Environmental law and practice in Australia: overview
A Q&A guide to environment law in Australia.
This Q&A provides a high level overview of environment law in Australia and looks at key practical issues including emissions to air and water; environmental impact assessments; waste; contaminated land and environmental issues in transactions. In addition, answers to questions can be compared across a number of jurisdictions to assist in the management of cross-border transactions (see Country Q&A Tool).
This Q&A is part of the global guide to environment. For a full list of jurisdictional Q&As visit www.practicallaw.com/environment-guide.
Environmental regulatory framework
There are a large number of legislative instruments and regulatory bodies that govern environmental regulation in Australia.
Australia has a federal legal system with environmental matters primarily regulated at a state and territory level. The regime varies between each state and territory. The Commonwealth government (being the highest level of government in Australia) also regulates specific matters on a national level in addition to regulation by the state or territory government.
Policy changes and legislative developments have been relatively constant in the last five years. Recent developments in Australia include an increasing focus on the duplication of approval processes between the different levels of government and a substantial change in climate change policy.
State and territory legislation
The key environmental legislation, and the relevant regulatory body, for each state and territory are as follows:
Australian Capital Territory. The Environmental Protection Act 1997 (ACT) administered by the Environment Protection Authority.
Northern Territory. The Waste Management and Pollution Control Act 1998 (NT) and Environmental Assessment Act 1982 (NT) administered by the Environment Protection Authority.
New South Wales. The Protection of the Environment Operations Act 1997 (NSW) administered by the Environment Protection Authority.
Queensland. The Environmental Protection Act 1994 (QLD) administered by the Department of Environment and Heritage Protection.
South Australia. The Environment Protection Act 1993 (SA) administered by the Environment Protection Authority.
Tasmania. The Environmental Management and Pollution Control Act 1994 (TAS) administered by the Environment Protection Authority.
Victoria. The Environment Protection Act 1970 (VIC) administered by the Environment Protection Authority.
Western Australia. The Environmental Protection Act 1986 (WA) (EP Act) administered by the Environmental Protection Authority (EPA) and the Department of Environment Regulation (DER).
Where possible in this chapter, broad topics are addressed consistently throughout the various jurisdictions in Australia. Where we could not comment generally, this chapter concentrates on the provisions contained in Western Australian legislation.
Environmental regulation at the Commonwealth level (that is, national/federal level) is limited to areas of national significance and those involving the Commonwealth or Commonwealth bodies. The Commonwealth's primary environmental legislation is the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) administered by the Department of the Environment and Energy (DOEE).
Sanctions and penalties
All jurisdictions in Australia consider a breach of environmental law a serious incident with significant consequences, including criminal sanctions in some circumstances.
While each jurisdiction varies, the relevant regulators all have significant enforcement powers, including:
Instituting criminal and/or civil proceedings.
Issuing notices and orders.
Suspending or cancelling licences, or amending licence conditions.
In all jurisdictions the directors and managers of a company, unless they can establish one of the available defences, can also be guilty of an offence if the company is found guilty. Some jurisdictions also impose liability on licensees or occupiers for breach by a contractor.
Broadly, penalties under state legislation are divided into three categories, depending on the severity of the offence, and there are "follow on" penalties such as the amendment or cancellation of licences, and daily penalties for each day an offence continues unremedied:
Tier 1 offences. The most serious offences involving penalties in the order of:
A$1 million for corporations; and
A$500,000 and/or up to five years imprisonment for individuals.
Tier 2 offences. These offences are strict liability offences resulting in penalties in the order of:
A$250,000 for corporations;
A$125,000 for individuals.
Tier 3 offences. Generally, minor offences involving penalties in the order or A$5,000 for both individuals and corporations. In addition to monetary penalties, courts generally have powers to make the following orders:
Action to remedy, mitigate or prevent further environmental harm.
Action to publicise the contravention.
Regulators generally have an enforcement and prosecution policy that outlines the factors to be taken into account in deciding what level of enforcement action is appropriate in each instance.
While an offence may carry with it many enforcement options, the circumstances of the offending behaviour will dictate the appropriate enforcement response. The seriousness of the offence, any action of voluntary mitigation and an outcome that best achieves the objectives of the relevant act are all relevant considerations. Prosecution is not seen as a tool of last resort, and instead is employed as the appropriate response to a particular circumstance.
