Bills Digest No. 18 2003-04
Ozone Protection and Synthetic Greenhouse Gas Legislation Amendment
Bill 2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Ozone
Protection and Synthetic Greenhouse Gas Legislation Amendment Bill 2003
Date
Introduced:
5 June 2003
House: House of Representatives
Portfolio: Environment and
Heritage
Commencement: On Royal Assent,
except that any offence provisions created by the Bill
only apply to conduct after a date to be proclaimed.(1)
To amend the Ozone Protection Act 1989 so as to
extend Commonwealth regulation to (i) various ozone-benign substances
that are greenhouse gases and (ii) end-uses of ozone-depleting substances.
Background
The Ozone Protection and Synthetic Greenhouse Gas Legislation
Amendment Bill 2003 (the Bill) is the main Bill of a package of three
dealing with the management of ozone depleting substances and their greenhouse
gas replacements. The other two are short consequential Bills dealing
with licence fees.
The Ozone Protection Act 1989 (the Act) implements
Australia’s
obligations under the 1987 Montreal Protocol on Substances that Deplete
the Ozone Layer (Montreal Protocol)(2). The Montreal Protocol
has been amended a number of times to extend its scope. Australia
has ratified the 1990, 1992, 1995 and 1997 amendments but not the 1999
(Bejing) amendment. Amongst other things, these amendments have progressively
tightened regulation of the manufacture, use, trade and disposal of ozone
depleting substances (ODS) included in the original Montreal Protocol
as well as expanding the range of ODS covered by its scope.
ODS, such as hydrochlorofluorocarbons
(HCFCs), chlorofluorocarbons (CFCs), halons, and methyl bromide, are used
for a variety of purposes such as refrigeration and air conditioning,
foam manufacture, fumigation, fire extinguishing and a range of aerosol
products. If released into the atmosphere, ODS damage the ozone layer
which protects the earth from UV-B radiation.
The Act and other associated legislation and regulations
prohibit the import, export and manufacture of those ODS that are the
most damaging to the ozone layer and place various limitations on less
damaging ODS with a view to a progressive phase-out of these latter substances.
State and Territory legislation, on the other hand, tends to be focused
on the end-uses of ozone depleting substances, including licensing, education
and training and emission control measures. This general division of responsibilities
is consistent with the basic Australian policy document, the ANZECC Revised
Strategy for Ozone Protection in Australia
1994.(3)
In April 2000 a Task Force consisting of representatives
from Environment Australia, the Australian Greenhouse Office, the Attorney
General’s Department and PricewaterhouseCoopers was formed to review the
impact, appropriateness, effectiveness and efficiency of Commonwealth
ozone regulation. The Review also incorporated National Competition Policy
(NCP) elements as to whether the legislation impeded market competition,
whether any such impediments could be justified in terms of costs and
benefits to the Australian community, and whether more effective measures
were available to achieve the same regulatory objectives. The Review,(4)
completed in January 2001, made positive findings in relation to effectiveness,
cost-benefit analysis, effects on competition, stakeholder support etc.
The major recommendations of the Review dealt with revenue matters and
extending the reach of the Act. As contained in the Review’s executive
summary, these recommendations were:
Revenue
-
the Ozone Protection Reserve be extended to include
all appropriations, revenue and expenditure associated with ozone
protection, including that associated with the National Halon Bank;
-
Environment
Australia develop longer-term budgets for its ozone protection activities;
-
licence fees under the legislation be increased to
reflect reasonable increases in the costs of Environment Australia’s
ozone protection activities; and
-
a fee
be introduced for processing Section 40 exemptions under the legislation.
-
Extending
the legislation
-
Commonwealth
end-use powers be elaborated and exercised in a new part to the legislation;
-
the
Commonwealth consider early extension of the legislation to ensure
national consistency in ozone protection regulation across all States
and Territories, in relation to supply and end-use; and
-
noting
wide-spread support from stakeholders, the Commonwealth should determine,
upon direct and early advice from relevant agencies, whether the legislation
should be extended to cover synthetic greenhouse gases used in Montreal
Protocol industries.
