Water Regulation Series (part 1): New civil penalties for water offences in NSW

Updated on 14 November 2025

Editorial Note: On 11 September 2025, the Bill passed the Legislative Council with amendments, including that the proposed limitation periods in the Bill were reduced from 6 years to 3 years. On 13 November 2025, the Bill passed the Legislative Assembly with no further amendments. The new provisions of the Water Management Act 2000 (NSW) will generally commence on the date of the Governor General’s assent, except for certain provisions which will commence on 1 January 2026 or by proclamation. 

Water regulation in Australia is intensifying in response to the increasing value and scarcity of water resources. The King & Wood Mallesons water team is proud to present Part 1 of our new Water Regulation Series, covering the latest developments in water regulation. In this instalment, we take a deep dive into the new civil penalty regime proposed under the Water Management Legislation Amendment (Stronger Enforcement and Penalties) Bill 2025 (Bill) which would, if passed, raise the stakes for water compliance and increase compliance risks for water users across NSW.

Civil Penalty Regime

The Natural Resources Access Regulator (NRAR) responsible for enforcing water laws in NSW. Currently, NRAR has a range of tools at its disposal, including:

1. Stop work orders, directions and warnings;
2. Penalty notices and cautions;
3. Civil proceedings to restrain breaches of the Water Management Act 2000 (NSW) (WMA); and
4. Criminal prosecutions for offences, with maximum penalties of up to $5,005,000 per offence for a corporation.

The Bill proposes to amend the WMA to create a new civil penalty regime, giving NRAR the option of seeking a monetary penalty for breaches via civil proceedings, as an alternative to criminal prosecution.

Why are the changes significant?

The changes will result in higher penalties and increased compliance and reputational risks for water users.

For NRAR, the reforms introduce a new regime for enforcing compliance via the NSW Land and Environment Court. This power is not available to other NSW environmental regulators and has not previously formed part of the Court’s functions.

Significantly higher penalties

The Second Reading Speech for the Bill states that the changes are to “improve deterrence” and that “key to improving deterrence is introducing a civil penalty proceedings”. Consistent with this, the proposed maximum civil penalties are significantly higher than the existing criminal penalties under the WMA. For example, for a corporation, the proposed maximum civil penalty for certain offences is up to $9,999,000 or five times the value of the water taken (plus additional daily penalties), compared to the current maximum criminal penalty of $5,005,000. This reform is expected to fuel the trend of NRAR seeking increasingly severe penalties for breaches of water law. Notably, in March 2024, NRAR obtained its highest ever penalty of $800,000 in a prosecution for illegally taking water. Similarly, in March 2025, NRAR secured a ‘record’ fine in the Local Court of $300,000 in a case involving the construction and use of dams without approval.

Lower standard of proof

The Second Reading Speech indicates that the civil penalty regime is intended to make it easier for NRAR to prove breaches, particularly where “the inherent scientific uncertainty of water management might make it difficult to satisfy the court that an offence has been committed to the criminal standard of beyond reasonable doubt”. In practice, all civil penalty proceedings will be subject to a lower standard of proof: NRAR will only need to prove breaches on the balance of probabilities, rather than beyond reasonable doubt. This shift responds to difficulties NRAR has faced in some criminal prosecutions in the Court. For example, in Natural Resources Access Regulator v Lidokew Pty Ltd [2023] NSWLEC 130, NRAR was unsuccessful in proving offences related to taking water, as the Court was not satisfied beyond reasonable doubt despite extensive expert evidence about the amount of water that would have been required by the Defendant to water its crops. The outcome may have been different if the civil standard had applied.

Reputational risks

Civil penalty proceedings will introduce new reputational risks for water law breaches. While such proceedings will not result in any criminal convictions, any Land and Environment Court decision to impose a monetary penalty will be published, and all civil penalties will be recorded in NRAR’s public register, including the identity of the person and particulars of the orders made.

