Environmental Law 2019 Second Edition

Last Updated November 13, 2019

Australia

Law and Practice

Authors



Maddocks is one of the leading environmental law teams in Australia. The firm is deeply connected to Commonwealth, state and local governments, enabling it to provide insightful, practical, savvy solutions for clients across a wide range of projects, transactions, disputes and business-as-usual situations. Maddocks has over 30 environmental lawyers from Melbourne, Canberra and Sydney; some of the firm's partners have specialised in environmental law for over 30 years and are recognised leaders in this field. The team delivers excellent outcomes across the field of environmental law including: major project approvals; environmental planning and impact assessment; environment protection and pollution; biodiversity protection; heritage; waste; contaminated land; water; climate change and energy. Maddocks has extensive experience with managing these issues in transactions, projects and disputes and in implementing environmental management initiatives.

Environmental laws are primarily set out in the legislation of the states, territories and the Commonwealth. The key Commonwealth legislation is the Environment Protection and Biodiversity Conservation Act 1999 (Cth). However, the Commonwealth has limited jurisdiction. In each state and territory there are environment protection and impact assessment regimes.

Policies and legislation vary for each state/territory and for the Commonwealth. Generally, the following principles are recognised, but the degree of commitment to them is variable, in particular where they intersect with mining and agricultural interests:

  • the principle of intergenerational equity – that the present generation should ensure that the health, diversity and productivity of the environment is maintained or enhanced for future generations;
  • the precautionary principle – that where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation;
  • the polluter pays principle – those who generate pollution and waste should bear the cost of containment, avoidance or abatement;
  • the users of goods and services should pay prices based on the full life cycle costs of providing them including the use of natural resources and assets;
  • reasonable and practicable measures should be taken to minimise the generation of waste and its discharge into the environment; and
  • conservation of biological diversity and ecological integrity should be a fundamental consideration.

Environmental legislation in Australia typically regulates the interactions of business operations in the following areas:

  • environmental planning and assessment (eg, town planning and assessment of the environmental impacts of new projects);
  • environmental protection (eg, regulation of pollution and waste disposal);
  • contaminated land;
  • protection of threatened species and their habitats (biodiversity);
  • water resources, quality, access and usage;
  • protection of reserves, parks and special areas; and
  • protection of European and Aboriginal heritage.

Most environmental legislation imposes a general duty to exercise reasonable care, exercise due diligence and not cause harm to the environment. This general duty is supported by numerous offences. Penalties exceeding AUD2 million can apply as well as enforcement orders such as clean-up orders and stop work orders.

While the legislation is implemented and enforced primarily by government agencies, members of the public, community groups, environmental groups and affected landowners sometimes have standing to seek court orders to restrain and remedy breaches of the legislation.

The common law principles of negligence, nuisance and trespass are also relevant. Acts and omissions that cause environmental harm may lead to claims for damages or injunctions under these principles.

Australia's Federal system has three tiers of government: Commonwealth, state/territory and local. All tiers of government are responsible for making, administering and enforcing environmental laws. To develop a major project such as a mine, major infrastructure, major processing facilities or major industrial operations, it will often be necessary to deal with all three tiers of government.

Commonwealth

The primary Commonwealth environmental agency is the Department of the Environment and Energy. This department is currently overseen by the following ministers:

  • the Minister for Energy and Emissions Reduction;
  • the Minister for the Environment; and
  • the Assistant Minister for Waste Reduction and Environmental Management.

The Constitution gives the Commonwealth government limited jurisdiction in environmental issues, typically:

  • external affairs (international treaties);
  • Commonwealth land;
  • some aspects of heritage;
  • aspects of water; and
  • matters that affect aboriginal peoples.

The main Commonwealth environmental legislation is the Environment Protection and Biodiversity Conservation Act 1999 (Cth) although the Water Act 2007 (Cth) is an important act establishing the administrative arrangements for the Murray Darling Basin plan. The Commonwealth has the power to legislate in respect of trading and financial corporations and could use this power to increase the scope of its environmental regulation but, to date, has generally not done so. 

State/Territory

State/territory legislation is the principal form of environmental regulation.

State environmental legislation is generally administered by the government department responsible for environmental issues and the state Minister for the Environment. Enforcement of the state/territory legislation is carried out by a mixture of state/territory agencies and local governments.

State/territory environmental legislation generally covers a wide range of environmental issues including pollution, waste, contaminated land, threatened species, heritage, planning, etc.

Local Government

Local councils are established under state/territory legislation and are responsible for administering local government areas. Typically, the members of a local council are elected by people who live in the local government area. Local government powers relate to local land use planning, development controls, local roads and traffic control, building regulations, community waste management, civil enforcement and prosecution for environmental offences, minor pollution incidents or nuisances and public health.

