The year in review: A look at the NSW waste industry in 2022

In brief - 2022 has unsurprisingly shown us that a number of policy and legislative changes directed towards better environmental outcomes are likely to impact the NSW waste industry in the coming years. Also, a recent decision from the NSW Court of Criminal Appeal demonstrates the NSW Environment Protection Authority's (EPA) willingness to ensure that the waste industry is appropriately deterred from unlawful conduct.

A snapshot of the key 2022 events impacting the waste industry is below:

Draft Climate Change Policy and Action Plan

In 2021, in Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority [2021] NSWLEC 92, the Land and Environment Court (LEC) found that the NSW EPA had a statutory duty to develop guidelines and policies to protect the environment from climate change. In response, the NSW EPA has released a draft Climate Change Policy and Climate Change Action Plan for 2022-2025 for consultation.

There are three key pillars that guide the draft policy and plan:

1. Inform and plan.

2. Mitigate.

3. Adapt.

If implemented, the plan will see the introduction of new requirements for licensees as part of the first key pillar, such as requiring licensees to actively consider how to reduce emissions and their exposure to climate risks. Consideration will also need to be given to updating Pollution Incident Response Management Plans having regard to how a changing climate may increase the risk of pollution.

Additionally, new emission reduction targets will be developed and new emissions limits will be progressively introduced as part of the second key pillar. The plan has identified the waste sector as a potential sector for emissions regulation. This means that waste facilities could be faced with new licence conditions requiring them to monitor and report emissions and carryout pollution reduction studies. New emissions limits for licensees could come in the form of emission intensity limits (CO2-equivalent emissions per tonne of production) or load limits (total CO2-equivalent emissions per year).

As part of the third key pillar, the EPA will commission research into the impacts of climate change on waste transportation, storage, processing, disposal and legacy sites, as well as prepare climate change adaptation guides for key industry sectors they licence. The findings will help them develop contingency waste capacity and improve climate preparedness as the waste sector builds resilience to climate change. 

New decision from the Court of Criminal Appeal in Grafil 

There has been a recent development in the longstanding Grafil series of cases.

To briefly recap, in 2020, Grafil Pty Ltd (Grafil) and its director were found guilty of using land as a waste facility without an environment protection licence. When imposing a sentence, the LEC in Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (No 4) [2021] NSWLEC 123 did not impose any penalty on Grafil in addition to its liability for legal and investigation costs. 

The EPA appealed that decision to the NSW Court of Criminal Appeal (CCA) and were successful. In Environment Protection Authority v Grafil Pty Limited Environment Protection Authority v Mackenzie [2022] NSWCCA 268, the CCA imposed a $100,000 fine on Grafil.

The first ground of appeal was that the LEC erred in finding that there was no failure of moral culpability. In other words, the LEC did not find that the respondents were 'blameworthy'. However, the CCA found that using land as a waste facility without a licence and depositing between 24,000 and 44,000 tonnes of waste is a substantial offence and the respondents were 'blameworthy'.

The EPA's second ground was that the LEC erred in finding that general deterrence had no role to play in determining sentence, and that neither respondent was an appropriate vehicle for general deterrence. In other words, the LEC found that penalising the respondents would not discourage other people from committing the same offence. The CCA found that general deterrence does form an important aspect of sentencing in environmental crime.

The EPA also argued that the sentence was manifestly inadequate. However, this third ground was not dealt with by the Court because re-sentencing was required as a result of the findings in grounds 1 and 2.

The next question considered by the CCA was whether it should exercise its residual discretion and decline to intervene and re-sentence the respondents. The CCA decided that there was no reason why it should not intervene particularly where the sentence was so manifestly inadequate and that absent intervention, there was a risk that public confidence in the criminal justice system would be undermined. Consequently, on re-sentencing the CCA imposed a $100,000 fine.

Grounds 1 and 2 were successfully argued against the director of Grafil. However, on re-sentencing, the CCA reached the same conclusion as the LEC that the charge against the director should be dismissed pursuant to section 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999 (NSW). 

This case serves as a reminder of the serious consequences that might arise from non-compliance with legislative requirements, with the CCA disagreeing with the LEC's findings about the substantiality of the breaches made out against the defendants.

While the EPA does not regularly challenge the severity of court decisions, this case could signal an increased focus on deterrence.

What will 2023 bring for the NSW waste industry?

• The EPA is currently considering the recommendations made in the Independent Review of the Resource Recovery Framework. We expect to see the changes that will be made (if any) following that review in 2023. We have provided our high level comments on the Independent Review from a legal perspective in our recent article Outcomes of the independent review into the NSW resource recovery framework.  

• The EPA's review of comments following public consultation on the draft Climate Change Policy and Climate Change Action Plan for 2022-2025 should be completed and the final versions of the documents potentially published.

• If not in 2023, possibly soon thereafter, new conditions may be introduced to Environment Protection licences relating to climate change and resulting in greater regulation of the waste sector.

• In addition, the potential introduction of a federal environmental protection agency could see changes to how new waste facilities are approved and how waste facilities operate once it is operational. 

• While the policy arm of the EPA will be kept busy, we expect so too will the compliance arm of the EPA with licence holder premises being regularly inspected and inevitable regulatory action following where it is deemed appropriate.

• The EPA's 2021-2022 Annual Report publishes the number of prosecutions commenced and completed for the financial year. The numbers have remained fairly consistent with 100 prosecutions commenced and 65 completed in 2021-22 compared to 101 commenced and 66 completed in 2020-21. 

• Fines and other financial penalties have also risen totalling $2,339,602 in 2021-2022, which is up from $1,612,028 in 2020-2021.

• The EPA's recent success in the Court of Criminal Appeal challenging the severity of sentence issued by the NSW Land and Environment Court also demonstrates the regulatory authority's willingness to invest resources in ensuring the waste industry is deterred from unlawful conduct, which we expect will be carried on into the new year.