In some jurisdictions, private persons can bring civil proceedings to recover damages where they have suffered loss or harm.
NGOs play an important role in environmental law in Australia. They have brought a number of public interest environmental litigation cases. In many jurisdictions in Australia there is open standing for NGOs to bring civil proceedings to enforce particular statutory obligations or to challenge the decision making process in respect of the approvals for a particular project.
There has been a re-emergence of NGO activity in recent years, largely driven by coal seam gas (CSG) projects and the perceived environmental risks associated with the CSG industry and a higher degree of activism around the fossil fuel industry more generally, including the development of new or expanded coal mining operations, because of the perceived contribution to global carbon dioxide emissions.
For example, an anti-coal activist was given a 20-month suspended prison sentence and released on the condition of good behaviour for two years and a A$1,000 bond, after releasing a false press release that caused a A$300 million decrease in a major coal company's share price.
Integrated/separate permitting regime
Generally speaking, Australia does not have a fully integrated permitting regime. Each project must be assessed on its merits, nature and location to determine what environmental permits are required and if state and/or Commonwealth permits are needed. Any project or activity with any level of consequence for the environment is likely to require several permits, covering development, environmental and heritage issues.
While permitting is not strictly integrated, the permitting regime in each jurisdiction generally allows a degree of integration across certain issues. For example, in most Australian jurisdictions, a single environmental permit or authorisation may govern a number of relevant environmental concerns such as noise, air, water and waste for each of the prescribed premises.
The environmental permits required for a particular project depend on a number of factors including the nature and location of the project, the type of activity and the proposed treatment of waste and rehabilitation plans. For example, resource projects require environmental authorisations to cover waste and rehabilitation concerns that do not necessarily need to be addressed in residential developments.
As previously noted, there is no integrated permitting regime in Australia (see Question 4, Integrated/separate permitting regime). Therefore, each project should be assessed and all relevant environmental permits and other authorisations obtained, having regard to the merits, nature and location of the project.
Permits and regulator
Water pollution is regulated at both a Commonwealth and state/territory level through the EPBC Act and through state and territory environmental protection legislation (see Question 1).
In Western Australia, businesses operating a prescribed premises as listed in Schedule 1 of the Environmental Protection Regulations 1987 (WA) have the potential to cause environmental harm. Licences and works approvals are issued under Part V of the EP Act to these businesses and may specify conditions to ensure compliance with the EP Act and relevant best practice for that industry. Conditions may include regular audits, monitoring and reporting or compliance with a standard or code of practice. Water pollution is covered by this licensing regime.
An approval under separate water resource management legislation is required in each jurisdiction to take and use water, unless a specific exemption applies.
In Western Australia, pollution of watercourses is addressed under the EP Act. Under the EP Act, it is an offence for a person to pollute the environment or cause environmental harm. A person who discharges or abandons, or causes or allows to be discharged or abandoned, any solid or liquid waste in water to which the public has access commits an offence, unless they can establish that the pollution, emission or harm occurred in the course of carrying out a development approved under the EP Act or the discharge was the result of an emergency.
The Health Act 1911 (WA) (Health Act) makes it an offence for any person to pollute any water supply or water catchment containing water intended for human consumption.
The Department of Water (WA) and local government each have power to control pollution of watercourses within and under catchment areas and water reserves. This includes the power to make local laws to control polluting activities within a catchment.
In Western Australia, under the DER's Enforcement and Prosecution Policy, DER can take action to remedy the breach and the offender can be pursued for the cost of the clean-up.
In Western Australia, as in other jurisdictions, there are criminal and civil financial penalties for causing water pollution (see Question 2).
The penalty for failing to comply with the Health Act provision is a maximum fine of A$10,000 and a daily penalty of A$1,000. The Rights in Water and Irrigation Act 1914 imposes penalties of up to A$10,000 for each offence and additional daily penalties may apply.
Permits and regulator
Air pollution is regulated at Commonwealth and state/territory level. There are a number of national policies and programmes related to the reduction of air pollution in relation to the transport, residential and industrial sectors.
Commonwealth and complimentary state and territory legislation allow the National Environment Protection Council to make National Environment Protection Measures (NEPMs), including the:
National Environment Protection (Air Toxics) Measure.
National Environment Protection (Ambient Air Quality) Measure.