Local government is important as the tier of government most immediately connected to the people. However, it is often excluded from decisions on the approval of major projects. Nonetheless, it usually becomes necessary for proponents to work with the local community and therefore the local council remains a very important participant.

Regulatory authorities and bodies have very broad investigative and access powers with respect to environmental incidents and breaches of law/permits. These are set out in the relevant Commonwealth and state/territory environmental legislation and include to:

  • enter premises (in some circumstances without prior notice);
  • inspect premises, plant and equipment;
  • take samples, photographs and videos;
  • seize offending articles or other evidence;
  • carry out monitoring and assessment and require the production of documents; and
  • interview employees and require responses to questions.

Generally, it is an offence to fail to comply without lawful excuse.

At a Commonwealth level, an environmental approval will be required under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) for actions that are likely to have a significant impact on matters of national environmental significance. These are matters that the Commonwealth government has constitutional power to legislate in relation to and include:

  • world heritage properties;
  • national heritage places;
  • wetlands of international importance;
  • nationally threatened species and ecological communities;
  • migratory species;
  • Commonwealth marine areas;
  • the Great Barrier Reef Marine Park;
  • nuclear actions (including uranium mining); and
  • a water resource in relation to coal seam gas development and large coal mining development.

To obtain this approval, proponents may be required to conduct an environmental impact assessment to consider the potential impacts of the proposed action on matters of national environmental significance and how the impacts can be mitigated or reduced.

At a state/territory level there is a requirement to obtain an environmental approval from the state/territory government for significant projects, which generally also require an environmental impact assessment of some kind. The requirements for this approval differ across the states and territories but such an approval is likely required for a major project such as a new mine or a major infrastructure project. In some states/territories this approval requirement is integrated with the town planning approval. Usually, there is a list or specification in the legislation that describes the activities requiring a permit.

In addition to this approval, environmental permits are required:

  • for specified activities that present a particular environmental risk – eg, in most states/territories, environmental licences are required for specified industrial activities such as chemical industries, large-scale crushing or grinding works, certain mining, extractive industry and related activities, heavy industrial or manufacturing uses, intensive agriculture, and waste facilities;
  • where activities are carried out in a manner that presents environmental risk – eg, permits are often required to transport, store, process or dispose of waste (where the waste exceeds a specified volume or is of a particular type) or to store or use hazardous substances above certain quantities or in certain situations;
  • to cause pollution or specified polluting activities;
  • to harm threatened species or habitat;
  • to take or use water; and
  • to use certain radioactive devices.

It is very common for multiple permits to be required. It is not unusual to need permits from Commonwealth, state and local governments and for each level of government to have its own particular concerns, processes and requirements. Depending on the circumstances, the permit may be required to be held by the person carrying out the activity or the owner or occupier of the premises where the activity is carried out.

Obtaining Environmental Permits and Right of Appeal

Applications for approvals and permits are made to the relevant government agency.

An applicant generally has a right of appeal to a court or administrative tribunal. In some circumstances a person who objected to the granting of the permit will also have a right of appeal.

The nature of appeal rights varies for different permits and in different jurisdictions. Typically, appeals may be:

  • merits appeals, which are appeals by way of re-hearing and fresh evidence or evidence in addition to, or substitution for, the evidence given on the making of the original decision, with the court determining on the merits of the case what is the correct or preferable decision; or
  • administrative law appeals, which refers to judicial review proceedings where the court examines the legality of an administrative decision and may make an order as to the validity of a decision or issue an injunction.

Operators, polluters, landowners and occupiers can be liable for criminal and civil penalties for breach of Commonwealth and state/territory environmental laws. Offences carry significant penalties (in many instances with a maximum penalty in the order of AUD1 million). Breaches of the legislation may be restrained or remedied by government agencies and, in some instances, members of the public.

Liability may also arise under tort law for civil wrongs such as negligence, nuisance and trespass, or contract law for breach of warranties, indemnities, and other obligations in contracts, leases, and other agreements.

For further information, see 5.2 Types of Liability and Key Defences.

Environmental legislation generally follows the "polluter pays" principle (ie, the entity that caused the damage remains liable for it). However, this should be read together with the proposition that the public should be the last to have to pay for it. So when assets are purchased, the seller remains liable for their actions and impacts but the purchaser or current occupier or user of the asset may also incur liability (including in effect for past actions that are having a continuing impact). Liability can extend to:

  • the person who carried out activities on the land of a sort that are likely to cause the contamination;
  • the occupier of land;
  • the owner of land;
  • a person who exacerbates the risk from the contamination; and
  • certain public authorities (as a last resort).

The rules for apportioning liability are different in each state/territory. However, as a general proposition, an order is served on one person (usually the person most responsible or the owner/occupier) and they have a right to recover costs against any other person who may have contributed to the need to remediate. 