With the phasing out of some ODS during the 1990s, alternative
gases were needed to replace them. Whilst ozone-benign, some of the alternatives
brought in are potent greenhouse gases, ie contribute to the Greenhouse
effect. These are termed synthetic greenhouse gases, or SGGs. There are
two main types of SGGs that have replaced the traditional ODS, hydrofluorocarbons
(HFCs) and perfluorocarbons (PFC)s. According to the 2001 Review,(5)
HFCs are currently the refrigerant of choice
in Australia for most domestic and non-domestic air conditioning and refrigeration
systems. They are also used in the manufacture of rigid polyurethane foam
and metered dose medical inhalers and serve as a sterilant gas, as a solvent,
as a propellant in aerosols and as a streaming agent in fire extinguishers.
PFCs are used as a cleaning agent in the electronics industry, in certain
fire suppression systems and in some refrigerant blends.
Items 2-6 amend the Act to reflect the inclusion
of synthetic greenhouse gases (SGGs) within its scope. From example, item
6 amends existing section 3 to add the following two new objectives
of the Act:
-
to
provide controls on the manufacture, import, export and use of SGGs,
for the purpose of giving effect to Australia’s obligations under
the Framework Convention on Climate Change; and
-
to promote the responsible management of ‘scheduled substances’(6)
to minimise their impact on the atmosphere. Scheduled substances are
those substances listed in Schedule 1 of the Act.
Items 7-23 add, amend or repeal various definitions
and technical terms contained in existing subsection 7(1) of the Act.
For example, item 13 expands the definition of ‘Montreal Protocol’
to include the Protocol as affected by the Bejing amendments contained
in new schedule 3D.
Item 25 amends existing section 9 to solve some
drafting inconsistencies. The Act regulates ODS in 3 different forms:
(i) When held in a container for storage or transport purposes;
(ii) Where it is a constituent of a product by virtue of a product’s
manufacturing process (eg where a foam is manufactured using an ODS);
(iii) Contained in products in the sense that it is necessary for the
product's operation (eg as refrigerant that circulates around in a car's
air conditioning system, or halon in a fire extinguisher).
Existing subsection 9(1) provides that none of the Act's
references to ‘scheduled substances’ is intended to refer to a substance
in forms (ii) or (iii).(7) However, existing Parts V and VI
of the Act(8) actually regulate of the importation and manufacture
of forms (ii) and (iii) by making reference to ‘products manufactured
using scheduled substances’ and ‘products containing scheduled substances’.
Apparently the drafting of existing subsection 9(1) was an attempt
at making a distinction between, on the one hand, those controls in the
Act that were intended to only apply to form (i) and on the other hand,
those controls intended to apply to forms (ii) and (iii). However, the
result is confusing since on a plain English interpretation existing section
9(1) just seems inconsistent with the existence of the regulatory controls
imposed by Parts V and VI.
Item 25 deals with this by redrafting section
9 to specifically name those parts of the Act (Parts III, IV and VII)
where there is no intention to regulate ODS (and now SGGs) in the forms
(ii) and (iii). Thus these Parts will in effect only regulate ODS and
SGG in form (i) – ie bulk storage or transport form.
Item 27 inserts a new subsection 13(1A)
to expand the range of offences in existing section 13 for the unlicensed
manufacture, import or export of various substances. Specifically, it
is offence for a person to manufacture, import or export a SGG unless
they have a licence that allows them to do so, or the manufacture, import
or export is allowed by the regulations. In line with existing section
13, new subsection 13(1A) is a strict liability offence
provision, with a maximum fine of 500 penalty units.(9) However,
no other section 13 provision allows for regulations to authorise manufacture,
import or export. The Explanatory Memorandum suggests that this
later provision:(10)
ensures that where synthetic greenhouse gases are used
other than as alternatives to ozone depleting substances (such as in
the manufacture of aluminum and magnesium), they can be excluded from
the operation of the legislation.
Item 28 inserts a new subsection 13(6A)
which again expands the range of section 13 offences. This creates an
offence of importing ‘pre-charged equipment’ unless allowed by the appropriate
licence, or the equipment is a personal or household effect within the
meaning of existing paragraph 68(1)(d) of the Customs Act 1901. Under
item 15 ‘pre-charged equipment’ means refrigeration and air-conditioning
equipment that contain an HCFC and/or HFC. Other aspects of item 28
offences are the same as in item 27.