NEPMs are national objectives aimed at assisting the protection and management of air quality in Australia. However, each jurisdiction implements NEPMs in a slightly different way.
Air pollution is regulated at a state and territory level through general environmental laws. It is a standard requirement to comply with pollution caps as well as obtaining permits for continuous emissions into the air. Air pollution is typically dealt with under the general pollution provisions of the environmental legislative instruments listed in Question 1.
For example, in Western Australia, air pollution is dealt with under the general pollution provisions of Part V of the EP Act (see Question 6). Accordingly, any works that may cause emissions to air or alter the nature or volume of emissions at a prescribed premises requires a works approval or a licence. It is a general condition of the works approval or licence that the licensee report on emissions to air.
Air pollution is also dealt with under numerous regulations including the Clean Air (Determination of air impurities in gases discharged into the atmosphere) Regulations 1983 and, as noise pollution is considered air pollution for the purposes of the EP Act, the Environmental Protection (Noise Regulations) 1997. Additionally, the Environment Protection (Unauthorised Discharges) Regulations 2004 specifies certain materials that are not to be released into the environment.
Under the Western Australian EP Act, it is an offence for a person to cause air pollution or to allow an unreasonable emission to air from any premises unless the pollution or emission was:
Permitted under a works approval or licence.
A result of an emergency or other exempt activity.
Permitted under an approval granted by the Minister for the Environment.
Under the DER's Enforcement and Prosecution Policy in Western Australia, the DER can take action to remedy the breach and the offender may be pursued for the cost of the clean-up.
There are criminal and civil financial penalties for causing air pollution in Western Australia as in other jurisdictions ( see Question 2).
Climate change, renewable energy and energy efficiency
Under the Kyoto Protocol, Australia agreed to limit annual greenhouse gas (GHG) emissions to an average of 108% of 1990 levels during the period from 2008 to 2012. There are national targets for the reduction of GHG emissions, the use of renewable energy and energy efficiency.
GHG emissions. The Commonwealth government's target is a reduction in GHG emissions by at least 5% by 2020 as compared to 2000 levels. It has set a target of a reduction of 26% to 28% by 2030 (compared with 2005 levels).
Renewable energy. The Commonwealth Renewable Energy Target scheme has set a target of 33,000 GWh of energy generated by large-scale renewable sources by 2020. A separate small-scale scheme supports non-commercial installations such as domestic household solar systems.
Energy efficiency. All Australian governments have agreed to improve Australia's energy efficiency by 40% by 2030 and adopted the National Energy Productivity Plan in December 2015 to map out how the target is to be achieved.
Parties to UNFCCC/Kyoto Protocol
In December 1993, Australia became one of the first countries to ratify the UNFCCC.
On 3 December 2007, Australia signed the instrument of ratification of the Kyoto Protocol. Australia's ratification of the Kyoto Protocol came into effect on 11 March 2008.
Australia signed the Paris Agreement under the UNFCCC in April 2016 and intends to ratify the agreement under domestic law.
The Commonwealth has implemented various measures to comply with its obligations under these international agreements. The key strategy is the government purchase of emissions reductions through the Emissions Reductions Fund (ERF) via reverse auctions. Three auctions have been held, with a fourth planned for November 2016. To be eligible to sell emissions reductions to the Australian government, entities must generate reductions from new projects using accredited methods of calculating reductions. This approach is an extension of the Carbon Farming Initiative (CFI) which has operated since 2012 and allowed emissions reductions from land-based activities (such as avoided deforestation and changes to agricultural practices) to be converted to carbon credits. Under the ERF, the methods and practices developed under the CFI have been expanded to other sectors of the economy, such as road transport and energy efficiency in commercial buildings. The ERF operates alongside other GHG-reduction strategies, such as the renewable energy target and the National Energy Productivity Plan. A safeguard mechanism commenced on 1 July 2016 to ensure that emissions reductions purchased under the ERF are not offset by rises in emissions above baseline levels set for major emitters and sectors.
Environmental impact assessments
Not all projects require an EIA. For projects that meet threshold requirements, such as those with a significant environmental impact, all jurisdictions in Australia require EIAs be carried out and submitted to the relevant regulator before work begins. The extent of assessment that is required depends on the nature of the project. The EIA is generally carried out by the proponent of the project and submitted to the relevant regulator in the appropriate state or territory for approval.
