How to manage environmental regulators when the flood waters recede: a guide for operators

Operators of environmentally relevant activities need to take immediate action to ensure they can withstand environmental regulator scrutiny following significant weather events. This is particularly the case for those activities that have extensive or exposed infrastructure which can be significantly impacted by natural forces, such as mines, quarries, landfills, waste recycling including product supply, waste water treatment plants, asphalt manufacturing, poultry farms, abattoirs, feedlots and open air industrial sites.  

A quick look at a regulator’s enforcement actions register shows that a number of regulator investigations are directly related to extreme weather events, most recently, wet weather.  

For obvious reasons, regulators have been investigating whether infrastructure and systems were sufficient to withstand an event – this may also inform future policy, standards and the type of conditions that are attached to approvals and permits.

This Insight aims to help operators navigate the murky regulatory mess after the flood waters recede.

Duty to notify

Commonly, environmental legislation imposes a duty on those carrying out an activity that causes or threatens material or serious environmental harm[1] or a pollution incident occurs in the course of an activity so that material environmental harm is caused or threatened[2] to notify the regulator.

Further, it is common for an environmental authority to include conditions requiring notification to the regulator where there has been non-compliance with the various requirements and limits within the environmental authority itself.

Compliance with this duty and/or condition may be the trigger for a regulator to inspect regulated activities on-site.  That said, community complaints to regulators and the media are becoming more common place and increasingly sophisticated.  Operators should be mindful there is no unnecessary delay in notification when required.

Of course, proper identification of an incident and its nature and extent should be balanced against how quickly the notification should be given.

Temporary emissions licence or other exemptions

In Queensland, the Environmental Protection Act 1994 (Qld) (EP Act) allows the holder of an environmental authority to apply for a temporary emissions licence (TEL) to change the conditions of the approval in response to an event or natural disaster. Typical condition changes permit contaminants to be released above the usual release concentrations or may even allow sludge or mud to be discharged from the site. Businesses which have typically relied on TELs during or immediately following disaster include:

• quarries;
  
  
• waste transfer and disposal facilities;
  
  
• sewage treatment plants; and
  
  
• dredging at ports.

That’s not to say other operations can’t apply for a TEL, it is just less common.

Where non-compliance with the environmental authority is likely to be prolonged, this may be an appropriate response by an operator.

Similarly, in NSW the Protection of the Environment Operations Act 1997 (NSW) permits the holder of an environment protection licence to apply for an exemption in an emergency event (e.g. fires, floods, and fuel shortages). In certain cases, the regulations may prescribe the manner in which the exemption must be applied.

However, in many cases, the above exemptions are not applied and may not be a suitable response in any event. Where a TEL or exemption is not appropriate, it is imperative that operators look to best manage any non-compliance with an environmental authority.

Environmental and regulatory checklist

While there are no generalising actions entities should take, as a starting point, the measures that operators should consider now in order to put them in the best possible position if a regulator comes knocking, before or after a major weather event, include:

1. Review approval conditions on a regular basis

Reviewing conditions of approval from both a technical and legal perspective at a grass roots level is beneficial.  Ideally, in-house experts and lawyers would review the conditions together following a site visit.  Assumptions are sometimes made about the construction of a condition against the background of how the operation has always been carried out; those assumptions may be incorrect.

This review may result in:

• changes to systems and practises to ensure compliance with a condition – as amendments to management plans and inclusion in approvals may be overlooked. This is particularly important when:
  
  
  • infrastructure is upgraded;
    
    
  • new businesses or processes are incorporated into operations;
    
    
  • the operations or throughput expand;
    
    
  • land is reconfigured; or
    
    
  • adjacent land is purchased and incorporated into the activity;
    
    
• targeted due diligence training for relevant staff – training by external providers who are familiar with environmental and development regulatory compliance is recommended.  This may be interspersed with internal training, because it avoids argument with the regulator that the training may not have been adequate or comprehensive. Training for executive officers is becoming increasingly important;
  
  
• discussions with the relevant government department to clarify how a condition ought to be interpreted; and
  
  
• an application to amend the approval may be necessary.