There is a National Environment Protection Measure on contaminated land that seeks to provide a consistent framework for assessing contaminated land and making management decisions.

For more information, see 11.1 Key Laws Governing Contaminated Land.

Tortious Liability

Commonwealth and state/territory legislation preserves the rights and remedies of any person to prevent, control and abate pollution. An operator can be liable under the common law torts of negligence, nuisance and trespass. For further information, see 9.1 Civil Claims.

Administrative/Regulatory Liability

Criminal proceedings

There are four types of liability for criminal offences:

  • absolute liability– there is no defence if the defendant is found to have breached the requirement;
  • strict liability– a defence is available if the offence occurred because of an honest and reasonable mistake of fact;
  • qualified strict liability– a defence is available if the person exercised due diligence and took reasonable precautions or in other circumstances set out in the legislation; and
  • fault-based liability– offences requiring proof of intent, negligence, recklessness or other deliberation.

To rely on the due diligence defence, operators must understand how their operations interact with the environment and have in place management systems aimed at ensuring compliance.

Examples of criminal offences include:

  • causing pollution (ie, pollution of water, air pollution, pollution of land and emission of excessive noise);
  • causing environmental harm;
  • breaching approvals conditions or other regulatory obligations (eg, failure to comply with an administrative order such as a clean-up notice); and
  • operating without the relevant approval.

In most jurisdictions, the maximum penalty for the worst offences exceeds AUD1million for each offence. Further, penalties can be imposed for each day an offence continues. Where a natural person commits an offence, jail terms may also be imposed.

Civil proceedings

Regulatory authorities can bring civil proceedings to enforce compliance with environmental legislation. For example, seeking an order that a person comply with a statutory obligation. In some jurisdictions, there is open standing that permits any person to bring proceedings to remedy or restrain breaches of the legislation.

In some cases, regulatory authorities will bring both criminal proceedings to impose a penalty, and civil proceedings where the court has discretion to make an order as it sees fit to remedy or restrain the breach.

Enforcement powers

In addition, regulatory authorities have a range of administrative enforcement powers at their disposal, including powers to: 

  • issue infringement or penalty notices, which generally require the payment of a small fine (compared to a larger fine that would have been payable if criminal proceedings were taken and a conviction was recorded);
  • issue stop work orders, which require the operator to cease operations until the issue is resolved;
  • issue clean-up or response orders (or the regulatory authority can conduct the clean-up itself and then recover the cost from the polluter as a debt due);
  • issue compensation orders;
  • order publication of the details of the offence; and
  • order contribution to environmental funds.

Civil penalties

Some Commonwealth and state/territory legislation also contain "civil penalties provisions" as an additional mechanism for enforcing environmental laws. A civil penalty is a pecuniary penalty imposed by a court exercising a civil rather than criminal jurisdiction and, importantly, requires proof of the breach on the balance of probabilities (rather than the criminal standard of beyond reasonable doubt). These provisions have been described as a hybrid of civil and criminal provisions because they are punitive sanctions imposed through the civil process.

A corporation will be vicariously liable for the acts and omissions of its employees and general contractors.

Australian courts have distinguished between the acts of employees and the acts of truly independent contractors. There are exceptions but, generally, a company will not be liable for independent contractors or independent subcontractors unless the company:

  • failed to take care in choosing the independent contractor;
  • directly authorised the act or omission the subject of the offence; or
  • engaged the contractor to perform what the law regarded as a non-delegable duty (ie, something that is of a seriously risky nature for which the employer should remain legally responsible).

In some cases companies can be liable for the acts and omissions of related bodies corporate.

Generally, a shareholder of a company is not liable for environmental damage or breaches of environmental law by the company. The "corporate veil" operates to shield shareholders from liability.

Likewise, a parent company is generally not liable for the environmental liabilities of its subsidiary unless:

  • the parent company has such a level of control over the management of the subsidiary that the subsidiary company is properly an agent of the parent company;
  • the corporate structure perpetrates a fraud;
  • there is insolvent trading; or
  • the parent company is, in fact, a shadow director.

In all states/territories there are provisions that have the effect that directors and some other officers are personally liable for certain offences committed by the corporation. These provisions usually provide that where a corporation has been found to commit an offence, each person who is a director or is "concerned in the management of the corporation" is taken to have also committed the same offence.

In most jurisdictions a director or other officer may be prosecuted even where no proceedings have been taken against the company, or where proceedings were taken but the company was not convicted.

Generally, a defence is available if the relevant person can demonstrate that they:

  • exercised due diligence to prevent the commission of the offence by the corporation; or
  • were not in a position to control or influence the relevant conduct of the corporation.