In all jurisdictions, the EIA process is transparent, with opportunities for public and other stakeholder comment. The applicant is generally required to provide information about the proposed projects as well as its environmental impacts and how those impacts are to be managed. The assessment is submitted to the relevant regulator, which prepares a report and recommendations for the relevant Minister for Environment as to whether the project should be approved.
Assessment of projects may also be required under the EPBC Act. The Commonwealth and all states and territories have entered into bilateral agreements regarding the assessment process for major projects that are likely to have a significant impact on matters of national environmental significance. These projects require the approval of the Commonwealth Environment Minister, but a separate assessment process, beyond that required by the relevant state or territory law, is not required (provided that the assessment carried out under the relevant state or territory law also assesses the impact of the project on matters of national environmental significance). All governments have also agreed similar "approval" agreements that accredit the state or territory approval for the purposes of the EPBC Act and effectively remove the requirement to obtain the separate approval of the Commonwealth Environment Minister. However, the legislative amendments that are required to implement those agreements have been stalled in the Commonwealth Parliament and it is unclear whether the amendments will obtain the necessary political support to become law.
Permits and regulator
If an EIA is required, the outcome of the EIA process is a decision by the relevant Minister or delegated decision maker that the proposed development may or may not proceed. If a development is approved, there are usually a range of conditions attaching to that approval.
In all jurisdictions, failure to comply with the requirements of the EIA process may invalidate the approval or consent obtained. There is also the possibility of financial penalties.
Permits and regulator
Waste is generally regulated at a state and territory level and depends on the nature of the waste involved.
In Western Australia, municipal waste (that is, general household waste) is principally the responsibility of local governments under the Health Act. However, the Department of Health also has all powers of local governments in respect of municipal waste.
Otherwise, DER and the Waste Authority are the primary regulators of waste in Western Australia. DER is empowered by the EP Act, while the Waste Authority was established by the Waste Avoidance and Resource Recovery Act 2007 (WA) (WARR Act).
Licences and works approvals under Part V of the EP Act are required to conduct waste related activities in Western Australia. Additionally, specific licences are required for certain classes of waste, for example, to:
Transport controlled waste (see below, Special rules for certain waste).
Conduct the collection of municipal waste.
Similar controls exist in other states and territories.
The EP Act and the WARR Act establish offences relating to waste, including the following:
Collection of waste by unauthorised persons.
Obstructing or hindering the holder of a waste collection permit in the collection of local government waste.
Discharging or abandoning, or causing or allowing the discharge or abandonment of, any solid or liquid waste in water to which the public has access.
Intentionally, or with criminal negligence, allowing or causing waste to be placed in a position whereby it would likely result in pollution.
Otherwise allowing or causing waste to be placed in a position whereby it would likely result in pollution.
The Western Australian Marine (Sea Dumping) Act 1981 (WA) makes it an offence to dump waste or any other matter into coastal waters without a permit. The Commonwealth Environment Protection (Sea Dumping) Act 1981 (Cth) deals with the loading and dumping of waste at sea and applies to all vessels, aircraft and platforms in Australian waters and to all Australian vessels and aircrafts in any part of the sea.
There are no financial criteria for operators of waste disposal sites. However, other means of ensuring financial competence of operators are adopted, such as landfill levies payable by waste disposal site operators and financial assurances.
While landfills must be licensed under Part V of the EP Act, in Western Australia there are no specific technical requirements for operators of landfills or waste disposal sites in the EP Act.
Special rules for certain waste
In all jurisdictions, waste is classified into several classes, which in turn dictate the conditions and requirements for its disposal.
For example, in Western Australia DER regulates the transportation of wastes that may cause environmental or health risks, known as controlled waste. Controlled waste is regulated through the Environmental Protection (Controlled Waste) Regulations 2004 (WA) (Controlled Waste Regulations), which provide for the licensing of carriers, drivers and vehicles involved in the transportation of controlled waste on public roads.
The fine for breaching an obligation under the Controlled Waste Regulations is A$5,000 for individuals or A$25,000 for companies.
Penalties under the WARR Act are up to A$25,000 per offence. A penalty for each day that the offence continues may also apply.
An Australia-wide ban on the importation, manufacture and use of all forms of asbestos and asbestos containing products has been in place since 2003. It does not apply to asbestos products already in place.
