Are you confident your water use is lawful? For many agricultural water users in New South Wales, the answer may be more uncertain than they realise.
A regulatory landscape that is rapidly shifting
There has been a marked and growing focus on water compliance in New South Wales. On 1 January 2026, significant changes took effect to the Water Management Act (WMA), granting the Natural Resource Access Regulator (NRAR) additional powers, and expanded civil penalty provisions under the WMA.
This is not a quiet administrative update. It is a signal that water compliance is being treated with the same seriousness as environmental and corporate regulation more broadly and primary producers who fail to take notice do so at their considerable financial and reputational peril.
A minefield for the unprepared
Most agricultural water users have a general idea about water compliance, but many fail to understand the full extent of the compliance requirements imposed upon them.
That gap between general awareness and genuine understanding is precisely where legal exposure lives. And as of 2026, the consequences of that gap have grown substantially more severe.
Since the start of 2026, penalties have increased significantly, with the WMA now imposing civil penalties of up to nearly $5 million for individuals and nearly $10 million for corporations.
To put that in context: these are not minor regulatory fines. For many farming operations, a penalty of this magnitude could be existential.
You are more likely to be caught than you think
One of the most common assumptions among water users is that low-level non-compliance will simply go unnoticed. That assumption is increasingly difficult to sustain.
With the proliferation of drone technology and information sharing, the risk of being discovered for non-compliance is greater than ever before. According to NRAR’s own statistics, in the period between March 2025 and 2026 alone, NRAR commenced nine prosecutions, issued 69 penalty notices and undertook 630 investigations with the majority of non-compliances originating from the North Coast region.
630 investigations in a single year is a significant enforcement footprint. NRAR is active, resourced, and increasingly effective at identifying breaches that previously may have gone undetected.
What are you required to comply with?
Primary production water users must comply with the conditions imposed upon their Water Access Licence (WAL), all take, use and other approvals, as well as the WMA, the regulations, and the relevant Water Sharing Plan. There are many ways a water user can find themselves in breach including failing to order water prior to taking it, constructing or expanding dams without the necessary approvals, exceeding bore extraction limits, and failing to maintain adequate logbooks.
The breadth of these obligations means that non-compliance is often inadvertent. However, inadvertence is not a defence, and NRAR’s enforcement record reflects that clearly.
Two misconceptions that could cost you dearly
Two key areas of non-compliance arise from widely held misconceptions that water users must understand:
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Overdrawing your water account
A common misconception is that a water account can go into a negative balance, provided it is not negative by the end of the water year. This is incorrect. As soon as a water account is overdrawn, there has been a breach of the WMA and a condition of the WAL, regardless of whether the balance is later restored.
The breach crystallises at the moment of overdraw. The fact that a user intends to “top up” the account before year end is entirely irrelevant to NRAR’s enforcement powers.
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Telemetry device failures and obligation to lodge a s91i form
Most water users understand the requirement to report a metering equipment failure by lodging a s91i form. However, a common misconception exists around telemetry devices that go offline and that many users believe these do not require a s91i to be raised. Under the WMA, the definition of “metering equipment” includes telemetry equipment. The regulations provide that where telemetry equipment is the only part of the metering equipment that is faulty, and the fault has persisted for at least 72 hours, a s91i must be raised within 24 hours of the user becoming aware of the fault.
Missing this obligation is easy to do and, given the expanded penalties now in force, costly to miss.
The public register: Reputational risk is real
Non-compliance carries consequences beyond financial penalties. Convictions are recorded on a publicly accessible register, which includes among other things, the names of both individuals and companies. The register also captures penalty infringement notices, enforceable undertakings, and directions. Information is not published where the outcome of an investigation is an advisory letter, warning, or official caution.
For businesses operating in primary production where access to finance, supply chain relationships, and community standing all matter. The reputational damage of a public listing should not be underestimated.
Act before NRAR does
The single most effective step any water user can take is to seek legal advice before an issue becomes an enforcement action. It is important to seek legal advice early for two reasons: first, to undertake an early compliance audit review to ensure early detection of possible or actual non-compliances; and second, where NRAR has already made contact, to ensure that your rights are preserved as much as possible and to mitigate any potential enforcement action.
Early engagement with specialist legal advice is not an admission of wrongdoing, it is sound risk management.
The regulatory environment around water compliance in New South Wales has materially tightened. The penalties are larger, the enforcement activity is intensifying, and the technology available to regulators is more powerful than ever. For primary producers, the time to review your water compliance obligations is now not when an NRAR officer arrives on your property.
If you have questions about your obligations under the Water Management Act or wish to arrange a compliance audit, please contact Lisa Ward.