In most jurisdictions, the legislation provides a maximum penalty for a corporate officer similar to the penalty that could be imposed if a natural person committed the offence. Some jurisdictions also provide that a corporate officer is not liable for imprisonment where they are found personally liable for an offence only as a result of a corporation committing the offence.

To date there have been limited examples of regulatory authorities prosecuting directors, officers or managers under these provisions.

In addition to breaching environmental laws, directors could be liable for breach of directors’ duties under the Commonwealth corporations legislation that regulates the duties of company officers generally. This imposes duties on directors to act:

  • with a degree of care and diligence of a reasonable person in the circumstances;
  • in good faith and in the best interests of the corporation and for a proper purpose.

A director who breaches these duties may be liable to criminal sanctions (imprisonment or significant personal fines) or civil sanctions (fines under the civil penalty provisions). The Australian Securities and Investments Commission and the courts have the power to disqualify directors for long periods of time who fail to comply with their directors’ duties under the Commonwealth corporations legislation.

Director and officer insurance is available and generally covers acts carried out in good faith. It will usually exclude cover in the case of wilful decisions to harm the environment. 

A company may also choose to indemnify its directors against legal costs and financial penalties against a director. However, the usefulness of the indemnity may be limited in circumstances where there is also a finding that the director has not acted in good faith within the meaning of Section 199A(2) of the Corporations Act 2001 (Cth). Further, the traditional common law position has been that an indemnity against a criminal sanction is not enforceable (that proposition may be doubtful for strict and absolute liability offences).

Generally, financial institutions/lenders will not be liable for environmental harm caused by a debtor. However, it is possible for financial institutions/lenders to be liable where they are:

  • concerned in the management of the defaulting company;
  • directly involved in decisions that cause a pollution incident;
  • found to be aiding, abetting, counselling or procuring the offence;
  • considered a "shadow director" – ie, a person whose instructions the directors follow;
  • in occupation of land on which or from which a pollution incident occurs; or
  • in control of or an owner of land, plant, equipment or substances involved in a pollution incident.

Lenders can protect themselves from these risks by conducting due diligence to identify and assess environmental risk arising from the borrower’s operations prior to entering into loan transactions. For example, lenders should investigate whether there have been any prosecutions against the borrower or incidents of conduct that may lead to a prosecution.

Lenders should make sure loan documentation:

  • contains warranties regarding prior conduct and environmental incidents and any prior prosecutions;
  • contains obligations for the borrower to comply with environmental laws, report on compliance and give the lender prompt notice of any significant environmental incident; and
  • gives the lender registered security over the project assets or land.

It may also be necessary to include step-in rights for the lender to take control of operations where the borrower is not performing (including in the case of environmental incidents). In this case lenders will usually enter into direct agreements with key sub-contractors to enable them to step in to contractual relationships in the event that the contract with the borrower is terminated.

Due to the fact that the greatest risk of liability arises where the lender has effective control of an asset, lenders need to consider how the decision to step in or appoint administrators is made.

Tortious Liability

An operator can be liable under the common law torts of negligence, nuisance and trespass.

In relation to liability for negligence, the courts have been willing to impose positive duties to investigate risks, issue warnings about risks and devise measures to respond to risk. The standard of care is variable and in an environmental law context the courts have said that harmful substances will raise the standard of care. There is a non-delegable duty of hazardous substances which means that an operator cannot delegate the duty of care to an independent contractor.

Nuisance and trespass may also be available as causes of action where environmental damage has occurred. However, these can only be used in specific circumstances given that nuisance requires an interest in land or a right to occupy or exclusively possess land in order to sue, while trespass is only available to those in possession at the time of the trespass.

Statutory Remedies and Judicial Review

Statutory enforcement provisions exist which allow civil proceedings to be brought to remedy or restrain breaches of environmental legislation. These provisions can be used to bring proceedings against:

  • regulatory authorities in relation to their exercise of statutory duties; or
  • parties holding, or required to hold, statutory approvals to conduct activities that affect the environment.

Civil proceedings may be brought by the government, usually the regulatory agency responsible for administering the legislation. However, some legislation provides open standing for any person to bring civil enforcement proceedings. The remedies include injunctive relief, declarations or other enforcement orders. The discretion is wide and can enable the court to monitor compliance with its orders.

Where there are no specific provisions providing for civil enforcement of breaches of environmental law, regulatory authorities or members of the public may be able to commence judicial review proceedings where the court examines the legality of an administrative decision and may make an order as to the validity of a decision or issue an injunction. An applicant seeking judicial review of a decision must have standing, which requires a "special interest" in the subject matter of the action. The courts have recognised plaintiffs with legitimate environmental interests as having standing under this test.

Australian courts can award exemplary or punitive damages for nuisance or negligence, but these are extremely unusual. They are generally not available in claims for personal injury. The practice is not the same as in the USA.