2. Site inspections are a must

This year’s repeated heavy rain and flooding in parts of Queensland and New South Wales have seen some infrastructure crumble but often the damage is not one of complete failure, may not be obvious and requires a thorough site inspection to detect it. This may be challenging because wet conditions may make remote parts of the site challenging to access, long grass may obscure particular areas, some areas may be under water and staff may be deployed on other urgent projects.

It is important to confirm whether:

• detention and sediment basins have overtopped, or excess water has properly discharged, via the spillway. If embankments have eroded, it will be necessary to engage an engineer on the structural stability of the basin. Similarly, discharge and diversion channels should be checked;
  
  
• following rain, there is sufficient freeboard in on-site basins. If there isn’t, immediate action must be taken to ensure sufficient freeboard is achieved in a reasonable time, particularly if further rain is predicted;
  
  
• water intended to be discharged from basins meets the water quality stipulated in the approval;
  
  
• upstream stormwater has comingled with wastewater from the activities. If so, what, if any measures can be taken to prevent this;
  
  
• appropriate samples of stormwater flowing onto your site have been taken, as well as at the key places it leaves your site . This may be important if there are allegations your activities have contaminated waters;
• alarm systems (if any) worked as designed;
  
  
• fuels and chemicals were appropriated stored and secured. If not, arrangements will be required to better manage in the future;
  
  
• stormwater drains were contaminated with trade waste. If so, investigations about the root cause of the contamination should be carried out and a determination made about how to prevent contamination in the future;
  
  
• trade waste collection systems worked as designed;
  
  
• contractors were able to meet their general or emergency obligations (e.g. attending on site to collect, say, waste water or leachate within a reasonable time following a request for service);
  
  
• access tracks require maintenance and, if so, what is the schedule in which to carry out maintenance or improvements;
  
  
• material or serious environment harm may have been caused and, if so, whether notification to the regulator is required;
  
  
• proactive communications with adjoining neighbours is appropriate; and
  
  
• environmental harm has occurred off-site caused by a discharge from your site. For example, is there any discolouration of a nearby water or obvious deterioration of flora. 

In the event that some issues are identified, engaging legal advisors to review the conditions of approval has an added benefit of the potential protection of communications between client and lawyer, and lawyer and external technical experts, by way of legal professional privilege. 

Legal professional privilege protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services, including representation in proceedings in a court. It can protect against the disclosure of confidential communications which were made for the dominant purpose of either:

• a client obtaining legal advice; or
  
  
• use in existing or anticipated legal proceedings.

Operators of environmentally relevant activities may be entitled to refuse to disclose documents containing privileged communications to other parties in litigation, or to others such as regulators who may be conducting investigations (unless the privilege is expressly abrogated by legislation or is lost for some other reason, such as a waiver). For example, where the lawyers engage an expert to take samples and form a view about the nature and extent, if any, of environmental harm.

3. Attend to low hanging fruit

In some cases, a regulator’s inspection is not fruitful when investigating the inadequacy of broader processes or infrastructure. However, deficiencies in day-to-day upkeep such as maintenance of erosion and sediment control matters, intactness of bunding, proper location of signage and day cover application may frustrate the operator’s intention to show it is a good environmental steward. 

These types of relatively minor failings are generally low hanging fruit for a regulator and easy to prove. If warning letters or penalty infringement notices are given to the operator for these types of minor matters it may significantly undermine claims that the operator has a good environmental history.

These are matters that should be reviewed and tested regularly.

4. Review of management plans on a regular basis

Following any significant rain event, it is important to review relevant site based management plans and associated second tier plans including stormwater management plans. Usually these documents are ‘living documents’ which are intended to be reviewed on a regular basis.

These documents sometimes fall down where: 

• assumptions underpinning the original plan are not reviewed and an incorrect foundation is ultimately built upon;
  
  
• tasks are not allocated to a specific role but are generally allocated, which often results in them not being completed;
  
  
• the management plans are outsourced without detailed input from operational staff which may result in a plan that does not recognise economic, cultural or site restraints;
  
  
• the plans are updated without proper regard to changing environmental or engineering standards; and
  
  
• the timeline in which a review is scheduled is not complied with.

