Beyond compliance: NSW Court of Criminal Appeal clarifies "competent manner" obligations in Environment Protection Licences

The NSW Court of Criminal Appeal has confirmed that compliance with specific licence conditions is not a defence to a failure to act competently, however it remains relevant to whether activities were carried out properly and efficiently. The decision also reinforces the high bar for criminal liability, particularly where findings of incompetence turn on competing expert evidence.

Snapshot

• The NSW Court of Criminal Appeal (Court) has confirmed that a general obligation of competence in an Environment Protection Licence (EPL) operates independently of specific limit conditions, and compliance with specific limits does not provide a defence to a breach of the competence condition. 
• However, compliance with specific EPL conditions can be a relevant indication that activities were carried out competently and that matters were dealt with in a proper and efficient manner. 
• Where there is competing expert evidence on the ultimate issue of competence, a mere preference for one expert’s evidence over another is insufficient to establish guilt beyond reasonable doubt.

Background

On 4 October 2024, the Land and Environment Court of NSW (LEC) found Maules Creek Coal Pty Ltd (MCC) guilty of four offences under the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) in connection with an overburden blast carried out in 2020 (Blast).

Blasting to extract coal is a regulated activity, and Condition O1.1 of MCC’s EPL provided that licensed activities must be carried out “in a competent manner”. Further, Conditions L4.1–L4.4 of MCC’s EPL provided specific blasting limits at four monitoring points.

MCC was charged with three offences against s 64(1) of the POEO Act for allegedly carrying out the Blast (in respect of blast timing, stemming length used and overloading blast holes with explosives) otherwise than in a competent manner, in contravention of Condition O1.1. MCC was also charged with one offence against s 140(1) of the POEO Act for emission of noise caused by allegedly failing to deal with explosive materials in a “proper and efficient manner” so as to cause the emission of noise.

After the Blast, the airblast overpressure and ground vibration levels recorded at each of the four monitoring points prescribed in the EPL were within the limits specified in Conditions L4.1–L4.4. 

First instance decision

At first instance, the LEC found that: 

• Condition O1.1 imposed an obligation separate from the specific limit conditions, and that compliance with Conditions L4.1–L4.4 was not “in effect a proxy” for compliance with Condition O1.1. 
• In assessing competence, the primary judge had regard to the Australian Standard AS 2187.2-2006, the Blast Management Plan, and the potential environmental consequences of the Blast at locations other than the specified EPL monitoring points. 
• The primary judge preferred the evidence of the NSW Environment Protection Authority’s (EPA) expert over MCC's expert, noting that the EPA’s expert had greater experience in Australian mining and open cut coal mines. 
• MCC was convicted and ordered to pay penalties totaling $200,000. 

The appeal decision

• MCC appealed against conviction and the EPA sought leave to appeal against sentence. 
• The Court (Ward P, with whom Leeming JA and Fagan J agreed) allowed the conviction appeal, quashed all convictions and entered verdicts of acquittal. 

The Court’s key findings included: 

• Construction of the EPL: The Court confirmed that:
  • Condition O1.1 (requiring licensed activities to be carried out “in a competent manner”) imposes an obligation separate and independent from the specific limit conditions in Conditions L4.1–L4.4. 
  • The principle that a specific provision prevails where there is conflict with a general provision was not engaged, as the general and specific conditions are contained in separate chapters of the EPL.
  • Compliance with the limit conditions did not establish a defence to a breach of Condition O1.1, as there is no express condition to that effect within the EPL.

     However, the Court found compliance with specific EPL limit conditions may be “a strong indication of 
     competence”, although not necessarily determinative. 

• Competence findings: The Court found that the primary judge erred in concluding beyond reasonable doubt that there was a contravention of Condition O1.1. 

  The Court found:

  • The primary judge did not err in referring to potential environmental consequences of the Blast when construing the phrase “competent manner,” nor in having regard to the Australian Standard and the Blast Management Plan when assessing competence. 
  • However, as elements of the Blast Management Plan were not prescriptive, any departure from the design standard did not, of itself, indicate a lack of competence (particularly in circumstances where the Blast was not standard and there were “considered reasons” for the departure). 

  • A lack of competence was not established by reference to the failure to consider the potential impact of the Blast at locations beyond the specified EPL monitoring points.

    Importantly, where there was competing expert evidence on the issue of competency, it was not sufficient for the primary judge to prefer one expert's evidence over the other to find guilt established beyond reasonable doubt.

• The noise charge: The Court found that the primary judge erred in concluding beyond reasonable doubt that the explosives were not dealt with in a proper and efficient manner contrary to s 140 of the POEO Act.
  
  The Court confirmed:
  • Compliance with the noise condition in the EPL did not provide a defence to an alleged breach of s 140 of the POEO Act, unlike the position for water and land pollution offences.
  • Compliance with specific EPL conditions can be a relevant indication that materials were dealt with in a “proper and efficient manner”.
  • Efficiency must be assessed by reference to the outcome sought to be achieved by the Blast, and the modelling carried out by MCC's expert raised reasonable doubt as to the allegation. 
     

• Findings regarding proof beyond reasonable doubt: The Court held that where there was competing expert evidence on the ultimate issue of competence, it was not sufficient for the primary judge simply to prefer one expert's evidence over the other. 

  The Court found that MCC's expert evidence (particularly when understood in the context of the modelling evidence of MCC's blast consultant) gave rise to a reasonable doubt as to the alleged lack of competence. Unless that evidence was rejected, or categorised as not constituting reasonable doubt, which the primary judge had not done, a finding of guilt could not be made out. 
  
  Accordingly, the EPA had failed to establish guilt beyond reasonable doubt in respect of both the s 64 charges and the s 140 noise charge.

Key takeaways

This decision provides important guidance for holders of EPLs, particularly those undertaking blasting or other activities with potential externalities:

• “Competent manner” is a standalone obligation: General competence obligations operate independently of specific limit conditions. Compliance with specific EPL limits does not of itself establish compliance with a general obligation to carry out activities in a competent manner, although it may be a strong indicator of competence.
• Regulators cannot rely on hindsight or broader impacts alone: A failure to consider potential impacts outside monitoring points prescribed by the EPL will not, by itself, establish a lack of competence.
• Where management plans are not prescriptive, departures from design standards (particularly in non-routine or atypical operations) will not necessarily indicate incompetence: Operators should ensure that any departures from standard operating procedures are well-documented, supported by expert advice, and that the rationale for the departure is clearly recorded. 
• The criminal standard of ‘beyond reasonable doubt’ requires more than a preference between competing experts: Where there is competing expert evidence on the ultimate issue, a tribunal of fact must do more than express a preference for one expert over another. It must explain why the competing evidence does not raise a reasonable doubt.

• ‘Efficiency’ under s 140 of the POEO Act is assessed by reference to the outcome sought to be achieved: The proper and efficient manner of dealing with materials must be assessed in context, including the objectives of the activity and compliance with EPL conditions.