Directors and corporate related bodies that are able to benefit from environmental offenses committed by a corporation face new liabilities. The NSW Environment Protection Authority (EPA), has stronger enforcement powers. To minimize the risks for corporations, their directors, and related entities, it is important to review and update environmental compliance and risk-management practices as necessary.
Snapshot
- The 4th March 2022 was the official start date. Environment Legislation Amendment Act, 2022 (NSW) (ActFive pieces of environmental legislation were amended by ().
- Directors and other corporate bodies that receive monetary benefits for environmental offenses committed by corporations are subject to criminal and financial liability under the Act. It gives the EPA greater power to issue notices, impose restrictions upon the use of land, and require financial assurances.
- Directors and corporations are more likely to be sued because of their increased exposure to environmental liability. They must ensure that they have the most current environmental compliance and risk management practices in line with NSW’s environmental legislation.
Overview of the Act
We published an earlier version blog postThe following are the Environment Legislation Amendment Bill (2021)(NSW) shortly following its passage by Parliament.
The Bill has been given royal assent. It became an Act on March 4th 2022, and was in force the same day. The Act amended the following legislation
- 1997 Protection of the Environment Operations Act (NSW) (POEO Act);
- 1997 Contaminated Land Management Act (NSW) (CLM Act);
- Pesticides Act 1999 (NSW) (Pesticides Act);
- Radiation Control Act 1990 (NSW) (RC Act); and
- Protection of the Environment Administration Act, 1991 (NSW).
Directors and related corporations are more visible
The Act now allows corporations to be convicted of an offense under the POEO Act CLM Act Pesticides Act or RC Act. A court can order any of these persons or any other entity that it considers appropriate to pay to the EPA a sum representing the monetary benefit the offender received as a consequence of the offence.
- A related body corporate (as defined by the Corporations Act 2001(Cth), of the convicted corporation;
- A person who was or was a director in the convicted corporation or related body corporate at time of offence.
It is also illegal for any of these persons to receive financial or economic benefits by the commission of an environment offense by a corporation.
These new provisions make it more important than ever that directors and corporations strictly monitor and adhere to their environmental obligations.
If a corporation tries to skirt these obligations by creating creative corporate structures or cutting corners it will only result in those who ultimately benefit being pursued and divested from any benefits they have derived.
Increased likelihood of regulatory action by EPA
The Act gives the EPA greater enforcement powers, including the power to:
- Without requiring a declaration of significant contamination, clean-up notices and prevention notices can be issued immediately upon notification under section 60 of the CLM Act.
- Financial assurance can be imposed on the grounds of the financial capability of a licensee or the addressee to a management orders;
- To impose restrictions on land or covenants for the purpose enforcing a condition or suspension of an environmental protection license.
This means that businesses are at greater risk of having regulatory actions taken against them by EPA. This risk can be mitigated by ensuring compliance with all environmental obligations so that enforcement actions are not taken against you.
Next steps
The Act has increased directors’ liability for environmental offenses and increased the risk of regulatory action from the EPA. The Act has made it more difficult for corporations and their directors to comply with environmental regulations and to manage risk effectively.