Not reviewing management plans on a regular basis may indicate to a regulator a lack of genuine environmental concern.

Engaging external providers who are familiar with environmental and development regulatory compliance to audit these plans on a regular basis, say every three to five years, is important because they may be able to offer a new or different perspective to an issue.  In our experience, audits coupled with site inspections are generally more productive that a review conducted without a site inspection.

5. Proactive investigations or audits

Proactive audits are a strategy that aims to determine the root cause of equipment, infrastructure and process failures in order to correct them before they cause issues and lead to infrastructure and system breakdowns. 

Implementing proactive audits on a regular basis can ultimately boost productivity, maximise the use of assets, minimise environmental harm; and may provide the defence of compliance with the general environmental duty to any charges of causing environmental harm.

Proactive audits can also be undertaken under a legal professional privilege ‘umbrella’, again providing an opportunity to potentially protect communications between client and lawyer, and lawyer and external technical experts.

6. Show cause letters

It is important to cooperate and engage with the regulator if given a show cause letter or statutory notice, otherwise it may be perceived that the business is not environmentally conscious and is not remorseful. It may also prompt the regulator to escalate its investigations and enforcement actions if an appropriate response is not given.

A strategy to manage the communications between the regulator and the operator needs to be carefully developed as implied admissions and implied invitations to the regulator to ask more information or to seek particular documents should be avoided. 

7. Review insurance policies

It is important to review your general and public liability insurance policies to understand what is covered by the insurance product and services.  

In many instances, commercial decisions are made to not insure (or insurance is unavailable) for certain infrastructure. Where general insurance is an option, it is important for the operator to have a comprehensive risk identification and assessment process in order to focus on appropriate and effective proactive measures or responses.

Relevantly, public liability insurance is designed to help cover businesses in the event another entity (often an adjoining landowner) holds your business liable for property damage. For example, a neighbouring landowner may claim that your operations have allowed contaminants to migrate to their land causing damage to their property and sue you for the cost of remediation. If this happens, the costs can be high. 

A claim under public liability insurance will usually cover two types of costs: legal and financial compensation. All insurance policies have some events that are not covered. Some exclusions are industry standard, while some events may not be covered under public liability insurance because they are covered under another type of insurance policy.

Irrespective of the type of insurance, damage caused deliberately and knowingly will generally not be covered.  Accordingly, it is very important to guard against (or negotiate with) the regulator alleging that environmental harm was wilfully caused and to ensure that immediate steps are taken to stop ongoing contamination once brought to your attention; otherwise you may face challenges in claiming insurance.

8. Relationships and community engagement

Traditionally, disaster management has been the role of disaster management specialists and government, particularly local government who are ‘on the ground’ and have machinery and equipment that can be deployed for clean-ups.  

However, collaborative partnerships across governments, researchers and industry groups can provide the basis for resilience to expand. Communication is important and if properly considered, directed and broadly supported by other industry or community groups, it may result in improved community infrastructure including roads and telecommunications as well as coordination of funding opportunities by way of grants and collaboration on research projects. This may well benefit particular industries.

An added benefit may be an enhanced level of acceptance that stakeholders and communities extend to particular industries and environmentally relevant activities. Ensuring a social presence in the community is becoming increasingly important and may assist in demonstrating how seriously industry takes environmental concerns.

Industry supporting community groups (often with local government assistance) carrying out waterway remediation is an obvious example of good working relationships. Different groups drawing government attention to areas that may benefit from resilience measures, particularly road improvements to deal with flood waters and possibly increased traffic, to ensure waste is disposed of appropriately or agricultural productivity continues, are other examples.

Where feasible, engagement with universities to study matters relevant to the industry (e.g. leachate content, landfill gas, water quality and soil quality) may demonstrate a genuine desire to operate at best practice while potentially creating innovative solutions to environmental issues.

Conclusion

It is common for regulators to inspect environmentally relevant activities following significant rain and other weather events, notification by the operator under the relevant environmental legislation, or because of community complaints. As detailed in this Insight, there are a number of measures an operator can take to ensure they are well placed to deal with the regulator when it comes knocking.   

Proactive audits of environmental processes and infrastructure is clearly the most effective approach and should be the preferred option.

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