New bill seeks to tighten requirements for pollution incident reporting and doubles the penalty for failure to report.
In October 2011, the Protection of the Environment Legislation Amendment Bill 2011 was passed by the NSW Legislative Assembly. On 10 November 2011, it was passed by the Legislative Council with a few minor amendments relating to the new Board of the Environment Protection Authority (EPA.), and has now been sent back to the Legislative Assembly for concurrence. Once enacted, key aspects of NSW environmental regulation and pollution control will be amended, including:
- increased reporting requirements and penalties, investigation and audit powers, pollution incident response planning and public access to information through amendments to the Protection of the Environment Operations Act 1997 (NSW) (POEO Act); and
- the Board of the EPA will be reconstituted to strengthen the specialist expertise, requiring an annual regulatory assurance statement and the appointment of an independent chairperson with the aim of promoting more independence and accountability, through amendments to the Protection of the Environment Administration Act (NSW) 1991.
The amendments follow a review of environmental incident reporting laws by Brendan O'Reilly, which was commissioned by the Government following a release of hexavalent chromium into the atmosphere from an ammonium nitrate plant on Kooragang Island in August this year.
The key changes
The most significant amendments proposed by the Bill are the introduction of:
More onerous requirements for notifying government authorities of pollution incidents:
- a reduction in the time frame for notification from "as soon as practicable" to "immediately". Interestingly, the O'Reilly Review recommended reporting "immediately or within 1 hour of the incident occurring", which provides more specificity than the Government's proposed amendment;
- continuous disclosure obligations requiring "immediate" disclosure to authorities of new information in relation to pollution incidents as and when it comes to light;
- a requirement to notify up to six separate authorities of pollution incidents, including the EPA, the relevant local authority, Ministry of Health, WorkCover and Fire & Rescue NSW; and
- increased maximum penalties for breaches of notification requirements from $1 million to $2 million (for corporations) and $500,000 (for individuals). If the offence is continuing a further penalty of $240,000 (for corporations) and $120,000 (for individuals) can be made for each day the offence continues.
Greater record-keeping and publication requirements for environmental data to address the "community's right to know":
- Environment Protection Licence (EPL) holders must publish environmental monitoring data collected as part of their licence requirements prominently online within 14 days of data collection if they maintain a website that relates to the business or activity referred to in the EPL. If they do not maintain a website, they must provide data to any person who requests a copy at no charge; and
- the EPA must make available details of mandatory environmental audits, pollution studies, pollution reduction programs and any penalty notices issued to EPL holders.
Stronger investigatory and auditing powers for regulatory authorities, including powers of the EPA to:
- request the Ministry of Health to conduct a health risk analysis if it reasonably suspects a pollution incident has occurred or is occurring;
- conduct an environmental risk analysis of the nature and extent of the pollution incident and the actual or likely pollution and harm to the environment; and
- impose mandatory environmental audit conditions in EPLs if the EPA reasonably suspects an activity has been carried out in an environmentally unsatisfactory manner or there has been a breach of the EPL, POEO Act or regulations which are causing or likely to cause harm to the environment.
A requirement for EPL holders to prepare, test and implement a pollution incident response management plan (PIRMP), and the introduction of a range of offences for failure to comply with these obligations with maximum penalties of $1 million (for corporations) and $250,000 (for individuals). If the offence is continuing a further penalty of $120,000 (for corporations) and $60,000 (for individuals) can be made for each day the offence continues. The EPA may also require occupiers of non-licensed premises at which industry is carried out to prepare PIRMPs.
More onerous incident-reporting requirements
The most controversial amendment proposed by the Bill is the requirement for organisations to notify multiple government authorities immediately of pollution incidents which cause or threaten material harm to the environment. The definition of pollution incident is very broad and harm is material if it involves actual or potential harm to health and safety, or results in actual or potential property damage in aggregate exceeding $10,000.
The Government has not sought to introduce a further definition of "serious pollution incidents", for example by reference to specified hazardous chemicals or other thresholds, so the new reporting requirements are likely to unintentionally capture a large range of incidents and significantly increase the administrative burden on companies.