The importation of asbestos or goods containing asbestos into Australia is generally prohibited by the Customs (Prohibited Imports) Regulations 1956 (Cth). There is also other legislation, such as state and territory occupational health and safety legislation, dealing with the requirements for storage, handling and disposal of asbestos.
Asbestos containing materials in soils will generally amount to "contamination" according to each respective state or territory’s contaminated land provisions (see Question 14) and prescribed persons have obligations to remediate contaminated land.
Asbestos related duties and obligations are regulated at both a Commonwealth and state/territory level. Each jurisdiction generally regulates asbestos through its relevant occupational health and safety laws.
In Western Australia, the Occupational Safety and Health Act 1984 (WA) (OHS Act) places a duty on employers to provide a safe workplace for all employees. It is an offence under the OHS Act to use, sell or supply an asbestos product without approval or to handle asbestos products without taking reasonable measures to prevent asbestos fibres entering the atmosphere.
The Occupational Safety and Health Regulations 1996 (WA) require an employer or person in control of a workplace to identify the presence and location of asbestos and assess relevant health risks. If the asbestos found presents a health risk, then the employer has a duty of care under the OHS Act to implement controls.
Transport and disposal of asbestos waste must be carried out in accordance with all relevant legislation and guidelines, including the Controlled Waste Regulations.
Many jurisdictions in Australia have implemented a model Work Health and Safety Act (WHS Act) and associated regulations and codes of practice, which is designed to implement national harmonisation of occupational health and safety laws across all Australian jurisdictions. The WHS Act requires all persons who conduct a business or undertaking to, so far as is reasonably practicable, ensure workers (among others) are not put at risk in the course of the business or undertaking. The regulations include specific obligations to manage and control asbestos.
Permits and regulator
In Western Australia, a licence from WorkSafe is required for the removal of most materials that contain asbestos. There are two types of licence:
Unrestricted, which allows to remove all forms of asbestos (friable and non-friable).
Restricted, which allows to remove amounts exceeding ten square metres of bonded (non-friable) asbestos.
There are also asbestos related provisions in the Controlled Waste Regulations.
All breaches of the OHS Act and the Controlled Waste Regulations are subject to monetary penalties. Additionally, after notice of the offence has been given by an inspector to the offender, the offence is taken to continue for every day that it goes unremedied, meaning that additional daily default fines may be payable.
Regulator and legislation
Each state and territory has its own legislative regime to deal with contaminated land.
In Western Australia it is the Contaminated Sites Act 2003 (WA) (CS Act).
Investigation and clean-up
Under the CS Act, if a site is suspected of contamination, the CEO of DER will require investigation of the site. The CEO can give an investigation notice to relevant persons (see Question 15) when there are reasonable grounds to indicate that a site is possibly contaminated and appropriate action to investigate, monitor or assess the site is not being taken, or has not been taken.
Each site is classified as:
Report not substantiated.
Possibly contaminated: investigation required.
Not contaminated: unrestricted use.
Contaminated: remediation required.
Contaminated: restricted use.
Remediated for restricted use.
Except for sites classed "report not substantiated", "not contaminated" and "decontaminated", DEC must place a memorial notice on the certificate of title to alert potential buyers. However, only sites classified "contaminated: remediation required" must be remediated by the relevant liable person(s). In this instance, the CEO can issue a clean-up notice to liable persons, which specifies the nature and form of remediation required.
There are a range of offences under the CS Act, including a failure to:
Report likely contamination (only applicable to prescribed persons such as the owner or occupier of the site or the person that caused the contamination).
Disclose certain classifications of land to potential owners before change of ownership.
Comply with the requirements of a notice.
Each offence has a prescribed penalty. The maximum penalty under the CS Act is A$500,000 and a daily penalty of A$100,000 for each continuing day that the offence continues, and up to five times the maximum fine for a body corporate.
Generally, in all jurisdictions, more than one person may be responsible for remediation of a site. The hierarchy of responsibility is as follows:
The person that caused, or contributed to, the contamination.
An owner or occupier changing the use of the site where, as a result of the change, remediation is required.
The owner of the site.
In Western Australia, liability for remediation is determined by a statutory Contaminated Sites Committee who can divide responsibility between multiple parties. In certain circumstances, statutory responsibility for remediation may be transferred provided both the transferee and the CEO of DER agree in writing.