Item 30 substitutes a new version of subsection
13A(2) to do two things. First it clarifies that a separate licence for
each substance that a person wants to import, manufacture etc. Currently
if a person wants to, say, import a HCFC and methyl bromide, the
language of existing subsection 13A(2) suggests one licence can cover
both. The second thing is that it introduces SGGs into the substances
for which licences may be granted.
Item 31 will expand existing section 13A(4) to
allow ‘used substances licences’ to be granted to cover the import or
export of recycled or used HCFCs or methyl bromide. The Explanatory
Memorandum comments:(11)
It is anticipated that these licences will be sought
for the purpose of importing or exporting these substances for destruction;
or importing these substances for recycling and/or reclamation for re-export…This
represents the natural progression of the global phase-out of ozone
depleting substances in accordance with the Montreal Protocol.
As the global permissible use of these substances declines, there will
be a corresponding increase in demand for destruction of surplus or
contaminated used substances and recycling and reclamation of used substances
for reuse in critical applications.
Existing section 14 deals with application licences.
It says nothing about fees – fees are only mentioned in existing subsection
16(2), which provides a licence can only be issued on payment of
prescribed fees, or where waived. Item 33 inserts a new paragraph
14(1)(a) that specifies that an application fee must be paid, unless
‘waived in accordance with regulations’. The Explanatory Memorandum
comments:(12)
This clarifies the original drafting intention that fees
paid by applicants are intended to cover the cost to the Commonwealth
in processing them. Where the Minister refuses to grant an applicant
a licence, the application fee will not be returned to the applicant
as the Commonwealth has still incurred the cost of processing the application.
Item 35 deletes existing subsection 16(2) in consequence
of item 33.
Even where a person has a valid import licence, they
may only import a scheduled substance from a country that is a Party to
the Montreal Protocol: existing subsection 18(2). Item 38 provides
that this restriction does not apply to SGG licences – the rationale for
this that as the Montreal Protocol does not control SGGs. Item 40
makes a similar amendment to existing subsection 18(3), which covers to
exports.
Exemptions may be given by the Minister for some obligations
imposed under the Act or regulations: existing section 40. Item 46
specifies that a fee must be paid when applying an exemption, unless waived
in accordance with regulations.
Item 47 substitutes a new version of existing
section 41.(13) New section 41 requires the Minister
to maintain a register of countries that are party to the Montreal Protocol
on a per substance basis. The idea of a ‘per substance basis’ is that
as countries progressively ratify the various amendments to the Protocol,
they accept international obligations to a wider range of ODS and thus
they are effect Protocol parties for the substances covered by the various
amendments. The import and export of various ODS can only take place
in relation to countries that are Parties for the relevant ODS being exported
/ imported.
The Minister may not list a country on the Register,
if this would be inconsistent with Australia’s
obligations under the Montreal Protocol.
Items 39, 41, 43-44, 48-58, 75-76 and 81-83
all provide that references to ‘Protocol and ‘non-Protocol’ in existing
sections 44 and 45 are references to the Montreal Protocol (as
opposed to the Kyoto Protocol under the United Nations Framework Convention
on Climate Change). The change is consistent with the new definition
introduced at item 13.
Item 59 inserts a new Part VIA – ‘Controls on disposal,
use etc of scheduled substances’. New Part VIA contains only two new
provisions, new section 45A and 45B.
In relation to new section 45A, the Explanatory
Memorandum states that:(14)
[this will permit] the creation of Regulations relating
to the end-use applications of all scheduled substances to target preventable
emissions. The use of Regulations will allow the Commonwealth to flexibly
adapt end-use controls to reflect changes in technologies and practices
in each of the affected industries.
‘End-use’ in this context includes sale, purchase, disposal,
storage, use, handling, labeling etc. In relation to end-use controls,
the 2001 Review referred to earlier contains the following discussion:
8.60 The issue of whether
Commonwealth regulation should extend beyond the control of ODS at the
points of import, wholesale and distribution to controls at the point
of end-use emerged as an important issue in the review. If the need
exists for the Commonwealth to introduce end-use controls, its regulatory
coverage will expand to include a broader range of regulatory instruments
than currently applies. As instrument numbers increase, stricter forms
of regulation such as legislation emerge as the most effective means
to ensure consistent outcomes.
