Dramatic rise in Land and Environment Court penalties

JWS recently conducted an analysis of Class 5 proceedings determined by the Land and Environment Court (LEC) in the last five years.  This analysis looked at penalties imposed by the LEC and, in particular, the size of fines and other financial penalties imposed (such as orders to pay monies towards restoration or rehabilitation projects).  An analysis of 227 cases, representing Class 5 proceedings determined by the LEC between 2012 and April 2018, was undertaken.  The analysis revealed a dramatic increase in financial penalties being imposed by the NSW LEC.

Class 5 proceedings in the LEC are the class of proceedings which involve criminal prosecutions for breaches of planning or environmental laws.  Cases can range from prosecutions for water pollution to carrying out development without consent or breaching a licence condition, to unlawful clearing of native vegetation or waste offences such as the unlawful discharge or disposal of waste.  Class 5 prosecutions in NSW are usually commenced by the Environment Protection Authority (EPA), local councils or the Department of Planning and Environment (DPE).

Our analysis of penalties revealed that penalties for Class 5 offences have, on average, more than doubled in the last 5 years.  The average penalty imposed for a Class 5 prosecution in 2012 was approximately $82,000.  By 2017 this had risen to $198,000, nearly 2½ times the 2012 penalty.  The graph below shows the rise in average penalties each year from 2012 to 2017.    

A review of penalties according to offence showed a similar trend.  Penalties for threatened species or native vegetation clearing offences rose from $88,600 to $168,000 over the five year period.  This represents a two fold increase in penalties over five years.  The graph below shows the steady rise in penalties for breach of licence or consent conditions, with penalties for these types of offences also doubling.

The most dramatic rise in penalties imposed has been in relation to pollution offences under the Protection of the Environment Operations Act 1997, which rose from $92,000 in 2012 to $321,000 in 2017.  This means that the average penalty imposed for pollution offences in 2017 was 3½ times that imposed in 2012.  Most of these offences related to water pollution, with a much smaller number being for land pollution.

Along with this general rise in penalties, the LEC has shown a willingness to impose high penalties for single charges for pollution offences.  The $400,000 penalty imposed in EPA v Caltex Australia Petroleum Pty Ltd [2017] NSWLEC 8 was, at the time, a record penalty for a single prosecution commenced by the EPA.  This case involved a petrol spill at the Caltex Banksmeadow fuel terminal and the Court found Caltex guilty of negligence in relation to the petrol spill.  This high fine was imposed even though the Court found that Caltex had a culture of valuing safety and the environment and that the prospect of Caltex reoffending were slight and the need for specific deterrence low.  

Later in 2017 an even bigger fee for a single prosecution was imposed when Clarence Colliery was ordered to pay over $1 million to be put towards various restoration and enhancement projects.  In EPA v Clarence Colliery Pty Ltd; Chief Executive, Office of Environment and Heritage v Clarence Colliery Pty Ltd [2017] NSWLEC 98, Clarence Colliery pleaded guilty to offences relating to an overtopping incident at the Clarence Colliery Mine which led to coal slurry and reject material escaping into the Blue Mountains National Park and the Wollangambe River.  In this case the Court referred to the very substantial quantity of slurry released and the fact that actual environmental harm was caused to areas of high conservation value when imposing the fine.   

Companies operating in NSW need to be more conscious than ever of their obligations under environmental licences and planning approvals and ensure that there are adequate systems in place to manage operations and reduce the risk of breaches of environmental laws.  Failure to do so can prove very costly - more than two times as costly as five years ago.  The rise in penalties has come hand in hand with increased regulation in NSW.  The Resources Regulator was established in 2016 and existing agencies such as the DPE have significantly increased the size of their compliance teams.  Technology such as the use of drones is now also being used by agencies such as the EPA to carry out more thorough compliance checks.   Breaches of environmental laws are therefore more likely to be both detected and punished with high financial penalties.