Legally Green
November 2009

Exposure Draft CPRS Regulations 2009

Following soon after the establishment of the Australian National Registry of Emissions Units (Registry) in preparation for the commencement of the Carbon Pollution Reduction Scheme (CPRS) (see our Legal Update: Let the Trading Begin!), the Government has released exposure draft Carbon Pollution Reduction Scheme Regulations 2009 (Regulations) which contain the detailed rules for the operation of the Registry and dealings with emissions units.

The Regulations, which would apply from the commencement of the CPRS legislation, build upon parts of the CPRS Bill by providing detail on a number of matters, including:

• Proof of identity requirements for persons wishing to open Registry accounts;
• Authorisation by account holders of persons able to operate Registry accounts on their behalf;
• The process and requirements for transferring emissions units; and
• Special rules relating to the holding, transfer and treatment of emissions units created under the Kyoto Protocol (Kyoto units).

Transfer of emissions units

The Registry is web-based and accordingly, the Regulations contain provisions to ensure the security and authenticity of electronic notices transmitted to the Australian Climate Change Regulatory Authority (Authority). An ‘electronic notice transmitted to the Authority’ is the means by which a person:

• instructs the Authority to transfer emissions units from one account to another,
• surrenders eligible emissions units to meet the person’s liability under the CPRS;
• voluntarily cancels or relinquishes emissions units; and
• requests the Authority to cancel emissions units in return for the buy-back amount in the first, fixed-price year of the CPRS.

Emissions units will most commonly be assigned through an instruction issued by an account holder however the Regulations also deal with situations in which an account holder dies, an account holder becomes bankrupt or emissions units are transmitted as a result of a court order. Where there are other ways of dealing with a change in circumstances of the account holder, they are not dealt with in the Regulations. For example where a corporate body is wound up, a transmission can be dealt with through assignment before the body is wound up.

Certain information, including the holder of a Registry account and contact details of an account holder representative must be published on the Authority’s website.

Kyoto units

A registered holder of a Kyoto unit may instruct the Authority to either transfer the unit within the Registry, known as a ‘domestic transfer’ or to transfer it to a foreign account, known as an ‘outgoing international transfer’. All national registries under the Kyoto Protocol are linked by an international transaction log operated by the UNFCCC  Secretariat, which verifies the validity of international Kyoto unit transfers and their conformity with the Kyoto rules.

The Regulations also set out the details of ‘carry over’ provisions. A Party under the Kyoto Protocol with an emission reduction target, such as Australia, may carry over (bank) certain Kyoto units to a subsequent commitment period. However the Kyoto rules stipulate limitations on the transfer of carry over units and the Regulations set out restrictions for Registry account holders so as to ensure Australia’s compliance with its international obligations. The Government’s policy is that each registered holder of relevant certified emissions reductions (CERs) and emissions reduction units (ERUs) (including the Government itself) will be allowed to carry over a proportion of units so that, in aggregate, no more than the allowable volume of CERs and ERUs is carried over. For example, if the total number of CERs in the Registry at the relevant time is twice Australia’s allowable amount (i.e. 2.5 per cent of Australia’s initial assigned amount of 2,957,579,143 tonnes of CO2-e ) each registered holder will be able to carry over half of its CERs.

Provisions dealing with the cancellation and replacement of temporary CERs and long-term CERs are also provided for in the Regulations, as well as restrictions on the transfer of Kyoto units to Commonwealth Registry accounts. For a more detailed explanation of the Kyoto units that can be used for compliance under the CPRS, see our Legal Update.

Enforcement

The Regulations provide that a Kyoto unit is personal property for the purpose of the Proceeds of Crime Act 2002 which will allows the Commonwealth to apply for restraining orders to effectively freeze the use of a Registry account where the Kyoto units in the account are the proceeds or instruments of crime.

