New third-party enforcement rights in the Victorian Environment Protection Amendment Act 2018

In brief

In part two of our series on the Victorian environmental reforms, we explore the third-party enforcement rights introduced into the Environment Protection Act 2017 (Vic) by the Environment Protection Amendment Act 2018 (Vic), which passed Victorian Parliament in August 2018. Enabling third parties to seek civil remedies for breaches of the new Act is one of the most significant reforms in the new regime, and will bring Victoria into line with other Australian jurisdictions. Partner Jillian Button , Senior Associate Emily Johnstone and Paralegal Simon Chiarelli provide an overview of the new regime and the implications for environmental risk management and community engagement for Victorian businesses and projects.

The new regime

The Environment Protection Act 2017 (Vic) (EP Act) strengthens the existing enforcement regime for environmental law in Victoria by conferring additional investigation and enforcement powers on the Environment Protection Authority (the EPA) and imposing larger maximum penalties for both new and existing offences.

However, the change that has attracted a significant amount of interest from industry and the community is the introduction of statutory third-party standing rights, which will enable eligible third parties to seek civil remedies for a contravention of the EP Act. The court will be able to grant a broad range of orders restraining a person from engaging in specified conduct or to take any action the court thinks appropriate, if it is satisfied that the person is not complying with a condition of a permission or has contravened any other requirement or duty imposed under the EP Act, including the general environmental duty. (see Victoria's 'general environmental duty': what is it, and what can I do about it?).

The Victorian Government has described the new third-party rights as 'a significant community access to justice initiative'.¹ The changes bring Victoria into line with other regimes that already have statutory third-party enforcement rights, including New South Wales, Queensland, South Australia and Tasmania.

Previously, environmental legislation in Victoria provided limited opportunities for third parties to participate in enforcement action. The existing Environment Protection Act 1970 does not contain any third-party rights to bring civil action, so any person seeking to enforce compliance with the Act must satisfy complex and restrictive common law tests for standing. Introducing a clear pathway to enforcement action into the EP Act was identified during the Independent Inquiry into the EPA² as an important safeguard if the regulator fails to act.³

When can a third party bring an action?

The new third-party regime will empower any person to apply to court for a civil remedy for breach of the EP Act if they are an 'eligible person', which means:

• a person whose interests are affected by the contravention or non-compliance that is the subject of the application; or
• a person who has the leave of the Court to bring an application. Leave will only be granted if the Court is satisfied that:
  • the application would be in the public interest; and
  • the person had requested in writing that the EPA take enforcement or compliance action, but the EPA failed to take enforcement or compliance action within a reasonable time.

Submissions by public interest groups to the Inquiry called for 'open standing' provisions for civil actions, similar to those in New South Wales, to be introduced in Victoria. Open standing provisions entitle any person to bring proceedings to restrain breaches of an Act, with the New South Wales regime requiring the applicant to demonstrate that harm to the environment has occurred or is likely to occur. By contrast, the Victorian approach limits applications to 'eligible persons', but does not require the applicant to demonstrate actual or likely harm to the environment or the infringement of a person's rights to establish standing.⁴

When will a person's interests have been affected?

The first category of eligible persons are those who can demonstrate that their interests have been affected by the contravention or non-compliance.

The Environment Protection Amendment Act 2018 (Vic) (EPA Act) does not define when a person's interests have been affected for the purposes of bringing civil action. This will be determined by the court in accordance with common law principles.⁵

Case law provides helpful guidance on this issue, with key decisions explaining that a person can establish that their interests have been affected by:

• showing that they were likely to gain some advantage, other than the satisfaction of righting a wrong, upholding a principle or winning a contest, if the action succeeds, or to suffer some disadvantage, other than a sense of grievance or a debt for costs if the action fails;⁶
• demonstrating that their interest goes beyond a general belief that the law ought to be observed;⁷ and showing more than the level of interest that any member of the public will have;
• showing that they would benefit in some way from the orders sought in their application;⁸ or
• demonstrating that their interest rises above a mere intellectual or emotional concern for the environment.⁹ However, that interest does not need to amount to a proprietary or pecuniary interest.¹⁰

What is in the public interest?

The second limb of the third-party rights framework provides that a person can apply for leave from the court to make an application for a civil remedy. This limb establishes a 'public interest' test to establish standing, which will enable parties who are not considered to have been affected by a breach to bring action under the EP Act.

At common law, the term 'public interest' is interpreted broadly and has not been given any fixed meaning. Courts will generally be required to make a 'discretionary value judgment' on the public interest, by reference to the subject matter, scope and purpose of the statute in question.'¹¹ There are no settled tests that a court must consider in assessing a public interest application. Case law confirms that the test is intentionally broad and ill-defined to allow judges scope to use their judicial discretion to achieve a just outcome.

