Legal Insights

New point of law: What can be considered as a protected document?

By Patrick Ibbotson, Susanne Rakoczy

• 28 November 2023 • 4 min read
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A look at Environment Protection Authority v Sydney Water Corporation [2023] NSWLEC 119

This is the first case dealing with the protection of potentially self-incriminating voluntary environmental audits from production to the Environment Protection Authority (EPA) and other regulators. The Land and Environment Court (LEC) confirmed that the voluntary environmental audit privilege can apply to a wide range of evaluations carried out for the purpose of ensuring compliance or improving environmental performance. Further, the protections are not limited to formal, structured and comprehensive audits such as those carried out under International Organization for Standardization (ISO) 1900 standards.

This case is significant because:

  • the EPA has long argued for a more restrictive interpretation of the protections; and
  • now there is potentially a wider range of evaluations of activities that can be protected, including limited inspections of part of an asset, provided there is an ’evaluation’.

The Problem: a disincentive to carry out self-critical environmental audits

It is obviously desirable to have regulated entities carry out assessments to improve their systems and processes to protect the environment from harm. However, there will be a reluctance to undertake self-critical assessments if they can be obtained by regulators or used in evidence to prove an offence.

The EPA has broad investigative powers. It can compel the production of records and information and require individuals to answer questions. The privilege against self-incrimination is no protection to these powers. As a result, absent some legislative protections, self-critical audit documents could be obtained and used by the EPA in investigations or prosecutions

The legislated solution: protection of voluntary environmental audits

Part 6.3 of the Protection of the Environment Operations Act 1997 (POEO Act) protects certain documents from being produced to or used by the EPA, and provides:

  • that a document prepared for the sole purpose of a voluntary environmental audit
    • is not admissible in evidence against any person in any proceedings connected with the administration or enforcement of the environment protection legislation, and
    • may not be inspected, copied, seized or otherwise obtained by the EPA, any other regulatory authority, any authorised officer or any other person for any purpose connected with the administration or enforcement of the environment protection legislation; and
  • the EPA or any such authority, officer or other person may not, for any such purpose, require a person to answer any question or provide any information about the existence of the document or about what it contains.

What is a voluntary environmental audit?

In Environment Protection Authority v Sydney Water Corporation [2023] NSWLEC 119, the EPA subpoenaed 12 documents from Sydney Water Corporation. The documents fell broadly into the following categories:

  • comprehensive condition assessments of a rising main;
  • partial external condition assessments of a part of a rising main;
  • assessments of a part of the rising main in situ following a failure;
  • assessments of a part of a rising main after the relevant part had been excavated and moved to a depot; and
  • CCTV footage and inspection log of part of a rising main.

The EPA argued that none of the documents could be a voluntary environmental audit because the term ’environmental audit‘ required a more comprehensive, independent and systematic process such as envisaged in ISO 1900 standards. This submission effectively sought to imply a restricted technical overlay into the definition of environmental audit.

Sydney Water Corporation argued that the language of the POEO Act is plain and only requires a documented evaluation of an activity for either or both of the purposes specified in s 172 of the POEO Act:

  • to provide information to the persons managing the activity on compliance with legal requirements, codes of practice and relevant policies relating to the protection of the environment, and
  • to enable those persons to determine whether the way the activity is carried on can be improved in order to protect the environment and to minimise waste.

In his last judgment prior to retiring, Moore J agreed with Sydney Water Corporation’s view. He held that 10 of the 12 documents were protected and that the protection was not limited to the type of formal, comprehensive, technical and systematic audit contended for by the EPA.

What is the key takeaway from this decision?

Voluntary environmental audits are not required to be formal, comprehensive, technical and systematic audits. They can be informal assessments. They can relate to part of an activity. They do not need to be carried out by an accredited auditor. They must include an ’evaluation‘ of an activity. They must be voluntary.

Regulated entities should ensure that self-critical audits, inspections, and assessments contain more than just observations of the condition of assets. They need to include an evaluation of the asset or process in respect of its performance to comply with environmental laws or minimise environmental impacts.

If you have any questions contact our Public Law Partner, Patrick Ibbotson, or Associate Susanne Rakoczy.

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