Class actions are established as a means by which a large group or class of people can bring a claim in Australia. These are most commonly in the Federal Court of Australia or the State Supreme Courts. The Federal Court has limited jurisdiction in environmental matters.

There are "open standing" provisions in many environmental statutes which permit any person to bring an action to restrain breaches of the relevant legislation. These provisions often facilitate "public interest litigation", where not-for-profit environmental organisations or action groups can bring matters before the courts.

In the context of common law liabilities the following are of particular interest.

  • Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 – concerning the standard of duty of care that arises under the ordinary law of negligence (ie, that which is reasonable in the circumstances). The degree of care varies with the risk involved and includes both the magnitude of the risk of an accident happening and the seriousness of the potential damage if an accident should occur.
  • Bryan v Maloney (1995) CLR 609 – concerning a duty of care owed by a builder to a subsequent purchaser of a dwelling. Though there was no contractual relationship, there was a duty of care due to proximity and reasonable foreseeability that negligent work would cause loss.
  • Crimmins v Stevedoring Committee (2000) 200 CLR 1 – concerning the transfer of liabilities from one statutory authority to another. Depending upon context, the meaning of "liability" can include a contingent or potential liability.

Except for some very limited exceptions, a polluter cannot contract out of statutory liability. An indemnity or other contractual agreement may enable a person to transfer or apportion liability for incidental liability to third parties – eg, for damages or costs (including the costs of complying with regulatory orders) – but an indemnity or other contractual agreement between private parties will not have any binding effect or influence on regulators. Further, the traditional view is that an indemnity against criminal fines would not be enforceable.

Various environmental insurance policies are available in Australia, however, the environmental insurance market in Australia is not well developed.   

The type of risks covered by environmental insurance will vary according to the insurer and the policy purchased. Risks that may be covered include:

  • environmental clean-up costs, including compliance with statutory clean-up orders;
  • third party injury, property damage or clean-up costs arising from a pollution incident;
  • business interruption expenses resulting from a pollution incident;
  • damage caused to natural resources and biodiversity; and
  • legal costs.

In each state/territory there is legislation that regulates the cause, management and redevelopment of contaminated sites. The key aspects of this legislation are:

  • prohibitions against disposing of waste to land or causing contamination;
  • a person who causes contamination can be liable for the costs of investigation, management and other impacts;
  • people who exacerbate contamination can also be liable;
  • development cannot occur until an assessment of the risks from contamination has been prepared; and
  • local or state/territory environmental agencies can serve investigation or management (clean-up) orders on the polluter, landowner or other people – potentially this can include receivers or other financial administrators or intermediaries with an interest in the land.

Remediation or management standards vary depending on the risks posed to people or the environment over time at a location. The general approach taken by regulatory authorities to remediation requirements has been to accept risk-based assessments to determine an appropriate level of remediation. This approach is described in the National Environment Protection (Assessment of Contaminated Sites) Measure, which is a legislative instrument issued by the National Environment Protection Council.

The range of people who may be liable for contaminated land, and the rules for apportioning liability varies in each state/territory. This is discussed in 5.1 Liability for Historic Environmental Incidents or Damage.

Contaminated land issues also need to be considered in the process of obtaining planning approval for new developments. This can result in requirements for environmental assessments to be carried out before approvals are granted and possibly for remediation to be carried out either prior to the approval or as a condition of the approval.

Health, safety and environmental management issues arise in relation to work on a contaminated site and state/territory legislation deals with this. Specific approvals may be required to use or manage contaminated land.

In some jurisdictions there are reporting obligations when a person finds out or reasonably expects that they have contaminated land or that land they own or occupy is contaminated.

The powers of the authorities are different in each state/territory but, for example, an authority may be able to require additional work if the land use changes, there is new information, the original information was incomplete or there is a risk to the health of people. To the extent that an authority does enter into an "agreement" with a person, the agreement only binds the parties to it – not other authorities. The rights of a third-party challenge will depend on the context in which the agreement is made and implemented. There may be rights to obtain review of administrative decisions – for example, on the grounds of irrationality or want of jurisdiction. In the context of remediation proposed as part of a new development, objectors might, in limited circumstances, have rights to appeal on the merits.

A person who (i) is ordered to carry out remediation or (ii) is the owner or occupier of land that suffers damage from contamination may have rights against the prior owners or occupiers if those people contributed to the contamination or risks from it.

Generally, a polluter cannot transfer the risk of liability contractually. However, there are limited exceptions in Western Australia and South Australia in respect of contaminated land.

In respect of contractual liabilities, it is possible to agree to novate these with the consent of all parties. It is possible to obtain releases as between the parties to the contract – for example, a polluter could obtain a release from the purchaser. However, the polluter could still be liable under legislation and to manage that should obtain an indemnity from the purchaser as well.

