Dr Emma Carmody, Special Counsel
Kimberley Slapp, Legal Intern
Australia is an extremely dry continent that is in the process of becoming drier, including across swathes of the Murray-Darling Basin (MDB). For example, recently published research found that by 2070, most of Lake Eyre and parts of the MDB could become enveloped by the arid zone (that is, be subject to desertification). This makes it more important than ever to ensure that all water extractions are properly measured and water licence and approval conditions are strictly enforced by independent regulators.
Against this backdrop, we have prepared a case summary of a conviction recorded this week in the New South Wales Land and Environment Court for the illegal construction of a 2-kilometre-long by 30-metre-wide irrigation channel. The matter was brought by the Natural Resources Access Regulator (NRAR), which is responsible for enforcing water laws in NSW.
Grant Barnes, Chief Regulatory Officer, Natural Resources Access Regulator v Budvalt Pty Ltd; Grant Barnes, Chief Regulatory Officer, Natural Resources Access Regulator v Harris  NSWLEC 113
Budvalt Pty Ltd (Budvalt), which is owned by Peter and Jane Harris, operates an irrigation farm known as Miralwyn Cotton (Miralwyn). Miralwyn is situated at the confluence of the Barwon and Macquarie Rivers in north-western NSW. Commencing on the 29July 2015, an irrigation channel was built on the property by a third-party contractor at the direction of Budvalt. On the 20August 2015, Budvalt was observed using the channel to hold or convey water sourced from the Macquarie River for subsequent use in irrigation. Budvalt had not obtained the necessary approval under Part 3 of Chapter 3 of the Water Management Act 2000 (NSW) (WM Act) to construct and use the channel in question.
It is an offence under s. 91B of the WM Act to construct or use a water supply network without obtaining the necessary approval. This is a strict liability offence, which in simple terms means that the intent of the offender is not relevant; it is sufficient to have materially breached the law. Relevantly, the defendant entered a guilty plea.
The findings of the LEC
The Court ultimately found that Budvalt contravened section 91B of the WM Act during the charge period (29 July 2015 to 20 August 2015). However, and in spite of this breach, the Court found that Budvalt’s conduct did not amount to ‘water theft’. This is because there was no suggestion that the company had contravened the conditions of its water licence (which is separate from the approval required to construct and use an irrigation channel).
Under s.363B of the WM Act, the maximum penalty that can be imposed on a corporation that has been found guilty of breaching s.91B of the WM Act is 10,000 penalty units, which is the equivalent of $1,100,000.
When determining the final penalty, the Court is required to take into account a range of factors. This includes what are known as ‘aggravating factors’ and ‘mitigating factors’ which respectively increase or reduce the severity of the final penalty imposed by the Court.
The Court considered one aggravating factor, namely whether the offence had been committed for financial gain. Ultimately, it did not find beyond reasonable doubt that this had occurred.
The Court further considered a range of mitigating factors including the absence of substantial environmental harm; the fact that Budvalt had no prior convictions; and the fact that the company had chosen to plead guilty to the offence and had cooperated with the prosecutor. However, and by way of contrast, the Court found that Budvalt had not ‘demonstrated any genuine contrition and remorse whatsoever for its unlawful conduct’.
In light of these factors, and given that the final penalty must also serve to generally deter other water users from committing offences under the WM Act, the Court found that a starting penalty of $280,000 was appropriate. It then imposed a 10% discount for the guilty plea (which allowed for the matter to be dealt with more quickly by the Court, which in turn reduced the overall cost of the trial).
The Court’s orders
The Court ordered a fine of $252,000, with half of this sum ($126,000) to be paid to the NRAR. In addition, Budvalt was ordered to publicise the offence by placing notices (at its expense) detailing the offence and its consequences in several local newspapers. There was no further order made for costs to be paid.
The NRAR continues to demonstrate that it is serious about enforcing water laws in NSW. However, it requires guaranteed, ongoing funding to undertake its complex, resource-intensive work. Further and as the EDO noted in its recent submission to the Productivity Commission, the ability to properly enforce water laws – particularly those concerning water theft – depend on accurate metering data. In the absence of this data, it can be very difficult for the regulator to meet the criminal burden of proof which underpins prosecutions. We therefore look forward to the first tranche of the state’s new metering laws being implemented by affected water users from December 2020.