The Regulations include obligations on account holders to notify the registry of a change to their address details and to notify the Registry if an emission unit has been transferred incorrectly into their account. Civil penalties apply for breach of these requirements and for misuse of the Registry.

If you would like further information on the Regulations or the CPRS generally, please contact one of the Climate Change Team.

Back to top

Offshore greenhouse gas storage regulations and guidelines

The Department of Resources, Energy and Tourism (RET) is currently developing regulations and guidelines to support the greenhouse gas (GHG) part of the Offshore Petroleum and Greenhouse Storage Act 2009 (Act) which came into effect on 21 November 2008.

The regulations covering GHG titles and GHG operations will comprise 5 different sets of regulations:

• Fees Regulations;
• Environmental Regulations;
• Safety Regulations;
• Petroleum-like (well operations, data and datum) Regulations; and
• GHG Specific Regulations.

Fees Regulations and Environmental Regulations

These regulations will be incorporated into the existing petroleum regulations, making them dual purpose to cover both petroleum and GHG operations.

RET has advised that they have already finalised the Fees Regulations (which came into effect on 1 July 2009) by making minor changes to the:

• Petroleum (Submerged Lands) Regulations 1985;
• Petroleum (Submerged Lands) Fees Regulations; and
• Petroleum (Submerged Lands) Fees (Registration Fees) Regulations 1990.

It is important to note that application fees for GHG assessment permits (both work and cash bidding applications) and GHG search authorities have been set at zero in the new Fees Regulations.

Safety Regulations

The intent here is to mirror relevant parts of the existing Petroleum (Submerged Lands) (Management of Safety on Offshore Facilities) Regulations 1996 to cover GHG operations in the interim (as the Act already provides for the National Offshore Petroleum Safety Authority’s (NOPSA) regulation of offshore GHG operations). The final measure will be to merge the Safety Regulations with the existing petroleum safety regulations, following the petroleum regulation consolidation process (currently being undertaken by the Offshore Petroleum Branch of the RET), to cover safety matters relating to both petroleum and GHG facilities.

Petroleum-like Regulations

These regulations will mirror the:

• Petroleum (Submerged Lands) (Management of Well Operations) Regulations 2004; and
• Petroleum (Submerged Lands) (Datum) Regulations 2002,
• to cover relevant GHG Operations.

As is the case with the Safety Regulations, the above proposal is an interim measure pending the conclusion of the petroleum regulation consolidation process.

The RET is also reviewing the existing Petroleum (Submerged Lands) (Data Management) Regulations 2004 with a view to removing the data management plan requirement of those regulations to reduce regulatory hurdles for the industry.

GHG Specific Regulations

These regulations will be targeted to specific GHG operations such as injection and storage. The major components of the GHG Specific Regulations will be provisions relating to declarations, site plans, significant impact tests and the reporting and recording of incidents.

After ongoing discussions with stakeholders, RET has issued drafting instructions to the Office of Legislative Drafting to commence drafting of these regulations.

Timeframes

It is expected that the exposure draft of these GHG Specific Regulations will be available before the end of 2009 and that all regulations in relation to GHG titles and operations will be finalised towards the end of March 2010.

Back to top

Adapting the Sea Level Rise in NSW: Government Guides the Way

In the March 2009 issue of Legally Green we reported on the release of the NSW Draft Sea Level Rise Policy Statement (Policy Statement) by the NSW Department of Environment, Climate Change and Water (DECCW). In October, following extensive consultation, the Policy Statement was finalised. As proposed, it adopts the sea level rise planning benchmarks for an increase above 1990 mean sea levels of 40cm by 2050 and 90cm by 2100 (Benchmarks). To support the implementation of the Policy Statement, the Department of Planning (DoP) has released the draft NSW Coastal Planning Guideline: Adapting to Sea Level Rise (Draft Guideline) and the DECCW have released two draft guides to assist councils in preparing coastal hazard and flood studies to incorporate the Benchmarks. Submissions on the Draft Guidelines and draft guides are due by Friday 11 December 2009.