Rather than being obliged to report a pollution incident "as soon as practicable" to a single regulatory authority, there is now an obligation to notify up to six different authorities "immediately" following the incident, and to continue notifying each authority as new information comes to light. In the Second Reading Speech in the Legislative Council, the Hon. John Ajaka said that the word "immediately" was intended to mean "promptly and without delay. That is the everyday meaning of the word."
Notification can be oral, but must be followed up with written notification within seven days.
It would seem sensible to have a single integrated hotline to report pollution incidents rather than having to make up to six different calls, which could be time-consuming and potentially distract an environment and health and safety manager from dealing with the incident and attending to any serious threat to human health or the environment as soon as possible.
Additional publication of monitoring and audit information requirements
Increased access to environmental information is another major theme of the Bill arising from the O'Reilly Review and complaints that the community's right to know was not being met.
Organisations will now have to be ready to publish or provide monitoring data within 14 days of obtaining it. This timeframe may prove challenging especially when the accuracy of the data needs to be verified. Failure to comply with this requirement, or publication of false or misleading data, will be an offence with a maximum penalty of $4,400 (for a corporation).
The EPA does not have a timeframe for publishing details of mandatory environmental audits, pollution studies and pollution reduction programs on the public register but presumably this will have to be shortly after they are provided in order to ensure the public are able to access data as it becomes available.
Broader powers of investigation and audit
The Bill will empower the Chief Health Officer of the Ministry of Health and/or the EPA to conduct an analysis of the risk created by a pollution incident to human health or the environment, and organisations will bear the costs of those investigations.
Unlike the notification requirements, which apply only to a pollution incident which causes or threatens to cause material harm, these powers apply to all pollution incidents. This gives these authorities a broad scope to investigate even minor incidents.
The reasonable costs and expenses of such investigations are recoverable from the person reasonably suspected of causing the pollution incident and/or the occupier of the premises, unless it is proven that the investigation was not in the public interest, or that the nature and extent of the analysis was not reasonably necessary to respond to the potential public health or environmental concerns arising out of the incident. This is a high threshold and an organisation will need compelling evidence to avoid incurring such costs.
Regulatory authorities will also have broader powers to require EPL holders to carry out mandatory environmental audits. Previously, an authority needed to reasonably suspect
- that a licence holder had contravened the Act; and
- that the contravention(s) had caused or would likely cause harm to the environment.
Once the Bill is passed, some new triggers will be added to enable authorities to require EPL holders to carry out audits, where the authority reasonably suspects that an activity has been or is being carried out by a licence holder "in an environmentally unsatisfactory manner." This presents a lower threshold than the existing tests, and includes situations where no harm is threatened, so long as the activity is "not carried out in accordance with good environmental practice".
Obligations to develop Pollution Incident Response Management Plans (PIRMPs)
Finally, EPL holders must prepare, keep, test and implement a PIRMP which details the procedures to be taken in the event of a pollution incident threatening or causing material harm. PIRMPs must include procedures for notifying owners or occupiers of premises in the vicinity and relevant authorities, together with detailed descriptions of actions to be taken after the pollution incident to reduce or control pollution and procedures for co-ordinating actions with notified persons. The EPA may also require occupiers of non-licensed premises at which industry is carried out to prepare PIRMPs.
Major hazard facilities are likely to already have incident response plans in place which will be tested fairly regularly. However, non-hazardous facilities and non-licensed premises may not have such plans in place, which may lead to material additional costs Failure to comply with these requirements will trigger significant penalties, and organisations will have six months from the date that this part of the Bill becomes law within which to prepare these plans.
The Bill, if implemented in its current form, could significantly increase the regulatory burden on any organisation whose activities could result in a pollution incident. Occupiers within industrial premises also need to be wary as they may become subject to notification and other obligations under the EPA's new broad powers. The substantial penalties imposed for non-compliance with new requirements mean that organisations will need to carefully consider the likely impacts of their activities and prepare to comply.
In particular, EPL holders will need to amend or prepare new PIRMPs and consider the new publication requirements for monitoring data and mechanisms for ensuring the accuracy of that information. It would be wise to start considering these issues now to ensure your organisation is prepared well in advance.
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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.