EPA Inquiry Report Released – Is the EPA destined for a significant overhaul?

The Victorian Government’s 10 months Inquiry into the Environment Protection Authority Victoria (EPA) concluded on 31 March 2016 and the findings of the Inquiry have now been released.

The Inquiry was conducted by a three-person Ministerial Advisory Committee (MAC) and examined six key matters and ‘any other matter reasonable incidental to these matters’. The six matters related to the EPA’s role, duties, powers and regulatory tools, the Victorian community’s and industry’s expectations of the EPA as its environmental regulator, and the EPA’s governance structure and funding mechanisms. Partner, Meg Lee, and lawyer, Linda Choi report on the key findings and recommendations.

What were the key recommendations?

Drawing on a range of views provided by industry sectors, government bodies, academics, scientists, interest groups and experts during the consultation period, the MAC has put forward 48 recommendations. Among these recommendations, of particular importance from a regulatory perspective include the recommendations as set out below:

1. Reforms to Governance

Recommendations in this category include:

• undertake a ‘comprehensive overhaul’ of the Environment Protection Act 1970 (EP Act) and modernise it to include general preventative duty to protect the Victorian Environment against pollution and waste impacts (recommendations 5.1 & 12.1);
• establish a EPA (Establishment) Act to clarify the EPA’s role and strengthen its governance structure (recommendation 5.2);
• establish a Chief Environmental Scientist role under legislation (recommendation 6.1);

2. Reforms to third party roles

Recommendations in this category include:

• amending s33B(1) to clarify the test for third party standing for review of decisions under the EP Act so as to reflect section 5 of the Victorian Civil and Administrative Tribunal Act 1998 (which is essentially an “interests affected” test, where interests are defined broadly to include interests of any kind and is not limited to proprietary, economic or financial interests) (recommendation 7.4);
• a proposal to amend the EP Act to allow third parties to enforce breaches of the EP Act through the courts (rather than through VCAT), in a similar way to the way in which third parties can enforce the planning schemes and in the same way as is allowed in South Australia, New South Wales and Queensland (recommendation 7.5);

3. Clarifying the EPA role in greenhouse gas management

Recommendations in this category include:

• establish the appropriate statutory instruments to ensure the EPA has a clear role in managing greenhouse gas emissions (recommendation 8.2);

4. Better integration with other agencies

Recommendations in this category include:

• require local councils to seek EPA’s advice to in strategic planning processes and strengthen land use planning mechanisms to maintain buffer to conflicting land uses and better manage health, safety and amenity impacts (recommendations 10.1 – 10.3);
• establish a ‘high level’ Environment Protection (Integration and Coordination) Act to improve coordination and collaboration across government on environment protection and associated public health issues (recommendation 7.1);

5. Clarifying compliance and enforcement powers

Recommendations in this category include:

• clarify and enhance the EPA’s prosecution powers and expand the range and increase the severity of sanctions (recommendation 13.3);
• strengthen and formalise the EPA’s role in mining regulation under the Mineral Resources (Sustainable Development) Act 1990 including making the EPA responsible for compliance and enforcement of the environmental conditions in mining licences (recommendation 17.1);

6. Changes to funding model

Recommendations in this category include:

• develop a new funding model for the EPA that provides greater revenue certainty and stability and reduces reliance on funding sources with conflicts of interest; and redesign the Municipal and Industrial Landfill Levy to better meet its regulatory objectives (recommendations 21.10 and 21.20).

What has been the response?

As an immediate response to some of the report’s recommendations, the Government has announced that it will act to enhance the EPA’s capacity by:

• establishing an interim board with a range of skills and expertise to guide the EPA in delivering reform, with Cheryl Batagol continuing to chair the EPA;
• employing a Chief Environmental Scientist to strengthen the EPA’s focus on science; and
• improving the EPA’s environmental health capability by working with the Department of Health and Human Services to shift its environmental health functions to the EPA over time.

The Government has also stated, in response to the recommendation 21.20, that, while it supports the concept of polluter pays and having appropriate licence fees, the Government does not support the specific proposal to move away from funding the EPA through the landfill levy.

Industry will certainly welcome some of the recommendations, in particular, the proposal to more formally involve the EPA in strategic planning decisions regarding rezoning of land to ensure appropriate buffers are maintained and industry is protected from encroachment of sensitive uses.

However, it is expected that there will be significant concern from industry over the proposal to reform the third party standing rules for appeals against works approval and licensing decisions and to allow third parties to enforce breaches of the EP Act. This is something which has traditionally been seen as a role for the expert regulator, given the often complex and scientific nature of evidence required in such matters. It is noted, however, that such a reform would bring Victoria into line with South Australia, New South Wales and Queensland where there is a civil role in enforcement.

The extent to which the State Government adopts the other Inquiry recommendations will not be known until the release of the State Government’s response, which is not expected until later this year. Ultimately, many of the recommendations of the Inquiry are sensible structural changes that, if adopted and implemented, should assist to improve the effectiveness of the EPA and its interactions with other government agencies and bodies, however it is considered unlikely that there will be a significant overhaul.