Directors can also be held liable for the remediation obligations of their corporation if it is insolvent. Related bodies corporate may have the same liability.
Limitation of liability
The CS Act provides that a person with responsibility for a site can transfer that responsibility, or part of that responsibility, to:
Another person with that person's written consent.
In prescribed circumstances, to the state with the written approval of the Minister for the Environment.
Voluntary clean-up programme
There are no programmes that incentivise the voluntary clean up of land contaminated by third parties.
Each state and territory deals with the issue of lender liability differently. As a general principle, lenders who simply hold a security interest over land, without possession, are not liable for any contamination of that land.
In Western Australia, a mortgagee is an owner for the purposes of the CS Act if it is in possession of all or part of the site. This may result in a mortgagee in possession having liability under the CS Act.
A mortgagee can generally avoid liability by not taking possession of land. Lenders will often try to minimise potential future liability by conducting detailed due diligence of the borrower and the project prior to lending funds. They will also impose detailed obligations on the borrower in relation to compliance with environmental laws and reporting and managing of environmental incidents.
Depending on the circumstances, an individual may have a common law cause of action, or a claim for breach of contract, available to them if they have been affected by pollution. An individual may be able to bring an action in negligence or nuisance for damage caused by the movement of contamination onto their land.
In some jurisdictions, individuals may have a right to enforce certain provisions of environmental laws and/or receive compensation for losses suffered as a result of a breach.
Consenting and environmental impact assessment
Fracking is being undertaken in a number of Australian states. Generally, fracking operations are governed by the onshore petroleum legislation in each jurisdiction.
In addition to state approval, any proposed coal seam gas development which is (or is likely to) have a significant impact on water resources is a matter of national environmental significance under the EPBC Act, and therefore requires approval at Commonwealth level.
Queensland. In Queensland, the Petroleum and Gas (Production and Safety) Act 2004 (Qld) requires an environmental authority under the Environmental Protection Act 1994 (Qld) for all onshore petroleum operations. The requirements for an environmental authority vary, and there are specific requirements for certain applications concerning coal seam gas activities and related fracking operations. Activities relating to fracking may be prohibited in areas of particular environmental or social significance or additional approvals can be required if fracking is proposed in certain areas of "regional interest".
New South Wales. In New South Wales, fracking is permitted under the Petroleum (Onshore) Act 1991 (NSW). Under planning regulations, fracking operations must have development consent in certain circumstances, and coal seam gas developments are prohibited within certain exclusion or buffer zones of environmental or social significance. Coal seam gas explorations or developments require an Environmental Protection Licence under the Protection of the Environment Operations Act 1997 (NSW) and agricultural impacts must be specifically addressed in an Agricultural Impact Statement.
Western Australia. Fracking operations in Western Australia are governed by the Petroleum and Geothermal Energy Resources Act 1967 (WA). Pursuant to the Petroleum and Geothermal Energy Resources (Environment) Regulations 2012 (WA), fracking operations require an approved environmental plan that includes an environmental risk assessment and the details of any chemicals added to treatment fluids used for the purposes of fracking. Once approved, a summary of the environmental plan must be submitted to the Minister for public disclosure.
New South Wales. The Chief Scientist and Engineer of New South Wales undertook a comprehensive review of coal seam gas and fracking activities in the state and made substantial recommendations, which led to the development of a new "Gas Plan" for the state. The Gas Plan designates the state's Environment Protection Authority as the lead regulatory agency and includes enhanced community consultation obligations and standardised compensation requirements, and a new aquifer interference policy to protect water resources.
Moratoria. Moratoria on fracking activities are in place in Victoria and Tasmania, and the new government in the Northern Territory has committed to introduce a fracking ban.
Environmental liability and asset/share transfers
Most liability for environmental harm or other contraventions of environmental laws attaches to the responsible person or entity. Therefore, in many cases, the buyer of assets does not inherit the environmental liabilities of the seller.
However, some liability may be passed to the buyer by contract. One important example is responsibility for contaminated land. Although principal liability rests with the entity that caused the contamination, an occupier or owner may, in various circumstances, be deemed to be liable, which could expose a buyer to liability.
The acquisition of shares means that the buyer acquires the company with all of its assets and liabilities, including the company's pre-acquisition environmental liability. The position can be altered by contract, although it is not possible to completely contract out of statutory duties. The seller continues to be responsible for the contamination of any land and continues to be the subject of any orders issued by the relevant regulator.
