Environment and planning
Overview of environmental risk and regulation
Environmental laws in Australia are relevant to a broad range of industries – not simply the energy, resources and manufacturing sectors, but any business with operational environmental impacts, such as waste production.
In addition, any business that owns or occupies land may be subject to contamination laws, which require that discoveries of contamination are to be notified to the relevant state or territory environment regulator. Whilst Australia's environmental laws largely follow a "polluter pays" principle, owners or occupiers of contaminated sites may have (in some situations) an obligation to clean up contamination at a site in circumstances where they are not the original polluter (such as the clean up of historic contamination). This makes environmental due diligence prior to acquisition of a business or property assets an important aspect of risk management.
Complexity
One of the key challenges for business in Australia is understanding the specific legal requirements of the different states, territories and local government areas in which the business is located. Businesses that operate in multiple states and territories will be subject to several different laws.
Basically, there are three sources of environmental regulation: local government; state and territory government, and federal government. State and territory governments are responsible for the administration and enforcement of the majority of Australia's environmental regulation. Importantly, environment and planning laws are different in each state and territory.
Environmental laws cover a significant range of environmental protection issues, which may be relevant during development of a site or during its operation.
These include laws on land use planning; environmental impact assessment; pollution and licensing; waste; contamination; water; native vegetation and biodiversity conservation and heritage matters, to name a few.
To meet legal compliance requirements it is usually necessary to develop tailored operational and risk management approaches for each jurisdiction. A "one size fits all" approach is unlikely to meet regulators' standards. Consequently, costs associated with environmental compliance may be greater than in other countries or for other aspects of regulatory compliance that are more harmonised.
Environmental laws and supporting policies change reasonably frequently. This enables legislators (and relevantly the environment regulators) to set, publish and update standards on a regular basis as environmental knowledge develops. Businesses are generally expected to operate an environmental management system that responds to changes in laws and legal standards. The frequency of changes to environmental laws requires that such management systems are regularly reviewed and updated.
Regulators
The key regulators are state and territory-level environment protection authorities (EPAs), which are usually independent or semi-independent agencies of government. Some jurisdictions, such as Queensland, Western Australia and the Northern Territory, have government departments that fulfil this role. EPAs are the principal regulators for pollution, contamination and waste regulation and the licensing of high-risk industries. Other state and territory government departments are responsible for administration and enforcement of other laws.
At the federal level, the Department of Climate Change, Energy, the Environment and Water is responsible for enforcement of the main federal environmental laws. Federal laws provide an additional “layer” of regulation and seek to address environmental protection issues at a national level.
The key national environmental law is the Environment Protection and Biodiversity Conservation Act 1999, which is intended to protect nationally protected species, ecosystems, and places. There is likely to be material reform to this legislation in the next several years, which will include strengthening of environmental protection requirements and the establishment of a new independent federal EPA to enforce the law. Other federal laws additionally regulate Australia's carbon emissions and the import and export of waste chemicals. For example, the Industrial Chemicals Act 2019 regulates the importation and manufacture (and introduction) of new industrial chemicals to Australia, and is particularly relevant to businesses wishing to import new products or chemicals to Australia.
At a local level, municipal councils are also a key regulator. The landscapes of Australia are diverse, including coastal, desert, mountain and built environments. A significant area of the land mass is not urbanised. Accordingly, local laws may govern issues such as dust, erosion and specific local matters, such as local biodiversity and invasive species. In many jurisdictions, enforcement of state and territory laws in relation to planning and development, and public nuisance is delegated to local councils.
Energy and resources
There are separate (and in some cases additional) laws governing environmental issues at mining sites. Mine sites, depending on jurisdiction, may be regulated either solely by the relevant mining regulator (often a state or territory government department) or jointly by the relevant mining regulator and the environmental regulator.
Criminal and civil liability
Environmental laws are generally criminal in nature. Typical penalties vary widely between jurisdictions and reflect the circumstances of the offence. Penalties on conviction range from several thousands of dollars to maximum penalties, in some jurisdictions, of up to A$5 million and/or imprisonment. It is not uncommon for fines to be ordered at a significant level (hundreds of thousands of dollars). In the event that an environmental regulator does not proceed with a formal prosecution, there are a range of sanctions available to most regulators, such as warnings and infringement notices (lower level fines) as well as administrative powers requiring, for example, cessation of site activities or clean-up of contamination.
In addition to criminal liability for environmental offences, businesses must also be aware of civil liability to third parties (such as neighbours) arising from their actions.
Claims for negligence, nuisance, trespass and property damage or damage to human health are not uncommon, although many settle out of court. Many jurisdictions also have rights for third parties to participate in public licensing and planning approval processes, including limited rights to enforce the terms of development approvals.
Personal liability
Most of the primary state and territory environmental laws include a provision for directors and officers (and in some cases senior managers) to be held personally liable for the offences of the corporation (often called derivative liability). The purpose of such offence provisions, enabling prosecution of individuals, is to ensure that at the highest levels of the corporate structure, environmental matters are given priority. Liability commences from the date of a person's appointment, which means that environmental due diligence is important prior to appointment of new directors following an acquisition in order that any compliance and risk matters can be promptly rectified.
There are defences available to individuals in relation to offences that carry derivative liability. These are commonly that the director, or person concerned in the management of the corporation, has “exercised all due diligence” or “taken all reasonable steps” to ensure that the offence was not committed.
Licensing and approvals
Changes in land use or the development of land for operations may require a development approval under land use planning laws. Additionally, certain specified types of industrial operations may also need to hold an environmental licence for their operations. In some jurisdictions there is an integrated approvals framework for planning and environmental approvals, however, in other jurisdictions, the approvals framework is separated. In almost all jurisdictions, it is necessary to hold both a development approval and an environmental licence (for sites that have discharges to the environment).
Key contemporary issues
Climate change and environmental, social and governance (ESG) reporting are key issues for Australian businesses. Climate change litigation is increasing and legislation applies to many entities around reporting on emissions and energy use, climate risk and environmental statements.
The Australian Securities and Investments Commission (ASIC) has developed rules in relation to market disclosure of climate change risks. Directors need to demonstrate that they have exercised due care and diligence by properly considering climate change risk in the course of their duties. In addition, the Australian Competition & Consumer Commission has prioritised enforcement of consumer and fair trading issues about environmental and sustainability claims to require businesses making claims about their environmental credentials to substantiate those claims with evidence.
The National Greenhouse and Energy Reporting Act 2007 (NGER Act) requires reporting by business of energy consumption and emissions (above a certain threshold) to the Clean Energy Regulator. Australia's largest greenhouse gas emitters are required to report and manage emissions to a specific limit and purchase carbon credits to offset emissions if needed. The NGER Act scheme can impact foreign corporations that operate directly in Australia without an incorporated subsidiary and so is very relevant to foreign corporations wishing to do business in Australia.
There are growing opportunities in many jurisdictions for investment and development of renewable energy generation, battery storage and electricity transmission projects. In addition, many states have developed law and policy to promote a circular economy and strengthen waste laws to divert waste streams from export or landfill to domestic materials or energy recovery facilities (such as energy from waste facilities).