority conditions and the Environmental Protection Act 1994 (Qld) (EP Act). Further, in April 2009, DERM released a report entitled "A study of the cumulative impacts on the water quality of mining activities in the Fitzroy River Basin" which recommended that environmental authority conditions regarding water discharges be standardised across the Fitzroy Basin by agreement with the relevant mining companies.

These model water conditions were implemented by the following we season and contain stringent discharge limits and monitoring and reporting requirements.

Current Events

As early as 2 November 2010, it became clear that mines were starting to prepare for the onslaught of the wet season, when DERM approved a TEP for a mining operation to release up to 4,000 megalitres from one of its dams into a nearby creek. The purpose of the release was to 'maintain sufficient storage capacity in the water impoundments prior to the wet season'1.

By 4 December 2010, six mines had notified DERM of breaches of environmental authority conditions, primarily in relation to exceeding water quality limits, unintentionally discharging from authorised discharge points or not meeting receiving water flow requirements2. This number climbed steadily over the next month. By 6 January 2011, 13 coal mines and 4 coal seam gas operations in the Fitzroy and Burdekin Basins had released water outside of their environmental authority conditions since 30 November 20103. However, due to the heavy rainfall, DERM considered the risk of environmental harm to be very low due to the nature of the breaches and the very high flows in the receiving waters. Nonetheless, DERM clearly stated that it was investigating all breaches and would take enforcement action where necessary.  

In addition to being notified of environmental authority contraventions, DERM had approved 18 TEPs and 4 amendments to TEPs by 25 January 2011 (including in relation to one coal seam gas operation for the purpose of the management – but not the release - of water, brine and effluent from the CSG site). All of the TEPs related to water management, in particular, such things as authorising the release of water above maximum volume amounts and/or above maximum limits for electrical conductivity (EC) and turbidity.

Legal Framework

The media is rightly focusing on the current issue of "dewatering" coal mine pits and the impact of such releases on the environment. There is a balance being struck between taking the necessary time to test and monitor the quality of the water proposed to be released and actually allowing the releases while the waters are sufficiently large to dilute contaminants and minimise environmental harm.

To better understand the law behind the headline, below is a summary of some of the regulatory provisions that apply to incidents such as those arising from heavy rainfall and flooding.

Duty to Notify

Under the current section 320 of the EP Act, a duty to notify of environmental harm is imposed on a person who, while carrying out an activity, becomes aware that serious or material environmental harm is caused or threatened by their own or someone else's act or omission while carrying out that activity (or a related activity).  

If the person is an employee or agent of another (referred to as the 'employer'), that person must notify the employer of the event, its nature and the circumstances in which it happened as soon as reasonably practicable, in which case the employer must then immediately provide written notice of these matters to DERM. If the employer cannot be contacted or if the duty rests on the employer, the person or the employer must give written notice to DERM about these matters as soon as reasonably practicable.

However, there is currently no obligation on any relevant party to notify others who might also be affected by the environmental harm. For example, in the case of an unauthorised release of contaminated water, landholders downstream may be affected. If such landholders are not aware of the contamination event, they are not in a position to take steps to mitigate or manage the impacts (e.g. ensure stock is removed from the vicinity of the affected waterway).

However, the Natural Resources and Other Legislation Amendment Act (No 2) 2010 (Amending Act) passed in late 2010 (but not yet proclaimed into force at the time of writing) will replace the duty to notify with an expanded duty. Many of the obligations are identical to those currently in place. However, additional duties to notify will be imposed when the legislation is passed.  

The current duty to notify DERM or an employer about actual or threatened material or serious environmental harm will remain – although such notice will be required to be given within 24 hours (unless the person has a reasonable excuse).  

If the employer cannot be contacted, the employee must still give DERM written notification of the event, its nature and the circumstances in which it happened within 24 hours (unless the person has a reasonable excuse).  