What this means to you: the Implications of the Policy Statement

• The Policy Statement provides a clear statement of the NSW Government’s commitment and policy direction to combat sea level rise and confirms that the Government accepts no liability either under common law or statute to reduce the impacts of sea level rise.
• Councils must use the Benchmarks when undertaking coastal and flood hazard assessments in accordance with DECCW’s Coastline Management and Floodplain Development Manuals and the draft guides. Local environmental plans must give effect to and be consistent with these manuals and, as such, it is a statutory requirement that development must comply with the Benchmarks.
• Councils may be required to notify the adoption of the Policy Statement and Benchmarks in planning certificates issued pursuant to s 149 of the Environment Planning and Assessment Act 1979 (NSW) (EPA Act).
• Where Councils adopt and choose either to apply or not apply the Policy Statement and Benchmarks, pursuant to s 733 of the Local Government Act 1993 (NSW) (LG Act), Councils will be exempt from liability in respect of any advice furnished, or anything done or omitted to be done, in good faith, relating to the likelihood of:
  
  - any land being flooded or the nature or extent of such flooding; and
  - land in the coastal zone being affected by a coastline hazard or the nature or extent of such a hazard. 
  
  Nevertheless, Councils may still consider adopting a disclaimer regarding their adoption and application of the Policy Statement and Benchmarks similar to that of the NSW Government. A more detailed discussion regarding the implications of the Policy Statement for the liability of Councils will be provided in a future Legal Update.

• Consent authorities will be required to consider the Policy Statement and benchmark in determining development applications.
• Councils, State agencies, planners and developers should consider the impact of the Policy Statement and Benchmarks on the operation of any insurance or indemnities relating to their role in land-use and development of land which may be at risk from sea level rise.

Sea Level Rise

Sea level rise will have significant medium- to long-term social, economic and environmental impacts. Critically, it will cause:

• a permanent increase in sea levels relative to current sea levels; and
• increased coastal hazards (particularly beach erosion) and flooding risks during major storms.

These impacts in turn will affect coastal ecosystems, access to and use of land and freshwater, historical and cultural heritage values, and public and private infrastructure.

Policy Statement

The Policy Statement sets out the NSW Government’s approach to “sea level rise, the risks to property owners from coastal processes, and the assistance the Government provides to councils to reduce the risks of coastal hazards”. It is accompanied by a Technical Note which explains how the Benchmarks of 40cm by 2050 and 90cm by 2100 were derived from the Intergovernmental Panel on Climate Change (IPCC) and CSIRO reports.

The objective of the Policy Statement is for coastal communities to adapt to rising sea levels in a manner that minimises the resulting social disruption, economic costs and environmental impacts. To assist in achieving this objective, the NSW Government will:

1. Promote an adaptive risk-based approach to managing sea level rise impacts. The Benchmarks have been adopted to support consistent consideration of sea level rise in land-use planning and coastal investment decision-making. Importantly, the Benchmarks must be used when undertaking coastal and flood hazard assessments in accordance with DECCW’s Coastline Management and Floodplain Development Manuals and it is a statutory requirement that local environmental plans must give effect to and be consistent with these manuals. As such, it is a statutory requirement that development must comply with the Benchmarks;
2. Provide guidance to local councils to support this sea level rise adaptation planning with priority given to public safety and protecting valuable publicly-owned assets, and then to private land. Financial assistance is unlikely to extend to protecting or purchasing all properties at risk from sea level rise and any funding to protect or voluntarily purchase private property will be based on criteria established in the Policy Statement. Where assistance is provided, the Government does not assume any responsibility;
3. Encourage appropriate development of land projected to be at risk from sea level rise over time through appropriate site planning and design rather than preclude development of such land;
4. Continue to provide emergency management support to coastal communities during times of floods and storms including compensation and other payments in some cases. However, compensation will not be provided to the owners or potential developers of land affected by sea level rise;
5. Continue to provide updated information to the public about sea level rise and its impacts to support adaptation to, and appropriate investment decisions and risk pricing by the insurance industry in light of, sea level rise.