As a general rule, the polluter cannot contract out of any criminal liability for offences that may have caused the contamination.

Australia’s economy is resource intensive – coal is a particularly important resource. This reality, and the concern to foster both the resources and agricultural sectors and to manage energy costs for businesses and households, has left the Australian policy and legislative response to climate change in a state of flux for over a decade. However, there has been progress and throughout this period there have been initiatives, particularly in respect of renewable energy and energy efficiency.

International Agreements

Australia is a signatory to both the Kyoto Protocol and the Paris Agreement. However, there has been a great deal of policy and legal debate on how Australia will implement these agreements. While there is a general (but not universal) recognition and acceptance of the concept of climate change from human activities, there is not a general consensus on the response.

For greenhouse gas (GHG) targets, see 12.2 Targets to Reduce Greenhouse Gas Emissions.

Emissions Reduction Fund

In 2015, the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) was amended to establish the Emissions Reduction Fund (ERF), the key legislation setting out the Commonwealth Government’s response to climate change. The ERF is administered by the Clean Energy Regulator (Regulator) and comprises three elements:

  • crediting emission reductions;
  • purchasing emission reductions; and
  • safeguarding emission reductions.

Under the ERF, companies, state/territory and local governments and land managers who increase productivity and lower energy costs by undertaking a range of activities to reduce their emissions, can earn Australian carbon credit units (ACCUs) for the reductions they achieve and earn money from selling those units. ACCUs can be sold either to the Commonwealth Government through a carbon abatement contract, or to other businesses seeking to offset their emissions.

The Commonwealth Government purchases ACCUs through reverse auctions or other tender. As at October 2019, the Regulator has held nine ERF auctions, through which a total of 433 carbon abatement contracts have been awarded and AUD1.74 billion (out of an available AUD2.55 billion) in funds have been allocated to eligible projects which offer the lowest priced abatement. While such contracts are available to assist organisations to secure finance to undertake projects, payment from the ERF only occurs under the contract once it has been proved that genuine abatement has occurred. In February 2019, the Commonwealth Government announced the Climate Solutions Fund which will provide a further AUD2 billion to continue purchasing abatement.

ACCUs are also issued to approved emissions reduction projects, independent of any carbon abatement contract. ACCUs may be traded on the voluntary carbon market or surrendered as offsets under the "safeguard mechanism".

Safeguard Mechanism

The safeguard mechanism under the National Greenhouse and Energy Reporting Act 2007 (Cth) commenced in July 2016. It is intended to ensure that emissions reductions achieved through the ERF are not offset by emissions increases above business-as-usual levels by other emitters. Baseline net emissions levels are set for facilities with direct emissions above the ERF threshold. If direct emissions exceed baseline levels, a facility can offset this and avoid potential penalties by surrendering ACCUs issued to them or purchased through the voluntary carbon market.

While credits eligible to be surrendered as offsets are currently limited to ACCUs, the legislation allows for other eligible credits to be prescribed by the safeguard rules. International credits are not currently able to be used for compliance purposes.

Other Schemes

A number of other schemes relating to energy efficiency and climate change also operate in Australia, as detailed below.

  • The National Greenhouse and Energy Reporting Scheme (NGERS) requires some entities to report GHG emissions, energy consumption and energy production from "facilities" for which they have operational control. The reporting requirement applies where thresholds applicable to the facilities or the corporation's group are exceeded. Emissions, energy consumption or energy production associated with buildings are included.
  • The Renewable Energy Target (RET) scheme imposes an obligation on wholesale purchasers (and notional wholesalers) of electricity to contribute towards the generation of renewable energy with a target of 20% of electricity from renewable sources by 2020.
  • Ozone-depleting substances and synthetic GHGs are controlled under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989(Cth).
  • There are numerous state/territory schemes relating to abatement of emissions, building efficiency, reporting of consumption, etc.

Independently of legislation and government policy, there has been a rise in litigation related to climate change, including challenges to projects which would result in significant GHG emissions, such as coal mines. Recently, there has been a case against a superannuation fund regarding information requested by a member about the risks climate change poses to the financial position of the fund’s investments.

Under the Kyoto Protocol, Australia committed to reducing national GHG emissions to a level equivalent to 108% of 1990 levels by 2008–12.

Under the Paris Agreement, Australia has a climate change target of reducing its emissions to:

  • 5% below 2000 levels by 2020; and
  • 26-28% below 2005 levels by 2030.

The main mechanisms for achieving these goals are:

  • incentivising:
  • carbon offset projects under the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth), by the issue of tradeable ACCUs;
  • renewable energy power stations, and small-scale renewable energy systems, under the RET scheme which has a target of 33,000 GW hours of renewable source electricity by 2020; and
  • capping GHG emissions for designated large facilities.