The Amending Act will impose a further duty on employers and those carrying out the primary activity (otherwise than in the course of employment or engagement as an agent) to give:

  1. written notice of the event, its nature and the circumstances in which it happened to any combination of the following for the affected land:
    1. any occupier of the affected land (that is, any person who lives or works on the affected land)
    2. any registered owner of the affected land (that is, the registered owner of the land or any lessee of the land under the Land Act 1994).
  2. public notice of the event, its nature and the circumstances on which it happened to person on the affected land.  

Affected land is defined to mean 'land on which an event has caused or threatens serious or material environmental harm'.  The manner in which public notice can be given will be prescribed by regulation. However, examples given in the explanatory memorandum include a radio or television broadcast to allow a large number of affected landholders or occupiers to be notified, particularly in circumstances where the impacts of an incident are widespread.  

Written notice can be given to occupiers of affected land by addressing the notice to 'The Occupier' and:

  1. leaving the notice with someone who is apparently an adult living or working on the affected land
  2. leaving the notice on the affected land in a position where it is reasonably likely to come to the occupier's attention, such as a letterbox drop (if there is no-one on the land or access has been denied to the land)
  3. posting the notice to the affected land.  

The obligation for employers to notify landholders and occupiers arises where they themselves have been notified by employees and agents under the proposed new section 320B(2). However, the obligation does not appear to arise in circumstances where an employee or agent notifies DERM where the employer cannot be contacted. This leaves a significant gap in notification and would appear to be a drafting error, as this does not seem to be the intent of the proposed amendments.  

The penalty for failure to notify is currently 100 penalty units ($10,000 for an individual and $50,000 for a corporation). The Amending Act seeks to increase this to 500 penalty units ($50,000 for an individual and $250,000 for a corporation) on the grounds that:

  1. the current penalty does not reflect the seriousness of the offence, particularly as the failure to notify can increase the likelihood of a major environmental incident
  2. is too low to provide an adequate incentive to notify given that, if the incident leads to a prosecution, the penalty could be much higher.

It is a defence to the offence of failing to give such notice that reasonable efforts were made to identify the affected land and give written notice to each registered owner or occupier of the affected land.  

It is not possible to rely upon the privilege against self-incrimination as a reasonable excuse for failing to notify. However, the notice is not admissible in evidence against the person in any prosecution for the offence to which the notice relates. This does not prevent DERM from gathering other evidence regarding the offence and relying upon that evidence in a prosecution. This is the position in the current section 320 and the Amending Act does not seek to change this.  

Program Notice

Another form of DERM notification may occur by way of a program notice.

A program notice is given to DERM about an act or omission (called the 'relevant act') that has:

  1. caused or threatened environmental harm in the carrying out of an activity, and
  2. is lawful apart from the EP Act.

The program notice must give full details of the relevant event and declare an intention to prepare, and submit to DERM, a TEP for the activity. It can (but is not required) to also include any report, or the results of any analysis, monitoring program, test or examination carried for the relevant event. Once DERM receives the program notice, it must (within 10 business days) give written notice to the person of the day by which the draft TEP must be submitted to it for approval. This timeframe must not be more than three months after receiving the program notice.

The giving of the program notice has some distinct advantages, including:

  1. If the relevant event constitutes an offence, the giving of a program notice (together with any documents submitted with it such as testing results) are not admissible in evidence against the person in a prosecution for that offence. However, this does not prevent the gathering of other evidence and the use of that evidence in proceeding.
  2. Once the program notice is received, DERM can not prosecute the person for a continuation of the original offence that happens after the authority receives the notice. This immunity from prosecution is subject to certain limitations which are discussed below.

You would only use a Program Notice where you intend to prepare and submit a TEP.

The immunity from prosecution only applies to the continuation of the original offence and not in relation to the original offence itself.

However the immunity only applies until whichever of the following happens first:

  1. DERM approves the TEP
  2. DERM refuses to approve the TEP, or
  3. The day by which the draft TEP was to have been submitted, it is not submitted by this day.

Further, the Planning and Environment Court (PEC) (upon application from DERM) may set aside the immunity from prosecution if the PEC is satisfied that:

  1. The relevant event was willfully done with the intention of relying upon the program notice as an excuse, or
  2. Immunity from prosecution is not appropriate because of the nature and extent of the environmental harm caused or threatened by the continuation of the original offence.