Importantly, the Policy Statement emphasises that the Government does not have nor does it accept specific future obligations to reduce the impacts of coastal hazards and flooding caused by sea level rise on private property under both statute and common law.

Government Guiding the Way to Adapting to Sea Level Rise

The Draft Guideline outlines a risk-based approach for strategic land-use planning and development assessment taking into account the Policy Statement and the Benchmarks. It applies broadly to all coastal areas of NSW. The Draft Guideline adopts the following six coastal planning principles:

1. Assess and evaluate coastal risks taking into account the Benchmarks (using DECCW’s Coastline Management and Floodplain Development Manuals and draft guides detailed below);
2. Advise the public of coastal risks to ensure that informed land use planning and development decision-making can occur;
3. Avoid intensifying land use in coastal risk areas through appropriate strategic and land-use planning;
4. Consider options to reduce land use intensity in coastal risk areas where feasible;
5. Minimise the exposure to coastal risks from proposed development in coastal areas; and
6. Implement appropriate management responses and adaptation strategies, with consideration for the environmental, social and economic impacts of each option.
7. As noted, DECCW has also prepared the following draft Guides to assist councils in preparing coastal hazard and flood studies incorporating the Benchmarks:
   • Draft Coastal Risk Management Guide: Incorporating the sea level rise benchmarks in coastal hazard assessment;
   • Draft Coastal Risk Management Guide: Incorporating the sea level rise benchmarks in coastal hazard assessment.

Submissions on the Draft Guidelines and draft guides are due to the respective Government departments by Friday 11 December 2009.

Progress on Sea Level Rise Benchmarks in other States

As reported in our March issue, most other States have also developed sea level rise benchmarks in their coastal planning policies. For example:

• Vic - 80cm by 2100 until national benchmarks are established
• SA - 30cm by 2050 and 100cm by 2100
• QLD - 30cm by 2055 for coastal erosion prone area
• WA – 38cm for erosion potential on sandy shores

Noting the wide differences between these benchmarks, there is growing demand for the Commonwealth government to adopt a national sea level rise benchmark and planning framework to support greater cooperation and coordination between states in tackling sea level rise (see the recent report of the House of Representatives, Managing Our Coastal Zone in a Changing Climate).

Back to top

Judicial Consideration of Sea Level Rise

Several recent cases across different jurisdictions have considered the implications of sea level rise for coastal land-use planning and development. In our March and August issues summaries of some of the key cases were provided. (Please see our March and August issues for further details).

Most recently, in NSW, the Land and Environment Court considered the impact of sea level rise on coastal development in Aldous v Greater Taree City Council (Unreported, Biscoe J, 8-10 December 2008, 19 February 2009). This case involved a challenge to the validity of a development consent to construct a new dwelling on a beachfront property. A key ground of appeal was the Council’s failure to take into account the public interest pursuant to s 79C of the EPA Act as it failed to consider the principles of Ecologically Sustainable Development (ESD), and in particular, failed to consider and assess climate change induced coastal erosion. Referring to his decision in Walker v Minister for Planning (summarised in our legal update in December 2007 and the March issue) and the successful appeal of that decision (Minister for Planning v Walker [2008] NSWCA 224 (summarised in our legal update in October 2008)), Biscoe J confirmed that consent authorities are required to consider public interest when determining a development application under Part 4 of the EPA Act and this includes ESD. On the facts, his Honour held that the Council had taken the issue of coastal erosion and its inducements by climate change seriously and not merely adverted to the information regarding climate change induced coastal erosion or given it mere lip service. Although his Honour dismissed this ground of appeal, he upheld the appeal on other grounds. The judgment provides a good overview of DECCW’s Guideline, Practical Consideration of Climate Change, climate change cases specifically considering sea level rise, and the Stern Review, IPCC Assessment Reports and the Garnaut Climate Change Review.