8.61 It is clear that
State and Territory based legislation and regulations for ozone protection
are not applied uniformly across jurisdictions despite consultation
through the Ozone Protection Consultative Committee (OPCC) and the 1994
ANZECC Revised Strategy on Ozone Protection.
8.62 It is worth noting
that Australia’s obligations under the Montreal Protocol require national action on supply
and end-use. The Ozone Protection Act
1989 provides for both supply and end-use controls as these
are ‘part and parcel’ of consumption and production processes. However,
traditionally the States and Territories have legislated and provided
regulation in relation to end-use controls.
8.63 In recommending
a more national approach to ozone protection, the Task Force believes
that the end use powers of the Commonwealth be elaborated and exercised
in a new part to the legislation to clarify Commonwealth coverage and
responsibility. Attachment E to this report provides a preliminary assessment
of the benefits and costs of this approach. In practice this would require
the establishment of a single national ozone protection authority.
Note that in respect to paragraph 8.63 above, the Bill
does not create a single national ozone protection authority.
New Part VIA will overlap existing end-use controls in State and
Territory legislation. Whilst some jurisdictions may repeal their end-use
controls once this Bill comes into force, presumably any inconsistency
between new Part VIA and State and Territory legislation will
be resolved in favour of new Part VIA through the override mechanism
in section 109 of the Commonwealth Constitution.
New section 45B creates an offence of conduct
that results in the discharge of scheduled substances to the atmosphere
except as allowed by the Regulations. It is a strict liability offence
carrying a penalty of 100 units.(15) No offence occurs where
the discharge results from a product containing the scheduled substances
is ‘being used for its designed purpose’ except where the product is a
halon fire extinguisher discharged ‘during a training exercise’. An offence
also does occur where the relevant conduct happens before a date to be
proclaimed.(16)
Item 68 substitutes new ‘Part VIIIA
- Ozone Protection and SGG Account’ to replace the ‘Ozone Protection
Reserve’. The old Part VIIIA Reserve will continue to exist, but under
the new ‘Account’ name. Besides covering SGG matters, the Account will
be used for the revenue and costs involved the National Halon Bank. Item
68 also specifies that Division 1A of Part 4 of the Financial Management
and Accountability Act 1997 applies to the Ozone Protection and SGG
Account. Division 1A covers ‘special accounts’. Since the commencement
of the Financial Management Legislation Amendment Act 1999, the
Ozone Protection Reserve has in fact been a special account so item
68 seems to continue the status quo in this regard.
Item 70 substitutes a new version of section 67A
which deals with the Minister’s ability to delegate any of his or her
powers and duties under the Act to an SES employee, or acting SES employee
of the Department. New section 67A increases the range of powers
that may be delegated, leaving only the Minister’s powers under sections
19A and 20. The Explanatory Memorandum comments that:(17)
[sections 19A and 20] deal with the cancellation and
termination of licences. Due to the severely detrimental impact created
by the exercise of these powers (a licensee’s loss of livelihood) it
is appropriate that the Minister retain responsibility for them.
No rationale is given in the Explanatory Memorandum
for the increased range. However, given that the Bill introduces two new
proposed licences – those relating to synthetic greenhouse gases and pre-charged
refrigeration and air-conditioning equipment – there may be a substantial
number of applications for these and so overall the workload for the administration
of the Act’s licensing and quota system will increase. Thus it would appear
that the Bill is aiming to minimise any delays in the granting of licenses
etc by enabling the Minister to be removed from the routine decision making
process(18).
Existing section 69B provides that should the effect
of any part of the Act go beyond what is necessary to give effect to Australia’s
relevant international obligations, that part should ‘read down’ so that
it is within the legislative power of the Commonwealth. This is a fairly
standard provision to ensure any unconstitutional parts of the relevant
Act can be severed so as not to render the whole Act inoperative. Item
77 simply amends existing section 67B so as the severability provision
also applies to regulations made under the Act. No reason for this amendment
is given in the Explanatory Memorandum but it may have been prompted
by new section 45A (which enables the creation of Regulations to
control end-use applications). Items 78 and 79 also amend
subsection 69B to include the Framework Convention on Climate Change
as one of Australia’s
international agreements to which the Act is intended to give effect.