In deciding whether to set aside immunity, the PEC will consider:

  1. The circumstances in which the relevant event happened
  2. The nature and extent of the environmental harm caused or threatened by a continuation of the original offence
  3. The resilience of the receiving environment
  4. The environmental record of the person
  5. Whether a TEP or environmental protection order is in force for the relevant activity.

Transitional Environmental Programs

TEPs are specific programs approved by DERM that allow entities to operate outside of codes of environmental compliance and of conditions of approvals such as environmental authorities and development permits. By their nature, TEPs are temporary and must state a particular end date. The end aim of the TEP is to bring the relevant entity back into compliance with the relevant requirements.

The purpose of a TEP is to reduce environmental harm and/or detail the transition to an environmental standard. A TEP must (amongst other things):

  1. state the objectives to be achieved and maintained under the TEP
  2. state how the objectives are to be achieved and set appropriate timeframes for achievement
  3. state appropriate performance indicators at intervals of not more than six months, and
  4. make provision for monitoring and reporting compliance with the program.

The preparation and submission of a TEP may be required by DERM or done voluntarily (with or without a program notice). For example. DERM may require a TEP as a condition of an environmental authority or if it is satisfied that a person is causing or may cause unlawful environmental harm.

Where the actions approved under a TEP would otherwise constitute an offence, compliance with the TEP constitutes a defence for the relevant party.

Notification required by conditions

The conditions imposed in environmental authorities (and development permits) will usually require notification to DERM in certain circumstance

Emergency Directions

The EP Act confers on DERM broad emergency powers. In particular, it allows DERM to give a written emergency direction to a person to release a contaminant into the environment if it is satisfied that it is necessary and reasonable to release the contaminant because of an emergency and there is no other practicable alternative to the release. Any such emergency direction may be subject to reasonable conditions.

It is an offence to fail to comply with an emergency direction without reasonable excuse and the recipient of the emergency direction must also take all reasonable and practicable precautions to prevent or minimize environmental harm, the risk of death or injury to humans or animals and loss or damage to property.

Compliance with an emergency direction is a defence against many offences in the EP Act, including causing serious or material environmental harm.

Enforcement and Compliance

Upon investigation of a potential offence, DERM has a range of enforcement and compliance options open to it, which include:

  1. Verbal warnings and warning letters
  2. Administrative Enforcement Action (such as Penalty Infringement Notices, Environmental Protection Orders, Environmental Evaluation Notices, Clean Up Directions)
  3. Restraint or enforcement orders and declaratory proceedings in the Planning and Environment Court, or
  4. Criminal prosecution in the Magistrates' or District Courts.  

The particular enforcement method chosen will depend upon the circumstances and a range of public interest considerations which are set out in DERM's new Enforcement Guidelines published in late 2010, including:

  1. The seriousness, the triviality or 'technical nature' of the offence
  2. The harm or potential harm to the environment caused by the offence
  3. Any mitigating or aggravating circumstances
  4. The degree of culpability of the alleged offender
  5. The availability and effectiveness of any alternatives to enforcement action
  6. Whether the offender has been dealt with previously without enforcement action and, if so, what level of enforcement action
  7. Whether the breach is a continuing or second offence
  8. Whether the offence is ongoing
  9. The prevalence of the alleged offence and the need foe deterrence
  10. The length and expense of any court hearing
  11. The likely outcome in the event of a conviction having regard to the sentencing options available to the Court, and
  12. Any precedent which may be set by not instituting proceedings;

Further, early voluntary disclosure of the offence and the circumstances surrounding it together with co-operation with DERM during an investigation will be taken into account by DERM when selecting what enforcement action, if any, will be taken. Of course, this must be balanced against protecting the interests of those being investigated and can sometimes be a difficult balance to strike.

The Enforcement Guidelines deal with the situation where DERM enters into 'without prejudice' discussions about the type of enforcement tool to be selected. The Enforcement Guidelines state that the driving consideration should be to achieve the best environmental or natural resource outcome and that 'no agreement can be reached with an alleged offender who is not prepared to take responsibility for the impacts of the unlawful conduct'. In such a case, DERM will consider:

  1. The costs of the enforcement response relative to any outcome achieved
  2. Whether a negotiated response sets an unsatisfactory precedent for DERM's response to the conduct, and
  3. Whether a negotiated response provides an adequate deterrent for similar conduct.

