Should we consider mandatory self-reporting of environmental offending?
The Government has a clear intention to improve enforcement of environmental legislation, particularly the Resource Management Act 1991 (RMA).
One measure that could be used to strengthen enforcement is to introduce mandatory self-reporting of environmental offending. Mandatory self-reporting is a term used to describe a legal requirement for an offender to report to an authority if they have committed, or believe they have committed, an offence. There are fishhooks in mandatory self-reporting that will require careful consideration before implementation.
This article will address current regulatory drivers of a mandatory self-reporting scheme, provide some examples in New Zealand and overseas, and identify matters that the Government would need to consider when exploring this concept.
A trend towards strengthening enforcement
The Parliamentary Commissioner for the Environment, Simon Upton, has supported increased transparency around environmental discharges. He has proposed an independent assessment into the case for New Zealand to develop a Pollutant Release and Transfer Register, potentially giving the public access to information about discharges of chemicals and waste generated, and affecting businesses relying on chemical use and waste generation. The Government has not yet responded to this proposal.
The current Government is explicitly committed to better enforcing the RMA (Labour-led Government “Confidence and Supply Agreement between the New Zealand Labour Party and the Green Party of Aotearoa New Zealand” (24 October 2017)). To date, this has been demonstrated in the following ways:
- In the Budget 2018, the Government committed $3.07 million to the Resource Management Act Enforcement oversight unit (Oversight Unit). The purpose of the Oversight Unit is to “improve the consistency, effectiveness and transparency of council enforcement decisions” (Hon David Parker “Resource Management Act oversight unit to be established” (press release, 17 May 2018)).
- The Oversight Unit sits as part of the Environmental Protection Authority (EPA) and will, in due course, be given powers to take enforcement action in certain circumstances, for example, where local authorities have failed to do so (Cabinet Paper “Proposed Resource Management Amendment Bill: Stage 1 of a resource management system review” (9 October 2018) at - ). Development of the Oversight Unit shows the Government’s appetite for improving the consistency of enforcement taken by local authorities.
- In July 2018, the Ministry for the Environment released guidance to local authorities on RMA compliance, monitoring and enforcement in efforts to improve consistency in how local authorities undertake those functions (Ministry for the Environment Best Practice Guidelines for Compliance, Monitoring and Enforcement under the Resource Management Act 1991 (July 2018)).
- The Government has said that stage one of the RMA reform will involve strengthening compliance, monitoring and enforcement, and will enable the EPA to take enforcement action (Cabinet Paper “Proposed Resource Management Amendment Bill: Stage 1 of a resource management system review” (9 October 2018) at , -).
These mechanisms come at a time when New Zealand’s environment is in a poor and declining state (Ministry for the Environment and Stats NZ New Zealand’s Environmental Reporting Series: Environment Aotearoa 2019 Summary (April 2019)). Mandatory self-reporting of environmental offending could sit within the stage two reforms of the RMA (or within the RMA as it currently exists) and could be an effective tool in improving the enforcement of environmental offending.
There are local and international examples of mandatory self-reporting of environmental offending
Mandatory self-reporting in New Zealand
There is some precedent for this type of regulatory approach already on these shores. Two interesting environment- related examples to examine relate to the New Zealand Emissions Trading Scheme and fisheries.
The Climate Change Response Act 2002 (CCRA) requires mandatory participants to report to the EPA about their emissions. For example, a person that deforested pre- 1990 forest land (CCRA, sch 3 pt 1) has a duty to notify the EPA that they have become participants by deforesting pre-1990 forest land (s 56) and must make an emissions return for the deforestation activities in the immediately preceding year (s 65). Failure to fulfil these obligations is an offence under the Act. That offence sits alongside the participants’ obligations to surrender New Zealand units to account for deforestation activities.