Council Exemption from Liability, Insurance and Disclaimers

The implications of the Policy Statement and Benchmarks for the liability of Councils will be discussed in detail in a future Legal Update. Importantly, pursuant to s 733 of the LG Act, where Councils adopt and choose to either apply or not apply the Policy Statement and Benchmarks, Councils will be exempt from liability in respect of any advice furnished, or anything done or omitted to be done, in good faith, relating to the likelihood of:

• any land being flooded or the nature or extent of such flooding; and
• land in the coastal zone being affected by a coastline hazard or the nature or extent of such a hazard.

This is especially the case noting the High Court judgement of Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660. Nevertheless, Councils may still consider adopting a disclaimer regarding their adoption and application of the Policy Statement and Benchmarks similar to that of the NSW Government.

Assistance

If you require assistance in determining how climate change and in particular, sea level rise, needs to be considered in relation to your proposed developments, please do not hesitate to contact a member of our Climate Change team.

Back to top

Check before you chop – Recent Prosecutions under the Native Vegetation Act 2003 (NSW)

The Native Vegetation Act 2003 (NSW) (NV Act) is the main piece of legislation that regulates the clearing of native vegetation land in NSW outside of urban (as defined) areas. Section 12(1) states that subject to certain exemptions, native vegetation must not be cleared, except in accordance with:

• a development consent granted in accordance with the NV Act; or
• a Property Vegetation Plan (PVP).

Section 12(2) of the NV Act provides that a person who carries out or authorises the carrying out of clearing in contravention of this section is guilty of an offence. The maximum penalty prescribed for this offence, which reflects the seriousness with which Parliament views the offence, is $1,100,000 and a further daily penalty of $110,000.

Three recent Department of Environment, Climate Change and Water prosecutions have seen tough penalties imposed by the Land and Environment Court (the Court) for the contravention of this section and illustrate the Court’s attitude to non-compliance.

Director-General of the Department of Environment and Climate Change v Rae [2009] NSWLEC 137

In this case, the defendant, Mr John Rae pleaded guilty to clearing native vegetation contrary to s12(1) of the NV Act and on 18 August of this year, was found guilty of this offence. Mr Rae was fined $160,000 (plus prosecutor’s costs) for clearing an area of approximately 215 hectares.

Of these 215 hectares, approximately 155 hectares were cleared to an extent of over 95%. The clearing included mature native flora species, caused impacts upon eleven species of threatened fauna and was done for the purposes of increasing the economic viability of the land for agricultural purposes.

The defendant admitted to the regulatory authority and to the Court that he was aware a development consent or property vegetation plan was required, yet decided to clear land on his property without consent as he was concerned it would be refused and thereby limit his ability to clear land in the future.

The Court clearly articulated that a sentence is a “public denunciation of the conduct of the offender” and reinforced the need for both general and specific deterrence, specifically when imposing a sentence for offences of clearing native vegetation.

Additionally, Preston CJ spoke of the need to uphold the regulatory system through compliance with the NV Act. This depends upon persons, first, taking steps to ascertain when consent is required to clear native vegetation, secondly, making applications in the appropriate form (including environmental impact assessments) and obtaining any consent so required before undertaking the clearing and, thirdly, complying with the terms and conditions of the consent in undertaking the clearing.

After finding that the offence was of medium objective gravity, Preston CJ had regard to the subjective circumstances of the defendant including the fact he had no prior convictions for environmental offences, was otherwise of good character and entered a plea of guilty at a stage to warrant a 20% reduction in penalty. The defendant was found to be remorseful of his actions and accepted the obligation to carry out remedial works on the property, the subject of a direction under s38 of the NV Act. The works required eight areas of the property to be rehabilitated and excluded from agricultural production at a material cost to Mr Rae.

