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
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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
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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
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ISSN 1328-8091
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