Environmental Regulatory and Compliance Trends 2018/2019

Risk Review

Environmental Regulatory and Compliance Trends 2018/2019

31 January 2019

Managing exposure to environmental liability remains an ongoing challenge for Australian businesses, particularly as government regulators take a more proactive approach to environmental compliance.

The changing attitudes across Australia with respect to the regulation of environmental liability has seen an increase in offences and penalties, putting a spotlight on how companies are managing their environmental risks.

Recent regulatory changes support the need for organisations to:

Understand their environmental legal requirements
Ensure their workforce is trained in the identification and management of environmental risks
Ensure they have appropriate environmental risk management processes and systems in place

With a primary focus on developments from Victoria, Queensland and New South Wales, this Risk Review will outline some key environmental, regulatory, and compliance issues across Australia from 2018, and highlight some upcoming changes in 2019 and beyond.

Victoria

New Victorian Environmental Legislation a 'Game Changer'

The Environment Protection Amendment Act 2018 (Vic) (the Act) was passed by the Victorian Parliament on 22 August 2018, with commencement of the legislation to occur on 1 July 2020. The legislation will bring Victoria into line with the regulations of the other States and Territories, and will have significant implications for any organisation based, or with operations, in Victoria, whilst setting a new standard for environmental regulation in Australia.

The underlying principle of the new legislation is the introduction of a general preventative environmental duty that is criminally enforceable. The then CEO of the Victorian Environment Protection Authority (EPA), Nial Finegan, commented that ‘The general duty will require people conducting activities that pose risks to human health and the environment from pollution and waste to understand those risks and take reasonable steps to eliminate or minimise them’.

To meet this new duty, organisations will need to be proactive in identifying and implementing practicable risk management measures to reduce the impacts of pollution and waste. In doing so, the EPA is now empowered to work with businesses to prevent harm, rather than being solely reliant upon remedial measures, after environmental damage has occurred.

Some of the key features of the new legislation include:

New General Environmental Duty	Requires any persons, including companies, engaging in any activity that may give rise to risks of harm to human health or the environment from pollution or waste to minimise those risks as far as reasonably practicable. Additional requirements for businesses involved with the design, manufacture, installation or supply of a substance, plant or equipment, i.e. those businesses with a higher risk of causing environmental harm. If the duty is found to be breached, either intentionally or recklessly, a maximum penalty of up to five years’ imprisonment or fines up to $3.2 million could be imposed.
New Environmental Training Requirement	The Act requires that a person who is conducting a business or undertaking must provide information, instruction, supervision and training to any person engaging in the activity, to ensure compliance with the general environmental duty. The effect of this provision is that organisations will need to ensure their workforce is trained in general environmental awareness, specific to the nature of their role. Failure to provide this training could be viewed as contravention of the general environmental duty and subject to the penalties outlined above.
Implementation and Maintenance of Adequate Systems	The Act requires that a person who is conducting a business or undertaking must use and maintain systems for identification, assessment and control of risks of harm to human health and the environment from pollution and waste that may arise in connection with the activity, and for the evaluation of the effectiveness of controls. The Act goes on to require that if an environmental risk were to eventuate, the systems need to be adequate so as to ensure that its harmful effects would be minimised. In order to comply with these provisions, organisations will need to ensure that systems have been developed which address the specific environmental risks of their activities.
New Duties for Pollution Incidents	The Act creates two new duties for pollution incidents as follows: Duty to notify the EPA of ‘notifiable incidents’; and Duty to take action to respond to harm caused by a ‘pollution incident’. The timeframe for implementing these duties is ‘as soon as reasonably practicable’.

While the commencement date for this legislation is currently set for 1 July 2020, organisations will need to start preparing in 2019 in order to ensure they are ready to comply with these new requirements.

Queensland

Queensland Raising the Bar in Prosecuting Environmental Harm

The Queensland Government’s prosecution of Linc Energy has seen some of the highest ever penalties imposed for environmental harm in Australia. It has also led to the prosecution of five former Linc Energy executives.

Linc Energy operated four underground coal gasification sites in Chinchilla, where it burnt coal underground at very high temperatures to create gas. These operations resulted in significant water pollution to the point of it no longer being fit for consumption or to support agricultural activities. There was also the release of toxic gases which contaminated the air and soil. Scientists and workers warned about gases bubbling from the ground, but the company continued its operations. The site, which is now managed by the Queensland government, will require remediation for decades to come, and it will take potentially up to 20 years for the groundwater to recover.

In April 2018, Linc Energy was convicted of all five counts of wilfully and unlawfully causing serious environmental harm, concluding a ten-week trial and the largest and most complex environmental investigation conducted by the Queensland environmental regulator.

In May 2018, Linc Energy was sentenced to a total fine of $4.5 million and convictions were also recorded against the company (Source: ABC News). This sentence eclipses the highest fine of $500,000 previously imposed in Queensland.

The case highlights a new attitude amongst Australian environmental regulators to use maximum legislative penalties to effect behavioural change and serve as a deterrent to the broader community. It also highlights the importance of understanding environmental legal requirements, and the need for workforce training to identify and manage environmental risks.

Queensland Passes Revised Mine Closure and Financial Provisioning Legislation

The Mineral and Energy Resources (Financial Provisioning) Bill 2018 (the ‘Bill’) was introduced into the Queensland Parliament on 15 February 2018, and was passed on 14 November 2018.

The passage of this Bill was a significant departure from the previous approach to mine closure by the Queensland Government and signals a financial assurance reform process for the resources sector. The Bill will reduce financial risks to the State and achieve improved outcomes for the environment by establishing a financial provisioning scheme for the mineral and energy resources sector and implementing mining rehabilitation reforms.

The financial provisioning scheme will replace the current financial assurance requirements for environmental authorities for resource activities and small-scale mining tenures (‘SSMT’) under the Queensland Environmental Protection Act 1994 (‘EP Act’). The scheme will manage the financial risk to the State if the holder of an authority or a SSMT does not comply with their environmental management and rehabilitation obligations.

The Bill also introduced new progressive rehabilitation and closure plan requirements for site-specific mining lease environmental authorities through amendments to the EP Act.

This anticipated legislation will have far reaching implications for mine rehabilitation and rehabilitation in Queensland by introducing more stringent requirements around progressive rehabilitation, relinquishment and financial components of rehabilitation.

New South Wales

New South Wales Steps Up Efforts to Regulate Asbestos Waste

In November 2018, the NSW Government took steps to improve the management and control of asbestos waste in New South Wales.

The changes to the Protection of the Environment Operations Act 1997 will:

Make it an offence to dispose of asbestos waste unlawfully, as well as prohibiting the re-use or recycling of asbestos waste
Increase the penalties for offences, as well as increasing penalties for land pollution involving asbestos waste
Introduce the presence of asbestos as a sentencing consideration under the legislation

This legislation highlights the need for organisations to understand asbestos liability, and to ensure that workforces have received appropriate training in asbestos disposal.

How Greencap Can Assist

Greencap has offices in all mainland States and Territories of Australia, as well as in Auckland, New Zealand.

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