The CCRA also encourages voluntary self-reporting through its penalties regime. Failure to surrender New Zealand units within the specified timeframes incurs a penalty payment (s 134). The EPA has discretion to reduce this penalty payment but only if the participant voluntarily reports its failure to surrender units to the EPA before an investigation commences (s 135). If the EPA has taken steps to investigate a participant, the participant can no longer receive a discount on the penalty payment (s 135(2)(a)). Therefore, there is a financial incentive to admit an offence: automatic penalties will apply if a participant fails to surrender units when required to do so and self-reporting could mean that the EPA reduces the amount of the penalty, in some cases by 100 per cent (Environmental Protection Authority Emissions Trading Scheme: Compliance and enforcement programme (January 2019)).
The EPA has used its discretion to reduce penalty payments to encourage self-reporting by participants of their failure to surrender units (Jennifer Eder “Forestry authority reduces fines for Kaikōura farmer who cut down trees” The Marlborough Express (online ed, Marlborough, 2 May 2019)). Despite people reporting offences to the EPA, no one has been prosecuted under the CCRA.
A local example of a light-handed self-reporting approach is the current fisheries regime in New Zealand. It does not have the rigor and incentives associated with other approaches and is not a strong model for replicating. It requires honesty in the constant supply of information against regulatory requirements. It does not involve a special process for incriminating oneself or an alleviated penalty for reporting an offence.
The fisheries Quota Management System requires regular reporting from commercial fishers and licensed fish receivers (LFRs). Commercial fishers must provide details of catch, effort and landing returns for each fishing trip and monthly harvest returns (see for example, Fisheries (Reporting) Regulations 2001, reg 5). LFRs must submit a return each month, listing the amounts and types of fish received in the previous month and the fishers that supplied the fish to them (Fisheries (Reporting) Regulations 2001, reg 16). Failing to provide returns in the manner specified or making false or misleading statements is an offence (Fisheries (Reporting) Regulations 2001, regs 42(d) and (e)).
Due to the lack of checks and balances, the fisheries self- reporting system has faced criticism and is currently going through a change process. Current proposals involve the introduction of a digitised system to enhance the accuracy of reporting (see for example, Fisheries New Zealand “Protection and Response: Digital monitoring of commercial fishing” (2 August 2019)
Mandatory self-reporting internationally
In America, Australia and other countries, there are self- reporting obligations in relation to land contamination. Environmental laws in New South Wales (NSW), Australia, illustrate how this approach can be undertaken.
Section 60 of the Contaminated Land Management Act 1997 (NSW) (CLM Act) requires persons to notify the NSW Environment Protection Authority (NSW EPA) as soon as practical after they become aware of land contamination. This duty applies to people whose activities have contaminated land and to owners of land that has been contaminated. Awareness of contamination can be imputed if a person should have reasonably been aware of the contamination.
The factors taken into account in determining when a person should reasonably be aware of contamination include: their training and experience; whether the person could reasonably have sought advice; and the circumstances of the contamination (NSW Environment Protection Authority Guidelines on the Duty to Report Contamination under the Contaminated Land Management Act 1997 (September 2015) at 11).
A person with actual or imputed knowledge of contamination is required to notify the NSW EPA in the following circumstances (NSW Environment Protection Authority Guidelines on the Duty to Report Contamination under the Contaminated Land Management Act 1997 (September 2015) at 3):
- contamination in/on soil meets or exceeds the level of contamination set out in the relevant guidelines that have been made under the CLM Act and people have been or could be exposed to the contaminant; or
- contamination meets criteria prescribed by regulations that can be made under the CLM Act; or
- a contaminant has entered or could enter neighbouring land, atmosphere, groundwater or surface water and meets or exceeds the level of contamination set out in the relevant guidelines that have been made under the CLM Act and will foreseeably continue to meet/exceed that level.
In determining whether contamination should be reported, the particular site should undergo assessment by a professional contamination consultant (NSW Environmental Protection Authority Guidelines on the Duty to Report Contamination under the Contaminated Land Management Act 1997 (September 2015) at 4).
A person who is required to report contamination to the NSW EPA but fails to do so may be prosecuted. Failing to report is a separate offence under the CLM Act. The maximum penalties for failing to report are:
- for a corporation: AUD 1,000,000 with a further penalty of AUD 77,000 for each day the offence continues; and
- for an individual: AUD 250,000 with a further penalty of AUD 33,000 for each day the offence continues.