When applied to the EP Act, this means that the 'public interest' test will be assessed by reference to the Act's objects and key purposes, including whether the alleged breach:

• represents a risk to human health and/or the environment from pollution or waste;
• compromises the ability of the EPA to ensure compliance with the EP Act; or
• is otherwise damaging to human health and/or the environment.¹²

As a general guide, applicants can expect that the greater the potential harm to human health or the environment from the alleged breach, the more likely it is that they will satisfy the public interest test. Courts will also consider broader issues like whether the proceeding would be an abuse of process, if there is sufficient evidence for the case to proceed or whether the person can adequately represent the public interest in the conduct of the proceeding. The court is unlikely to grant leave to an applicant who is unable to meet these requirements.

Leave will also not be granted unless the applicant can demonstrate that they submitted a written request to the EPA to take enforcement or compliance action about the contravention, and the EPA did not take any action within a reasonable time. This additional restriction ensures that the EPA will be given reasonable notice and an opportunity to investigate alleged contraventions before they reach court, and it is hoped that this will limit unmeritorious claims.¹³

What types of remedies are available to third parties?

Part 11.4 sets out a broad range of civil remedies that are available to both third parties and the EPA, including:

• orders restraining a person from engaging in specified conduct;¹⁴
• orders that a person undertake a specified act or thing which is reasonably necessary to prevent, minimise or remedy the breach or non-compliance;¹⁵
• orders requiring a person to provide a financial assurance as a condition for engaging in specified conduct;¹⁶
• orders for compensation to be paid to the EPA or the person bringing the action (the injured person) if they have suffered injury, loss or damage as a result of the breach or non-compliance;¹⁷
• orders for any costs reasonably incurred by the EPA or the injured person in the course of taking action to prevent, minimise or remedy any injury, loss or damage suffered;¹⁸ and
• orders for costs reasonably incurred by the EPA in the course of taking action to prevent, minimise or remedy any harm to human health or the environment caused by the breach or non-compliance.¹⁹

Applications for these remedies can be made by the EPA or an eligible person whether or not proceedings have been commenced for an offence under the EP Act or contravention of a civil penalty provision.²⁰ Once the court has established the existence of a breach of a condition in an environmental permission or a contravention with a provision of the EP Act, the court is entitled to make these orders whether or not the contravention has or is likely to cause harm to a person or the environment, or is likely to result in an infringement of the rights of any person.²¹

Implications and next steps

The new third-party rights represent a substantial shift in the role of the community in pressing for compliance with environmental law, and will provide fresh impetus for some operators to improve their environmental compliance standards to avoid enforcement action. In our view, the changes are unlikely to open the 'floodgates' of community and public interest litigation, both due to the relatively restrictive 'eligible persons' tests and the complexity, cost and unpredictability of environmental litigation more generally. A relatively small number of actions have been brought under equivalent third party provisions in other jurisdictions. In a number of cases, the court has refused to grant leave to a third-party litigant, or narrowed the scope of the third-party standing provisions. For example, the New South Wales Land and Environment Court has confirmed that municipal councils are not entitled to seek leave to bring proceedings as third-party claimants.²² That court has also confirmed that third-party rights are intended to supplement, and not replace, the role of environment protection agencies as the primary environmental regulator.²³

The EPA Act was passed by the Victorian Parliament in August 2018. However, businesses affected by the new reforms have time to prepare for the transition to the new framework, with the substantive reforms in the EPA Act not set to commence until July 2020 (with a final deadline of December 2020).

Eligible persons will not be able to bring actions under the new third party provisions until 12 months after the EPA Act commences. This transition period will give those who will be required to comply with the new requirements sufficient time to adjust to the changes before there is a possibility of civil proceedings being brought by a third party. Given that the reforms provide a new and separate statutory compensation mechanism outside contract, we recommend that businesses carefully consider the risk of possible civil claims for projects, transactions and operations.

Businesses can best protect themselves from third party actions by ensuring they have clear and detailed systems in place to meet their obligations under the EP Act, including the new general environmental duty and the conditions of their environmental permissions. We also recommend that businesses start reviewing internal policies and procedures now, to ensure that key environmental and safety management systems and underlying compliance protocols are designed and implemented to ensure compliance with key obligations under the EP Act.

Clear strategies to manage community engagement and complaints will also be important tools for minimising the risk of enforcement action, by ensuring that potential issues are addressed early.

We will continue to bring you more information about the reforms as draft regulations and EPA guidance material is released. If you require advice on the potential impact of the third party rights or the EPA Act on your business more broadly, please contact Jillian Button.