The current policy is to provide incentives to companies who reduce their emissions. On this basis, there are no penalties for continuing to operate at baseline levels (both actual and baseline emissions are measured using data reported under the NGERS). Where a facility’s emissions exceed its baseline, financial penalties may apply. In relation to the RET, energy retailers may be liable for a renewable energy shortfall charge for failing to surrender sufficient renewable energy certificates.

Each state/territory has laws that require identification of asbestos materials, labelling, risk assessment, control measures (eg, asbestos management plans) and in some circumstances, health monitoring. Specific obligations apply in relation to the assessment, management and disposal of asbestos waste in soils. There are also requirements relating to training and, in some cases, accreditation certification, for people who work with asbestos products.

The import and export of asbestos or goods containing asbestos into or from Australia is prohibited under Commonwealth legislation.

There has been a large volume of asbestos-related litigation. A number of specialist tribunals or specialist court lists have been established to manage these cases, (eg, the New South Wales Dust Diseases Tribunal).

The laws regarding the transport, storage processing and disposal of waste differ depending on the quantity, class or category of the waste. Waste classification is generally based on some or all of the following:

  • source of the waste;
  • risks presented by the waste;
  • physical characteristics of the waste; and
  • content of the waste.

Waste is usually defined broadly to include any discarded, rejected, unwanted, surplus or abandoned substance, whether or not it is intended to be (or can be) reprocessed, re-used or recycled.

There are additional controls on certain classes of waste including restraints on, or requirements to hold approvals for, generation, storage, transport, handling and disposal.

In all states/territories, it is an offence to dispose of waste in a manner that harms or is likely to harm the environment or to dispose of particular volumes or kinds of waste at an unlicensed facility. As well as the person disposing of the waste, liability will also frequently attach to the owner or consignor of the waste, and the owner of the facility at which the waste is deposited.

In most cases, waste produced on-site can be stored on-site temporarily, pending its treatment or off-site disposal or reuse. The volumes and types of waste allowed to be stored will depend on the location, the waste and the risks. Both environmental and safety controls apply. Waste is generally unable to be disposed of on the site where it is produced unless it is inert and suitable to be used, for example, as fill.

The Commonwealth government also regulates the import and export of industrial chemicals and hazardous wastes. More recently, the Commonwealth and state/territory governments have indicated that there will be an export ban on certain recyclable products to ensure that they are recycled in an environmentally responsible way.

Generally, each of the producers (often called generators), consignors, transporters or receivers of waste can retain liability for waste if an incident occurs before waste is lawfully disposed of. Once waste is lawfully disposed of at a waste facility, the liability of the producer or consignor is likely to be remote unless, for example:

  • the consignor provided false or misleading information;
  • a contract or licence to which the consignor is a party obliges the consignor to manage the waste in some other way;
  • the consignor acted contrary to law by consigning the waste to the particular facility;
  • there is a change in law that specified that consignors could be liable for remediation or similar clean-up costs.

For example, Section 115 and Section 116 of the Protection of the Environment Operations Act 1997 (NSW) create offences relating to the unlawful disposal or escape of waste. Both the person causing the incident and the person who is the owner of the waste commit an offence. The producer of waste will be the owner of the waste unless they have transferred ownership to another person. This is possible with properly documented transfer documents.

Where the incident occurs in the transport of waste, then the producer of the waste may retain liability under transport safety legislation as a consignor of the waste.

The common law principles of negligence may also apply to create liability for the producer of the waste.

There are some take-back schemes in Australia but at this stage these are largely voluntary. The Commonwealth and all states/territories have agreed to a National Waste Policy which provides a national framework for waste and resource recovery. Under this policy, all Australian jurisdictions are working towards the development of national product stewardship schemes. For example, there is a national television and computer recycling scheme where consumers can return items to designated free drop-off points. Under the scheme, liable parties (importers and local manufacturers) must be members of an approved co-regulatory arrangement, and commitments are made to certain collection and recycling targets.

Other initiatives proposed include co-regulatory schemes for mercury-containing lamps, tyres and plastics.

For packaging waste, there are some industry waste reduction plans that require waste reduction initiatives. These can be imposed if the industry participants do not sign up to and comply with the Australian Packaging Covenant, which is a voluntary scheme for the reduction of packaging waste.

There are obligations to self-report environmental incidents or damage to regulators in each state/territory. Typically, the triggers to self-report are:

  • pollution incidents (including soil or groundwater pollution) that have a prescribed level of materiality or significance;
  • in circumstances set out in approval conditions; and
  • when contamination is discovered that exceeds certain levels as set out in guidelines or regulations.

There is legislation in each state/territory that entitles any person to seek access to information under the control of the government, typically with a presumption in favour of granting access to information which is rebuttable in limited circumstances. 