Voluntary self-reporting of offending is viewed favourably by the NSW EPA and is a mitigating factor in determining whether to prosecute an offence or not (NSW Environmental Protection Authority EPA Prosecution Guidelines (March 2013)). However, notifying the NSW EPA is required under the CLM Act and is therefore not strictly voluntary. Despite this caveat, the quantity and quality of the information provided as well as expeditious notification are regarded by the NSW EPA as mitigating factors to be taken into account in sentencing.
As is common under other self-reporting regimes, the CLM Act protects those reporting contamination incidents from self-incrimination. This is an important element that any new rule in New Zealand would need to consider to ensure consistency with the New Zealand Bill of Rights Act 1990. Section 60 (7) of the CLM Act provides:
Information provided by a person for the purpose of complying with this section is not admissible as evidence in any proceedings against that person for an offence under the environment protection legislation (except in proceedings for an offence under this section).
Therefore, the CLM Act illustrates how the issue of self- incrimination can be addressed. A similar approach is taken in s 311 of the Clean Water Act 33 USC § 1321(b)(5) (Supp 1979), which provides that information received pursuant to a mandatory notification must not be used against any person in any criminal case (except a prosecution for perjury or misrepresentation) (see OA Caginalp “The Fifth Amendment Privilege Against Self-Incrimination and Compulsory Self-Disclosure Under the Clean Air And Clean Water Acts” (1980) 9 BC Envtl Aff L Rev 359 at 362).
Provisions similar to those of the CLM Act could apply in New Zealand, either under the RMA framework or under a new environmental management framework. By way of example, s 15 of the RMA could be amended. Simply put, s 15 states that no person may discharge a substance into the environment without authorisation. Mandatory self- reporting could also apply to a breach of resource consent conditions.
The European Union’s (EU) Restriction of Hazardous Substances Directive (RoHS) is one example of self- reporting obligations in relation to hazardous substances (Directive 2011/65/EU of the European Parliament and of the Council of 8 June 2011 on the restriction of the use of certain hazardous substances in electrical and electronic equipment  OJ L174/88). The RoHS restricts the use of hazardous chemicals within products in order to protect human health and the environment.
In the United Kingdom, regulations ratifying RoHS require manufacturers (amongst others) that place electrical and electronic products on the EU market to take necessary corrective measures and immediately inform the relevant authority where they have “reason to believe” their product has breached the limits on the use of certain restricted hazardous substances (The Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Regulations 2012 (UK) (ROHSUK), reg 20). It is an offence for a manufacturer to contravene or fail to comply with the requirements of the regulations, including the requirement to self-report a breach (ROHSUK, reg 37).
The Regulations also state that non-compliance with the obligation to self-report under reg 20 is liable on summary conviction to a fine (ROHSUK, reg 39).
Mandatory self-reporting of environmental offending could reduce authorities’ monitoring costs and increase environmental compliance and performance
From a purely environmental perspective, mandatory self-reporting makes sense. It allows authorities to access information relating to environmental offending faster and reduces reliance on third party tip-offs or sporadic monitoring by regulatory authorities.
Speed and transparency of action could make a significant change to the current approach to incidents involving discharges into the environment. For example, discharges of contaminants can be extensively studied by resource consent applicants to understand their extent and impact as part of the resource consent application process. This can mean a delay of months or years before the resource consent application is actually submitted. With incentivised reporting, authorities can be assured that an incident is addressed sooner (including any clean up, if required), preventing further environmental harm occurring.
Such a model would also be relatively inexpensive to establish, as the offender could meet most costs. It could lead to significantly reduced monitoring costs for authorities and avoid the sole reliance on councils (and in the future, the Oversight Unit/EPA).
A clear regime for mandatory self-reporting (with incentives for doing so and any protections against self-incrimination) could also provide certainty of enforcement outcomes for operators that report incidents promptly.