Item 80 inserts new Parts VIII-X to Schedule
1 of the Act. Schedule 1 lists the various substances covered by Montreal
Protocol and its various Amendments. Part VIII contains
only one substance, bromochloromethane, which is covered by 1999 Beijing
Amendment. Parts IX and X contain various HCFs and PCFs,
which are SGGs.
Item 84 inserts new Schedules 3D and
3E into the Act. These contain the text of the Beijing Amendment
and the United Nations Framework Convention on Climate Change respectively.
Item 85 makes a consequential change by altering
a reference in the Trans-Tasman Mutual Recognition Act 1997 from
the Ozone Protection Act 1989 to the Ozone Protection and Synthetic
Greenhouse Gas Management Act 1989. This preserves the current situation
that Commonwealth ozone regulation requirements still apply to ODS and
SGG that are, for example, imported into Australia
from New Zealand.
-
See: Clause 4.
-
The 1987 Montreal Protocol contains specific obligations that build
on the original framework agreement, the 1985 Vienna Convention for
the Protection of the Ozone Layer. The relationship between the Vienna
and Montreal agreements
is similar to that between the 1992 Climate Change convention and
1997 Kyoto Protocol. See:
http://www.unep.org/ozone/aboutsec.shtml
for more background.
-
Policy 11, p. 5.
-
See: http://www.ea.gov.au/atmosphere/ozone/review/index.html
-
Paper 6 - Synthetic greenhouse gases used in Montreal
Protocol Industries.
-
As noted in relation to item 80, the SGGs HFC and PFC are added to schedule 1, Parts IX and
X, and thus become scheduled substances.
-
By comparison form (i) will be included
with the meaning of ‘scheduled substance’ except where the
substance in question is inside the container not only for the purpose
of transport and / or storage, but also for their end-use purpose
(eg a fire protection system consisting of cylinders of halon connected to a network of piping that runs through
a building): existing subsection 9(2).
-
New Part VIA will also regulate the end-uses of forms (ii)
and (iii).
-
Due to section 4B of the Crimes Act 1901, the maximum penalty
for a corporation is 2500 penalty units, ie
$275 000.
-
P. 118
-
At p. 119.
-
P. 119.
-
Amongst other things, existing section 41 provides that in relation
to the regulation of the import / export of an ODS, ‘a country is
a non-Protocol country if the country is not a party to the Protocol
[and that] regulations may specify all the countries that are parties
to the Protocol.’ No regulations specifying such countries have been
made.
-
P. 122.
-
500 penalty units for a corporation.
-
Subclause 4(1) of the Bill.
-
P. 125.
-
Although new section 67A does not specify that the exercise
of delegated power is subject to Ministerial direction, paragraph
34AB(a) of the Acts Interpretation Act 1901 allows
delegations to ‘be made either generally or as otherwise provided
by the instrument of delegation’ [emphasised added]. Thus the
Minister, in the relevant instrument of delegation under new section
67A, could make the delegation subject to certain conditions.
Angus Martyn
25 August 2003
Bills Digest Service
Information and Research Services
This paper has been prepared for general distribution to Senators and
Members of the Australian Parliament. While great care is taken to ensure
that the paper is accurate and balanced, the paper is written using information
publicly available at the time of production. The views expressed are
those of the author and should not be attributed to the Information and
Research Services (IRS). Advice on legislation or legal policy issues
contained in this paper is provided for use in parliamentary debate and
for related parliamentary purposes. This paper is not professional legal
opinion. Readers are reminded that the paper is not an official parliamentary
or Australian government document.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of the
public.
ISSN 1328-8091
© Commonwealth of Australia 2003
Except to the extent of the uses permitted under the Copyright Act
1968, no part of this publication may be reproduced or transmitted
in any form or by any means, including information storage and retrieval
systems, without the prior written consent of the Parliamentary Library,
other than by Members of the Australian Parliament in the course of their
official duties.
Published by the Department of the Parliamentary Library, 2003.
|
