New Compliance and Enforcement Policy puts EPA Victoria on track to becoming a 'modern environmental regulator'.
In June 2011, EPA Victoria released a new Compliance and Enforcement Policy ("the new Policy"), which was developed in response to the Compliance and Enforcement Review by Stan Krpan undertaken in late 2010 ("the Review"). The Review was critical of the EPA's "fractured, reactive and inconsistent" approach to enforcing the law, and found that there was little public or industry confidence in its capacity to protect the environment. The EPA has committed to implementing all of the recommendations of the Review, and the new Policy represents a further step in the direction towards a 'tougher' EPA.
The Policy differs from the previous Enforcement Policy1 ("previous Policy") in several key ways, including the manner in which it establishes a clear risk-based framework for targeted compliance and enforcement action, sets objective principles by which risk can be defined and assessed, and provides criteria to illustrate when each punitive sanction will be used.
The EPA's Regulatory Model, Approach and Principles
The EPA's new regulatory model is based on identifying the biggest risks to the environment, health, safety and well-being, and targeting compliance and enforcement activity towards them. Risk is defined as a combination of two elements: consequence, being the level of risk or harm to human health and the environment, and the likelihood or chance of non‑compliance. The new Policy defines different risk levels according to these two elements, with the most severe of these being the area of greatest focus by the EPA.
In undertaking enforcement action, the new Policy provides that the EPA will require all contraventions causing harm to be remedied. If this can't be achieved by restoring the environment to its previous state, then offenders will be required to 'make good' by minimising the extent of the damage or risks and taking all reasonable steps to remediate the impacts.
Where remedying a breach is insufficient to act as a deterrent, responsive sanctioning will then be applied according to specified criteria. This is in contrast to the previous Policy which provided that enforcement action would be taken in all instances where an offence had been committed, regardless of the risk or characteristics of the offender.
Monitoring Compliance and Undertaking Investigations
The EPA will undertake planned and pro-active inspections, "targeting areas of greatest risk and where non-compliance is most likely". The new Policy notes that during a site inspection, EPA staff will provide feedback, including their observations and any proposed further actions. Identified breaches will undergo a preliminary assessment to determine priority for further action and appropriate response. The criteria for deciding whether to undertake a comprehensive investigation which may result in a prosecution, include: its strategic value to the EPA, the consequence of the breach, and the culpability of the offender.
Areas of strategic value to the EPA include where the breach:
- occurred in a sector targeted in the EPA's annual compliance plan;
- came to light as a result of a compliance campaign or program;
- involved a breach of a statutory notice; or
- involved multiple parties to the offence.
The new Policy specifies certain situations warranting a comprehensive investigation due to the level of seriousness. These include:
- situations of significant environmental damage or harm;
- the discharging of waste following a licence suspension or revocation;
- failure to comply following repeated infringement notices;
- failure to comply with a pollution abatement notice or clean-up notice;
- breaches that undermine market mechanisms or self‑reporting requirements;
- failure to abate or clean-up environmental harm to achieve a commercial advantage; and
- failure to notify a breach of licence condition or waste discharge resulting in a major or severe risk of harm to human health and the environment.
Compliance and Enforcement Measures
In responding to incidents of non‑compliance, compliance advice from EPA officers will be given where the potential for harm is minimal, of an administrative nature, or where simple immediate or short-term action can be taken to remedy the issue, such as where the non‑compliance can be immediately remedied in the presence of an officer.
However, in all other instances, the EPA will issue a formal statutory notice or direction such as a pollution abatement notice or clean-up notice where works or actions are required to be undertaken to control risk, prevent further harm, or comply with the law, and these actions cannot be completed in the presence of an EPA officer during a site inspection.
The new Policy states that statutory notices are not "punishments"; however, they are certainly perceived by industry as being punitive measures and the more detailed public disclosure of such notices proposed by the new Policy is likely to be a cause of concern.
The new Policy states that the EPA will support "responsive sanctioning" and the use of punishment in a constructive manner to improve environmental outcomes. The new Policy is more structured than the previous Policy and provides clear criteria for when each of the different sanctions is likely to be used. The criteria considers both the severity of the harm or risk caused, and the culpability of the offender. Sanctions include, from least to most severe:
- Official warnings where the risk of environmental harm and offender culpability are low, and breaches of works approvals, licences or notices are of an administrative nature, with no material impact on the environment.
- Infringement notices for "common" breaches of the law, such as failures to comply with waste transport regulations, low-level waste discharges, littering, and motor vehicle offences. These will be used when the facts are not in dispute in relation to specific offences for which an infringement notice can be issued. A penalty infringement notice of up to $6000 can apply and, if paid, resolves the matter and avoids the risk of the recording of a criminal conviction in relation to the offence. There is also limited opportunity to seek an internal review pursuant to the Infringements Act 2006.
- Notice of contravention applies where there is a major ongoing breach and further enforcement action is planned. The recipient is liable to pay an accruing daily penalty while the breach occurs. A notice will trigger further investigation of higher penalties such as licence suspension, and active monitoring and surveillance of the site.
- Enforceable undertakings are voluntary agreements that act as an alternative to prosecution. The offender enters into a binding agreement to restore the damage to the environment and community, and implement systemic change in their business.
- Suspension or cancellation of licence or permit where there is a major risk to the environment. Suspension of a licence or permit may be appropriate where the licence holder has failed to pay an annual fee or levy, properly submit an Annual Performance Statement, or provide evidence or respond to a request for more information from the EPA. Where an organisation has a history of breaches of the law, ongoing non-compliance, or when serious breaches occur after prosecution, a licence or permit may be revoked. Procedural fairness will, however, be observed and a notice of an intention to suspend or cancel will be issued.
- Supreme Court injunction to prevent a continuing breach of the law. This may be necessary where other enforcement action has not been effective.
- Criminal prosecution will be used in the most serious circumstances, where other actions are likely to be ineffective. The new Policy adopts the guidelines of the Director of Public Prosecutions, in deciding whether or not to prosecute. Under the Environment Protection Act 1970 (Vic), either a company, or its officers, or both can be prosecuted for a breach of the Act.
Publication of Enforcement Information
Significantly, when the EPA undertakes enforcement action it will make information publicly available on its website regarding the nature of the offence, the offender, the EPA's action and the action the offender has taken or will take to resolve the issue. The website will list all notices such as pollution abatement notices, directions, prosecution details, and enforceable undertakings. The EPA will also maintain a public register of warnings issued by its officers (subject to any privacy requirements) and all active investigations will be identified; however, details may be limited so as not to compromise any ongoing investigation.
The new Policy is intended to act as a "rule book" on how the EPA will exercise its discretion around compliance and enforcement action, providing a more consistent and predictable approach for business and the community. It will be important for businesses to familiarise themselves with the provisions of the new Policy and the criteria for responsive action and the application of the various punitive measures as this new Policy is likely to be strictly adhered to by the EPA to address the criticisms and concerns of the past.
1. EPA Document No 384.3 dated 2006.
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.