After the 2008/2009 floods, five mines were charged with environmental offences relating to the release of contaminated water. One mine received a fine of $130,000 (plus costs of $8,000) for contravening a condition of an environmental authority and causing serious environmental harm. The Minister for Climate Change and Sustainability stated DERM had weighed up the company's lack of preparation for the heavy wet season against the steps that the company had taken to minimize the release of water during the rainfall event'4.  Similar comments were made in relation to another mine that was fined $135,000 after pleading guilty for unlawfully causing serious environmental harm5.   The need for proper preparation, undertaking risk assessments and having adequate water management plans in place is clearly critical. Further, companies that responded quickly and effectively to an incident and cooperated with DERM during its investigation were also more favourably regarded.

In contrast, of the 11 coal mines that were investigated for discharging outside their environmental authority conditions in the 2009/2010 wet season, six PINs and 11 warning notices were issued. No mines were prosecuted. DERM sited several reasons for this including that the environmental harm caused by the releases was not significant and that the mining companies cooperated with DERM during the investigations6.

Top Hints for dealing with incidents

While most mines appear to have managed this season's floods as well as possible and responded quickly with TEPs, it is worth recapping on the issues to be considered and actions to be taken when responding to a big rain or indeed any incident which has the potential to result in environmental harm.

Notify

  1. Notify environmental harm as required under the EP Act (including the expanded duty to notify when it comes into force).
  2. Check environmental authority conditions to ascertain what notification and reporting requirements apply.
  3. Consider whether a program notice would be appropriate in the circumstances.
  4. Consult as appropriate with stakeholders (community, local government, environmental group).

Responding and Mitigating

  1. Take quick and effective steps to mitigate environmental harm.
  2. Consider whether a TEP is necessary.

Investigation

  1. Cooperate with DERM investigators, but understand your rights and the potential for executive officer liability.
  2. Protect material which is subject to legal professional privilege and/or material not relevant to the investigation.
  3. Where possible and appropriate, cloak all internal and external communications regarding the incident with legal professional privilege.
  4. Demonstrate to DERM the measures taken to prepare for eventuality of incident (e.g. risk assessment, a robust and effective environmental management systems, environmental audits etc) and the measures taken to mitigate any environmental harm.

Review and Improve

  1. Review all relevant aspects of environmental management and incident response plans to ascertain areas of strength, areas of weakness and opportunities for improvement.
  2. Adopt and implement any changes (including by way of staff training).

Conclusion

Environmental issues are but one part of the matters facing resource companies at the moment. It is likely that long term adaptive environmental management will be required by DERM. In the short term, mines that reported non-compliance with environmental authority conditions must deal with the economic impacts on the mine of the rainfall and flooding, together with potential DERM investigations. Policy and legislative changes to such events are common and it remains to be seen what further change 2011 has in store.

Event

The top ten legal issues for resources companies facing flood conditions will be discussed on Tuesday, 1 February 2011, during a seminar at our Brisbane office. If you are interested in attending this seminar please contact Sandie Postlethwaite.

Endnotes

1 DERM Media Release dated 2 November 2010, Department of Environment and Resource Management Updates on Central Queensland Mine Water Releases
2 DERM Media Release dated 4 December 2010, Media Response – Central Queensland mine discharges
3 DERM Media Release dated 6 January 2011, DERM Update on 2010/11 wet season: recent coal mine and coal seam gas discharges
4 Media Release, Minister for Climate Change and Sustainability, The Honourable Kate Jones dated 30 March 2010, Mine Fined Over Contaminated Water Discharge
5 Media Release, Department of Environment and Resource Management dated 21 October 2010, Cloncurry mine fined $135,000 for contaminating creek
6 Update from the Department of Environment and Resource Management dated 7 June 2010, Investigations into the 2010 summer rainfall coal mine discharges completed

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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