Although indemnities can be used to recover the costs of some liabilities from the seller, in most cases public policy forbids the use of an indemnity to protect a person from criminal liability and as such, criminal liability remains with the company.
In an asset sale, a seller generally retains liability for any pre-disposal breaches of environmental laws or environmental permits as such liabilities are personal to the seller. The position can be altered by contract, but it is not possible to completely contract out of statutory duties. The seller continues to be responsible for the contamination of any land and continues to be the subject of any orders issued by the relevant regulator.
In a share sale, liabilities incurred by the company pre-sale (or post-sale but relating to acts or omissions occurring pre-sale) remain with the company. This is, however, subject to the terms of the contract, and it is common in Australia for transaction documents to include an indemnity in relation to specific environmental issues.
In all jurisdictions in Australia, there are requirements for contracts for the sale of land to disclose whether the land is the subject of certain orders or other instruments under the legislation in that state or territory. More extensive obligations apply in some jurisdictions.
Consumer protection legislation prohibits misleading or deceptive conduct (such as making false or misleading representations concerning certain matters in connection with the sale land). Silence as to a matter within a party's knowledge, for example whether land is contaminated, can be regarded as misleading or deceptive conduct. Additionally, where a party is silent as to whether land is contaminated, there may also be liability under common law.
The principles regarding disclosure in respect of asset sales also apply to share sales (see above, Asset sale).
Environmental due diligence is commonly carried out in both share sales and asset sales. Environmental due diligence assessments allow opportunities and constraints to be identified. It typically extends to:
Historical and current land uses.
Environmental approvals and current zonings.
Aboriginal and European heritage sites.
Pollution and contamination from prior and existing land use.
Native title (that is, the recognition by Australian law that some Indigenous people have rights and interests to their land that come from their traditional laws and custom).
Environmental due diligence processes in Australia have not generally seen an increase in the focus on climate change and sustainability issues.
Types of assessment
There are various types of environmental assessments available, which may be relevant at different stages of a project or for different types of projects. They include:
Environmental assessment for statutory purposes (environmental audit).
Environmental due diligence assessments.
Contamination assessments and remediation.
Groundwater resource assessments.
Asbestos in soils assessments.
Waste classification assessments.
Whether an environmental consultant is used depends on the nature and complexity of the due diligence. When instructing an environmental consultant, the main issues that should be covered in an engagement letter include:
The scope of the services the consultant is to provide.
Confidentiality and legal professional privilege.
Conflicts of interest.
Public liability and professional indemnity insurance.
In both asset sales and share sales, it is common for transaction documents to include warranties and indemnities in relation to environmental issues including responsibility for remediation of contaminated land, past contamination incidents and the existence of any regulatory enforcement actions.
Public policy dictates that warranties and indemnities cannot protect a person against criminal liability, and a court may declare such warranties and indemnities to be void.
The position is the same as for asset sales (see above, Asset sale).
There are no statutory limits on environmental warranties and indemnities. Whether limits apply, and the nature of the limits, depends on the contractual terms agreed between the parties.
While environmental warranties and indemnities are negotiated between the parties, it is common for limits to be placed on them including time limits and financial caps. There may also be trigger events that must occur before a buyer can make a claim under an environmental indemnity. Environmental insurance is also common (see Question 30).
Reporting and auditing
Each jurisdiction maintains several public registers of environmental information covering licences, contaminated sites, regulatory enforcement notices and (in some jurisdictions) offsets. The Commonwealth government also maintains a public register of approvals and referrals under the EPBC Act.
Third party procedures
Most registers are free to search and are available on the relevant department's website. Some registers can only be searched in person at the relevant department, or on payment of a specified fee.
There are specific requirements in each jurisdiction for companies to carry out environmental auditing and public reporting about environmental performance.
In most jurisdictions, environmental licences include conditions requiring the licence holder to report compliance with licence conditions, environmental standards and legislation to the regulator. In Western Australia, resource (mining and petroleum) tenures also include specific environmental compliance and reporting obligations.
Companies that meet the threshold must report their GHG emissions, energy production and energy consumption (National Greenhouse and Energy Reporting Act 2007).
