NSW EPA now targeting more directors, managers and employees for environmental crimes

Criminal liability for environmental offences can arise for corporations as well as individuals. Recent prosecutions by the NSW Environment Protection Authority (EPA) point towards increasing criminal liabilities for directors, managers and employees.

In 2024, the first three NSW Land and Environment Court (Court) decisions involving the EPA relate to prosecutions of individuals, including a director, a manager of a local council and an employee.

Does this mean that the NSW EPA is now targeting more directors, managers and employees for environmental crimes?

This article examines:

• The first three Court decisions for 2024 involving the EPA;
• An emerging trend in the EPA’s approach to regulating environmental crimes; and
• Implications for businesses operating in NSW.

Case Studies

Director of waste business convicted and fined for waste offences

In the decision of Environment Protection Authority v Nath [2024] NSWLEC 10, the Court criminally convicted a director of a tyre recycling corporation for four environmental offences committed by the corporation.

The director’s liability was based on the “special executive liability” provision in section 169 of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) which can operate to make directors liable for certain offences of a corporation.

The EPA personally prosecuted the director in circumstances where:

• the corporation had previously been prosecuted for similar breaches of EPL and failures to comply with waste regulations on at least two separate occasions;
• action taken by the EPA against the corporation did not result in compliance;
• the corporation had entered voluntary administration; and
• the director had “almost complete control over the commission of the offences”.

General manager of local council prosecuted in relation to Council sewage treatment plant

In the decision of Environment Protection Authority v McMurray [2024] NSWLEC 6, the Court dismissed an appeal by the NSW EPA relating to its prosecution of the General Manager of Cootamundra-Gundagai Regional Council. The prosecution was commenced against the General Manager of the Council arising from his management responsibility for an allegedly non-compliant Council Sewage Treatment Plant, again under the “special executive liability” provision in the POEO Act.

It is unclear on the facts why the EPA considered it appropriate to prosecute the General Manager as an individual, noting that the Council itself was also prosecuted in relation to the incident and was convicted, fined $8,500 and ordered to pay the prosecutor’s legal costs.

In any event, the prosecution of the General Manager was thrown out because it was held that section 169 only applies to corporations and does not apply to a Council.

Employee truck driver convicted and fined for diesel spill

In the decision of Environment Protection Authority v Routledge [2024] NSWLEC 8, the Court criminally convicted a fuel tank driver in relation to a diesel spill which resulted in pollution. The driver was an employee of a corporation, Park Pty Ltd, at the time of the spill but was subsequently fired.

The driver was personally prosecuted in circumstances where:

• the driver “had control over the cause that gave rise to the offence”[1] and where “there were practical measures that the Defendant could have taken to control or mitigate the harm caused by the incident”;[2] the driver’s conduct was “unintentional and an error on his part, and contributed to by a lack of training and inappropriate advice from his employer”;[3] 
• the driver assisted the EPA by preparing an affidavit to support the EPA’s prosecution of his former employer.

The fact that the EPA prosecuted the employee in circumstances where he was carrying out his employed work and co-operated with the EPA is also a departure from the usual protocols.

Emerging trend?

While there is nothing new about individuals being exposed to criminal liability for environmental offences in NSW (relevant statutory provisions have existed for decades), the recently prosecuted cases in the NSW Land & Environment Court (double the amount of prosecutions involving individuals in FY22 and FY23) suggest that the EPA is increasingly targeting directors, managers and employees. We have also seen several instances of the EPA opting to prosecute both corporations and individuals. For example, in the case of Environment Protection Authority v Carbon MF Pty Ltd; Environment Protection Authority v Fair [2023] NSWLEC 120, the EPA prosecuted Carbon MF Pty Ltd and its sole director and shareholder. This was despite the director being declared bankrupt and the Court’s view that “the primary culpability of the offending conduct” was on the corporation. 

This emerging EPA prosecutorial trend calls into question whether the EPA is giving effect to its new Prosecution Guidelines (March 2022) which clearly state that:

• “it is not always appropriate to prosecute every person who may be liable for an offence”;
• “Where an offence is committed by employees, agents or officers of a corporation in the course of their employment, proceedings will usually be commenced against the corporation”; and
• “The guiding principle in deciding whether to charge an employee is the degree of culpability involved.”

What is clear, however, is that this emerging trend is consistent with broader regulatory trends. For example, it follows legislative reform spearheaded by the EPA which commenced in March 2022 to expand potential liabilities for directors, managers and related bodies corporate for offences committed by corporations. It also aligns with the approach of other regulators, such as the Australian Competition and Consumer Commission (ACCC), which has recently prosecuted numerous individuals resulting in convictions in 2022 and 2024. 

Implications

For directors and managers, the EPA’s regulatory focus is a timely reminder on the ongoing need to use all due diligence to prevent contraventions of environmental legislation. This could include:

• Identifying and avoiding/mitigating environmental risks;
• Taking proactive steps to implement environmental obligations, including new obligations;
• Developing and implementing environmental policies, procedures, management systems and training;
• Monitoring and auditing environmental compliance;
• Fostering a culture of internal reporting, continuous improvement and compliance;
• Treating complaints or issues raised seriously and take action to mitigate risks arising from these;
• Promptly identifying, investigating and appropriately addressing any environmental issues or incidents.

For in-house lawyers and other individuals involved in incidents being investigated by the EPA or other regulators such as the Natural Resources Access Regulator or a local council, it is important to appreciate that the interests of the corporation, its directors and any employees could diverge during an investigation and any prosecution meaning that individuals involved could require separate legal representation.