Director-General of the Department of Environment and Climate Change v Hudson [2009] NSWLEC 4

A similar story is told in the case of Mr Hudson, though told to the tune of $408 000.

In this case the defendant was prosecuted for two breaches of the NV Act on his 2,126 hectare grazing property, known as “Yarrol” situated approximately 60 kilometres west of Moree in northern NSW.

In the first instance, Mr Hudson authorised the clearing of some 486 hectares of native vegetation contrary to section 12(1) of the NV Act. The native vegetation included Eucalyptus, Casuarina crisata and Acacia stenophylla and undisputed evidence was presented that Mr Hudson ‘personally authorised’ earthmoving contractors which used bulldozers and chains to fell or uproot the trees.

Mr Hudson was also charged with failing to comply with notice requiring him to produce evidence relating to the commission of the offence (contrary to section 36(4) of the NV Act).

Mr Hudson brought an array of defences external to the NV Act, central to which was his belief that ”the trees were [his] trees” which therefore entitled him to do with them as he wished. In relation to this, Lloyd J stated clearly that:

“Although Mr and Mrs Hudson hold the land in fee simple and they regarded the trees as theirs, they nevertheless remain subject to laws passed by the State parliament and which apply to all citizens within the State, including the Native Vegetation Act, which secures the sustainable management and conservation of native vegetation.”

In sentencing Mr Hudson, Lloyd J considered both s3A of the Crimes (Sentencing Procedure) Act 1999 and the objectives of the NV Act as expressed in s3 of this Act to conclude that Mr Hudson’s actions are to be regarded as “falling within the upper range of seriousness” within an already serious offences.

The Court also considered the very large area of native vegetation that was cleared, the deliberate nature of the offence motivated by commercial gain, the absence of any contrition or remorse in Mr Hudson’s failure to assist the Court (that is, provide , and the need for a penalty to act as both a deterrent and a specific deterrent in concluding that penalties in the amount of $408 000 plus prosecutor’s costs would appropriately befit the offence.

Director-General, Department of Environment and Climate Change v Calman Australia Pty Ltd & Ors [2009] NSWLEC 182

This case is the most recent illustration of the Court’s approach to offences against s12(1) of the NV Act, brought down as recently as 30 October of this year and in fact, heavily references the abovementioned judgments.

Each of the three defendants, Calman Pty Ltd, Iroch Pty Ltd and GD & JA Williams Pty Ltd t/as Jerilderie Earthmoving, pleaded guilty to clearing 21 hectares of native vegetation of River Red Gum Eucalyptus Camaldulensis open forest and the understorey associated with Red Gum across four separate areas. The land was cleared to diversify the use of the Property to include dry land for grazing.

All three defendants conveyed remorse for their actions and uniformly expressed that they were unaware that permission was needed by an authority, each for differing reasons. To this, Pain J stated:

“While [it] is true that ignorance of the law is no excuse, asserting that fact alone does not give rise to a finding that the Defendants acted negligently. They acted ignorantly and are guilty of a strict liability offence.”

As such, despite the low culpability of the Defendants, due to the substantial harm caused to the environment, the Court found that a penalty of $22 000 for each Defendant was appropriate. The Court noted that this figure was applied pursuant to the sentencing principle of parity and not totality. A remediation order was also agreed to by two of the three defendants (the two landowners) which included setting aside 47 hectares of land, enclosed by an electric fence, to be preserved and enhanced as native vegetation and that the landowners submit to reporting and monitoring requirements for ten years.

Lessons learned

It is clear that the Court’s current approach to offences involving the clearing native vegetation is to impose significant monetary penalties on offenders. This is particularly the case for offences of a more serious nature as penalties are viewed as a deterrent against the commission of similar, future offences. These cases strongly illustrate the importance of complying with legal requirements prior to the clearing of vegetation and the Court’s attitude to non-compliance.

Back to top