It is compulsory under Commonwealth legislation that all businesses report their emissions of certain substances to air and water, and the transfers of those substances in waste annually to the National Pollutant Inventory (NPI) provided they exceed reporting thresholds. The data is assessed and published on the NPI website (www.npi.gov.au).
The reporting requirements vary between jurisdictions in Australia. Generally, all unlicensed or emergency discharges to the environment must be reported as soon as possible to the regulator.
In Western Australia, an owner or occupier of a contaminated site or a person who knows, or suspects, that he has caused, or contributed to, the contamination of that site, must report to DER.
Environmental regulators have broad powers to ensure compliance with environmental legislation and to prevent environmental harm. Their powers vary between jurisdictions, but generally include powers to enter and search premises, inspect documents, speak to workers or require the provision of information and records.
The Commonwealth Corporations Act 2001 requires a company's annual report (prepared by the company's directors) to include details of the company's environmental performance, where that company is subject to "particular and significant" environmental regulation by the Commonwealth. Publicly listed corporations have additional reporting requirements in relation to environmental issues and performance under the Australian Stock Exchange Listing Rules and good governance rules.
Types of insurance and risk
A fairly broad range of environmental insurance products is available. Each general liability policy has its own particular wording and coverage. These can include coverage for remediation and coverage for clean-up or damages to third parties from conditions at the site. Additionally, directors and officers' policies may provide coverage if the directors and officers of a company are sued as a result of an environmental incident or loss.
It is contrary to public policy to provide insurance for criminal liability.
The environmental insurance market is just beginning to develop in Australia. Insurance can be obtained through local underwriting presence or through dealing with the American or UK insurance markets.
Expenditure incurred for an environmental protection activity is deductable. An environmental protection activity is an activity carried out for the purposes of preventing, fighting or remedying pollution, or treating, cleaning-up, removing or storing waste where the pollution or waste has resulted, or is likely to result, from an earning activity in a site on which the taxpayer carried on, carries on, or proposed to carry on a business activity.
In addition to the substantial changes that have occurred in relation to climate change and renewable energy regulation, there is an ongoing focus on simplifying and streamlining the processes involved in environmental regulation.
Most state and territory governments have been undertaking their own reviews of policy, legislation or both in relation to environmental regulation for particular industry sectors and have been working with the Commonwealth government in relation to the approval bilateral agreements (see Question 11).
The regulatory authorities
Department of Environment Regulation (DER)
Main activities. DER’s purpose is to advise on and implement strategies for a healthy environment for the benefit of all current and future Western Australians.
Environmental Protection Authority (EPA)
Main activities. The EPA is a five-member board with statutory obligations under the EP Act to conduct EIAs, implement procedures to protect the environment and to provide advice to the Minister for Environment on environmental matters.
Department of the Environment and Energy (DOEE)
Main activities. The DOEE is the Commonwealth body with responsibility for environment protection and conservation of biodiversity, air quality, national fuel quality standards, land contamination and water policy. Its mandate was expanded in 2016 to include Commonwealth energy policy, including oversight of the national energy market and climate change and renewable energy policy.
Description. Official and up-to-date Western Australian state law publisher.
Description. Official and up-to-date Commonwealth Legislation.
Description. Database of legislation for all Australian jurisdictions, not up-to-date.
Professional qualifications. Western Australia, 1980; Victoria, 1990
Areas of practice. Energy and resources; carbon emissions; environment.
- Advised BGC, an Australian construction company, on major contractual disputes, issues surrounding gypsum mining operations, a cement plant in Timor-Leste and restructuring its contracts and relationship with Atlas Iron Limited.
- Advised Statoil on the acquisition of unconventional shale oil assets in the Northern Territory and Queensland.
- Advising Moonies Hill Energy on the development of its A$400 million Flat Rocks Wind Farm in Western Australia's South-West.
Professional qualifications. Victoria, 1995; Western Australia, 1997; New South Wales, 2003
Areas of practice. Environment; aboriginal law; carbon emissions; energy and resources.
- Advising a global resources company on business as usual environmental licensing matters in relation to its operations in Western and South Australia.
- Advising Comcast Inc on its investment in Universal Studios Japan, focusing on the environmental and operational issues associated with the Universal Studios theme park in Osaka.
- Advising the lender on the project financing of a 13MW PV solar plant and 5.4MW lithium battery fringe-of-grid project (with ARENA grant funding) in far north Queensland, Australia.