A New Tool for NSW Environmental Regulators

The civil penalty regime would provide NRAR with a tool not available to other NSW environmental regulators. Other key environmental legislation, such as the Environmental Planning and Assessment Act 1979 (NSW) and the Protection of the Environment Operations Act 1997 (NSW), do not empower regulators to seek civil penalties from the Court. Currently, civil proceedings are generally only available to restrain a breach of environmental laws, not to seek a monetary penalty. Regulators seeking a monetary penalty for breaches have to commence criminal proceedings (and prove offences beyond a reasonable doubt), or issue fines in the form of infringement notices, with substantially lower penalty amounts.

There is precedent for the civil penalty regime in other jurisdictions. For example, the Environment Protection and Biodiversity Conservation Act 1999 (Cth) and the Environment Protection Act 2017 (Vic) include civil penalty provisions and offer some insight into how the civil penalty provisions in the WMA might be applied. For example, unlike in criminal prosecutions, in civil proceedings it can be possible to reach agreement with the regulator as to the amount of penalty, as seen in Minister for the Environment v Hansen [2016] FCA 1146 and Minister for the Environment v Northern Seafoods Pty Ltd [2022] FCA 656. Insights are also available from outside the environmental space, such as the Australian Competition and Consumer Commission’s pursuit of record civil penalties in the Federal Court for breaches of competition and consumer laws, including a record $438 million in 2023.

Details of the civil penalty regime

Some of the finer details of the civil penalty regime include that:

• The new regime is intended to apply retrospectively to conduct that occurred prior to the commencement of the new provisions;
• A six-year limitation period for bringing cases, compared to the three year limitation period for criminal proceedings;
• Civil action seeking a monetary penalty would be conducted in Class 4 of the Land and Environment Court’s jurisdiction;
• Some legal protections will apply, including double jeopardy provisions to prevent a person being punished again via a civil penalty after being subject to a Commonwealth civil penalty or convicted of an offence under the WMA for substantially the same conduct
• In addition to Court action, a new administrative penalty will be available to the Minister, who will be empowered to penalise unlawful taking of water by imposing a charge of up to five times the value of the water taken, without commencing Court proceedings, via an amendment to section 60G of the WMA

Other Reforms

Beyond the civil penalty regime, the Bill includes extensive changes to water laws in NSW, including:

• Enhanced and clarified powers for NRAR and its authorised officers, including an express power for authorised officers to enter premises with drones to determine compliance “at any reasonable time”
• Higher jurisdictional limits for the Local Court (up to $220,000 for corporations and $110,000 for individuals), potentially leading to more prosecutions by NRAR in the Local Court
• A new requirement for the court to consider actual, likely, or potential impacts of offences on Aboriginal people
• An expanded concept of environmental harm, incorporating harm, likely harm, or potential harm, enabling the court to make orders and impose penalties to address “likely” or “potential” harm to a water source, waterfront land, or the environment
• New offence provisions relating to providing false or misleading information; hindering, intimidating, or obstructing an authorised person; handling items seized by an authorised officer; and obtaining a monetary benefit from breaching the WMA, with an associated power for the Court to order offenders to pay an amount reflecting the monetary benefit obtained
• A statutory override of the rule against duplicity, allowing two or more breaches to be dealt with as a single offence or single civil penalty contravention
• Expanded grounds for suspension and cancellation of licences

Conclusion

Water law compliance is under scrutiny more than ever, reflecting the value and scarcity of water resources. If passed, the Water Management Legislation Amendment (Stronger Enforcement and Penalties) Bill 2025 will increase compliance risks and potential liabilities for breaches of water laws. We expect NRAR to continue seeking record monetary penalties where compliance is in question, and its ability to do so will be enhanced by this new civil penalty regime.

Water users can mitigate this increased compliance risk by:

• Obtaining all necessary water licences and approvals
• Keeping appropriate records, as required by licences and approvals
• Proactively identifying and regularising any historical works or activities to ensure full compliance with current legislative standards, including in the context of any business or property transactions
• Seeking legal assistance to respond to any incidents, suspected breaches, investigations, or compliance action by NRAR

Stay tuned for the next instalment in our multi-part Water Regulation Series from the King & Wood Mallesons water team.