EPA Guidelines https://www.epa.nsw.gov.au/-/media/epa/corporate-site/resources/epa/18p0558-monetary-benefits-guidelines.pdf now indicate how it is that the EPA propose to pursue orders in prosecutions relating to the monetary benefits or financial advantages obtained from an unlawful activity under section 249 of the Protection of the Environment Operations Act 1997. Here is a quick summary.

What monetary benefits will be the focus?

Monetary benefits can be costs avoided or delayed. The EPA will focus on:

  • Capital costs. e.g. machinery, equipment, dam walls, stormwater systems

  • Operation costs e.g. labour costs, training, consultant fees

  • Illegal profits e.g. profits earned when exceed a tonnage limit or intensification increase.

The EPA has said that its focus at this stage will not be illegal competitive advantages where economic savings enable the company to under-cut competitors..

When will it be sought by the EPA?

In prosecutions where the circumstances justify it. The EPA is more likely to seek it from the Court where:

  • The offence was not an accident that occurred despite reasonable precautions.

  • The offence was caused intentionally or because of negligence or recklessness

  • The offence was serious

  • It could have been prevented

  • The cause was within your control

  • You had information advising you how to comply and that information was ignored.

  • You have a history of non-compliance (which can include warning letters and PINs)

  • There is evidence of low concern with environmental management

  • It was an obvious error.

How will the monetary benefit be calculated? The EPA will engage an independent expert to calculate what would have been the capital or operational cost saved and if necessary what was reasonable to install to prevent the incident. e.g. the likely cost of a bund. The EPA will not expect a gold standard of compliance but will be satisfied with a straightforward and cost-effective means of compliance that was available at the relevant time.

In prosecutions, the EPA will generally rely on:

  • Evidence of the inputs to the calculation. e.g. evidence of the avoided or delayed cost, the tax status of the offender.

  • Expert evidence for any complicated inputs to the calculation. e.g. the rate of return for the offender, the least cost mode of compliance where the offender has a complex operation.

  • Expert evidence of an independent financial accountant to prove the calculated monetary benefit amount and that they calculated that amount by correctly applying the method in the EPA’s Protocol to the facts of the case.

How should operators react? Operators should make their personnel aware that there is no financial limit on a monetary benefit order. Where an incident is serious enough, the EPA would be encouraged to seek a monetary benefit order from a company that is large and can afford a penalty plus a monetary benefit order. This should be taken into account when decisions are being made on whether to implement capital or operational costs relating to protection of the environment.