The relevant legislation in each state/territory generally applies these laws to information held by government agencies, government ministers, local authorities and courts. There is also scope to apply these laws to persons or entities that perform functions that are ordinarily exercised by government agencies. 

There is also a wealth of environmental information available on the internet. Some examples of this include:

  • major developments usually need to publicly exhibit detailed environmental assessments;
  • there are registers of environmental approvals and conditions;
  • there are registers or publicly available records relating to contaminated land; and
  • the Commonwealth government has publicly available records of GHG emissions through the NGERS and of other emissions through the National Pollution Inventory.

The Corporations Act 2001 (Cth) and Australian accounting standards establish requirements for financial records and reports including annual reports. Actual or contingent environmental liabilities within the meaning of relevant accounting, auditing and reporting standards must be dealt with in accordance with those standards.

Section 299(1)(f) of the Corporations Act 2001 requires reporting "subject to any particular and significant environmental regulation" under a law of the Commonwealth or any state/territory, to address environmental performance in corporations’ annual Directors’ Reports.

Further, Part 3 of the NGERS provides that Registered Corporations are required to provide a report to the regulator relating to the GHG emissions, energy production and energy consumption from the operational facilities under the control of the corporation and entities that are members of the corporation’s group.

Finally, disclosure obligations may arise for publicly listed companies to the Australian Stock Exchange if it can be held that the environmental information falls within the continuous disclosure requirements of the ASX Listing Rules.

Environmental due diligence is typically conducted on M&A, finance and property transactions.

A typical environmental due diligence will:

  • examine the relevant Commonwealth and state/territory environmental approvals and confirm that the holder is the appropriate entity and that the scope of the approval is consistent with the statements made about the company or assets in the transaction documents – this review will consider:
    1. the conditions on these approvals (including the term remaining) and identify whether there are any onerous conditions;
    2. the extent to which these conditions appear to have been met;
    3. if the transaction is an asset sale, whether the approvals can be transferred under the relevant statutory provisions and, if so, the requirements for transfer – for example, some regimes require the relevant regulator approve the transfer and this may be subject to the fulfilment of conditions, such as the provision of security;
  • consider whether necessary water licences have been obtained and that the access to water under these licences is satisfactory for planned operations;
  • consider whether laws relating to Aboriginal cultural heritage have been complied with and identify any rights that Aboriginal people have to stop work to protect cultural artefacts;
  • consider any contamination reports in relation to the assets and search the state/territory registers of contaminated sites; and
  • search court records and regulatory databases to identify any previous environmental prosecutions or administrative action (such as clean-up notices) issued against the target company or in relation to the assets.

The contaminated land legislation in some states/territories requires a seller of land to disclose to a purchaser where land has been classified as contaminated. In some cases, there is also an obligation for the contamination classification to be registered on the title of the land as a charge or memorial so that anyone conducting a title search of the property would be notified of the contamination classification.

In some jurisdictions (eg, Queensland), an asbestos audit must be provided to the purchaser in respect of the sale of certain property.

In all transactions, there is a possibility that statements about the site conditions or other environmental aspects may be misleading or deceptive, resulting in potential offences and claims for compensation or damages. Silence about a state of affairs may also constitute a misrepresentation.

It is usual practice for the sale documentation to require the seller to warrant that it has disclosed all relevant information including information in relation to environmental non-compliance or environmental incidents.

Australia does not have a strong system of environmental taxes. It does not have a carbon tax (beyond the limited trading which occurs as part of the ERF safeguard mechanism).

At a state/territory level, most jurisdictions have a waste levy which is payable based on the type and quantum of waste disposed to landfill. These levies were initially introduced for the stated purpose of reducing the amount of waste being landfilled and instead promote recycling and resource recovery. However, the monies from the levies is usually taken into consolidated revenue and not traced through to environmental improvement initiatives. Further, the capacity, structural and regulatory problems with recycling markets in Australia have meant that the opportunities for diversion from landfill have not been fully realised.

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Law and Practice

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Maddocks is one of the leading environmental law teams in Australia. The firm is deeply connected to Commonwealth, state and local governments, enabling it to provide insightful, practical, savvy solutions for clients across a wide range of projects, transactions, disputes and business-as-usual situations. Maddocks has over 30 environmental lawyers from Melbourne, Canberra and Sydney; some of the firm's partners have specialised in environmental law for over 30 years and are recognised leaders in this field. The team delivers excellent outcomes across the field of environmental law including: major project approvals; environmental planning and impact assessment; environment protection and pollution; biodiversity protection; heritage; waste; contaminated land; water; climate change and energy. Maddocks has extensive experience with managing these issues in transactions, projects and disputes and in implementing environmental management initiatives.

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