Increased transparency also responds to the public’s demand for better environmental performance and more environmental information about incidents.
The incentives of self-policing programmes have, in some instances, encouraged companies to report and correct problems that would never have been discovered by regulators (Jodi Short and Michael Toffel “Turning
Themselves In: Why Companies Disclose Regulatory Violations” (2005) UC Berkeley: Center for Responsible Business 1 at 3). This illustrates the real potential for improvements in compliance.
However, mandatory self-reporting is not without its drawbacks
Even so, any mandatory self-reporting regime would need to be carefully considered. Mandatory self-reporting does not sit easily with the legal principle against self-incrimination, which is provided for in s 25 of the New Zealand Bill of Rights 1990 and s 60 of the Evidence Act 2006. As noted in the context of environmental legislation of the United States, “the conflict arises when information received by the government pursuant to required notification or records under the applicable statute is used by the government to prove its case against the alleged polluter” (OA Caginalp “The Fifth Amendment Privilege Against Self-Incrimination and Compulsory Self-Disclosure Under the Clean Air And Clean Water Acts” (1980) 9 BC Envtl Aff L Rev 359 at 359).
Any self-reporting regime must ensure that the right against self-incrimination has been considered.
Research has also been undertaken that suggests self- reporting can be effective for those operators that generally perform well and may have had an accident; however, poor or careless environmental operators are unlikely to self-report (K Fukuyama, DM Kilgour and KW Hipel “Self- Reporting Systems for Environmental Compliance” (2000) 126 J Water Resour Plan Manag 3 at 11). In addition, such initiatives confer industry bodies an unprecedented and unwarranted level of control over their own regulation, and may risk undermining compliance by publicly praising self- reporting companies who may be hiding severe violations behind the self-disclosure of relatively minor breaches (Jodi Short and Michael Toffel “Turning Themselves In: Why Companies Disclose Regulatory Violations” (2005) UC Berkeley: Center for Responsible Business 1 at 3).
The incentives and penalties under a mandatory self- reporting scheme would need fine balancing. For example, if incentives are too great, then this could have the effect of not discouraging, or permitting, environmental offending. If incentives are too small, then this will not encourage self- reporting.
The relationship between incentivising self-reporting and sentencing principles (for example, discounts offered for cooperating with authorities) also requires further examination.
Companies and councils will face increased compliance costs as they transition to a new scheme of self-reporting. There would need to be guidance and support as a new scheme is introduced.
What could mandatory self-reporting in New Zealand look like?
New mandatory self-reporting provisions in New Zealand could be modelled on the CLM Act and would need to address the following key issues that the CLM Act covers:
(1) who the duty applies to: those responsible and those with an interest in the land;
(2) when to self-report: on awareness or when the person should have been aware;
(3) the process of reporting:
(a) a qualified professional undertakes an assessment of the land; and
(b) a self-reporting notice is completed and provided to the regulator;
(4) penalties that apply: an appropriate punishment for failing to comply with the duty of self-reporting would need to apply to those convicted of the offence. This could also be supported by an incentive to encourage self-reporting; and
(5) protecting those who self-report: ensuring that the principle against self-incrimination remains protected under the new provisions.
Mandatory self-reporting of environmental offences could be the next step towards strengthening environmental enforcement in New Zealand.
Mandatory self-reporting of environmental offending would be in-step with other regimes under New Zealand environmental law. It would also reflect international practices.
With growing environmental awareness but decreasing environmental performance, self-reporting could be a tool to reduce environmental offending in New Zealand.
This article was first published in Resource Management Journal, August 2019.
About the authors
Rachel Devine, Partner
Rachel provides advice on all aspects of environmental and resource management law for private and public sector clients – from design through to approval, implementation and operation. She has significant experience in obtaining complex environmental and project approvals for developers, and advises on other environmental issues including pollution licensing and contaminated land.
Patrick Senior, Senior Solicitor
Patrick is a Senior Solicitor in the firm's Environment team. Patrick advises a range of public and private clients on resource management, compulsory acquisition, climate change, local government and public law matters.