Environment Protection Act 1970 and Litter Act 1987

99 Pages·2000·0.77 MB·English

by  Simon Pryor

August 2000
FINAL REPORT
Environment Protection Act 1970
and Litter Act 1987
National Competition Policy Review
The Allen Consulting Group Pty Ltd
ACN 007 061 930
Melbourne
4th Floor, 128 Exhibition St
Melbourne Victoria 3000
Telephone: [phone]
Facsimile: (61-3) 9654 6363
Email: [email protected]
Sydney
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Sydney New South Wales 2000
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Canberra
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Canberra ACT 2600
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Facsimile: (61-2) 6230 0149
Online
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Website: www.allenconsult.com.au
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Table of Contents
Executive Summary i
Chapter One 1
Background to the Review 1
1.1 The Legislation under Review 1
1.2 Review Methodology 2
1.3 Stakeholder Consultation 3
Chapter Two 4
Conceptual Framework 4
2.1 National Competition Policy 4
2.2 Regulation and Environment Protection 8
Chapter Three 13
The Environment Protection Act 13
3.1 Overview of Legislation 13
3.2 Markets Affected by Environment Regulation in Victoria 14
3.3 Preliminary Assessment of the Act 14
Chapter Four 16
Objectives of the Act 16
4.1 Overview 16
4.2 Objectives of the Legislation 16
Chapter Five 21
Powers of EPA 21
5.1 Overview 21
5.2 Powers of EPA to Recommend Policies and Regulations 21
5.3 Use of Economic Instruments 30
Chapter Six 33
Regulation of Premises 33
6.1 Overview of the Regulations 33
6.2 Scheduled Premises 34
6.3 Works Approvals 35
6.4 Licences 42
6.5 The Accredited Licensee Scheme 48
6.6 Environment Protection Levy 50
6.7 Financial Assurance 52
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Chapter Seven 55
Management of Waste 55
7.1 Overview 55
7.2 Prescribed Waste 55
7.3 Transport of Waste 56
7.4 Industry Waste Reduction Agreements 59
7.5 Landfill Levy 62
Chapter Eight 65
Appointment of Auditors 65
8.1 Appointment of Environmental Auditors 65
8.2 Appointment of Motor Vehicle Testers 68
Chapter Nine 70
Enforcement 70
9.1 Overview 70
9.2 Infringement Notices and Prosecutions 70
Chapter Ten 76
Regulation of Septic Tanks and Sewage Treatment 76
10.1 Regulating Alternative Waste Management Products and Systems 76
Chapter Eleven 79
Overlapping with other Regulation 79
Chapter Twelve 81
The Litter Act 1987 81
12.1 Overview of the Legislation 81
12.2 Offences and Penalties 81
Chapter Thirteen 85
Concluding Remarks 85
Appendix A 87
Terms of Reference 87
Appendix B 89
Policies and Regulations 89
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Executive Summary
About the Review
This review of the Environment Protection Act 1970 and the Litter Act 1987 was
commissioned by the Victorian Environment Protection Authority (EPA) and
Department of Natural Resources and Environment. The review is part of the National
Competition Policy (NCP) legislation review program endorsed by the Commonwealth
and all State and Territory governments in the intergovernmental Competition
Principles Agreement.
EPA and DNRE appointed The Allen Consulting Group to conduct the review in early
1999. The review was designated a Model 4 review which does not require public
consultation according to the then Victorian Government(cid:213)s Guidelines for the Review
of Legislative Restrictions on Competition. Nevertheless, stakeholders from industry,
community and environment groups were encouraged to participate in roundtable
consultations and to provide written submissions. A Discussion Paper was released
that raised the core issues discussed in this report.
Focus of the Review
There are many policy issues that will arise in a review of environment regulation.
These issues include use of the appropriate policy principles and objectives, use of
economic or regulatory instruments, issues of enforcement, dispute resolution
procedures, access to information, extent of public and industry participation in policy
formation, etc.
The focus of this review is on competition policy(cid:209)that is, the principle that legislation
must not impose a restriction on competition unless there is a net public benefit in
doing so.
Many of the issues raised by stakeholders during the review which are of a broader focus
than competition policy are worthy of further discussion and are discussed at times
throughout the report, such as questions of third party enforcement of the Act. Many of
these matters are the subject of discussion in ongoing forums between EPA, industry
and the community.
Issues, Conclusions and Recommendations
Since its introduction in 1970, the Environment Protection Act has been designed as
(cid:212)umbrella(cid:213) legislation covering all types of air, land, and water/sea pollution. The
numerous additional or amended clauses now in the Act reflect changes in environment
regulation since 1970. The Litter Act regulates the disposal of litter in Victoria.
Table 1 summarises the competition issues and conclusions and recommendations that
have arisen as a result of this review.
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Table 1
Issues, Conclusions and Recommendations
Chapter Subsection Competition issue Conclusions / Recommendations
4. Objectives Objectives The objectives of the legislation are not clearly The objectives of the Act should be clearly stated to
of the Act stated. The absence of a stated objective in the provide clarity to industry, the community, and the
Act is not a restriction on competition. However, EPA. The objectives should be developed with
one of the principles of competition policy reference to the principles listed in the
legislative reviews is to clearly identify the Intergovernmental Agreement on the Environment,
objectives of the legislation. This also accords the principles of competition policy and the
with good legislative design. objectives used in similar Acts in other jurisdictions.
5. Powers of Powers of EPA EPA has a considerable degree of discretion in EPA, as the authority with expertise and experience
the EPA to recommend creating policies and regulations and in environment management, is the body that is best
policies and administering the Act. From a competition policy placed to create SEPPs, IWMPs and regulations. To
make regulations viewpoint, EPA could potentially use this the extent possible, policy and regulation creation
discretion to inappropriately target a particular should be undertaken in a transparent manner that
industry or individual companies or type of maximises industry and public input.
pollution. This may be anti-competitive. To avoid
the possibility of discretion resulting in anti- Pollution sources, whether from point or diffuse
competitive outcomes certain checks and sources, should be treated equitably. Furthermore,
balances should be used. point source polluters, through existing fees and
levies, should not be required to subsidise regulation
and monitoring of diffuse source pollution. Possible
fees or levies on diffuse source polluters should be
considered where practicable.
Powers of EPA Economic instruments attempt to address market The use of economic instruments should be made
to use economic failure by accounting for external costs. The clearly available to EPA under the Act. The
instruments powers of the EPA under the Act to use development of an economic measure should be
economic instruments are unclear. treated in the same manner as the development of a
regulation(cid:209)the objectives of the instrument should
be clear; an impact statement should be prepared;
and the measure should be periodically reviewed.
6. Regulation Works approvals The requirement for works approval restricts the The requirement for works approval is justified
of premises undertaking of works subject to the conditions set under the precautionary principle. The competition
by EPA. restriction is outweighed by the benefits of certainty
to industry and the community.
Works approvals The works approval fee is an added cost As an initial measure, the fee structure should be
fee imposed on certain industries. The fee is revised to cap the fee as a proportion of works for
calculated according to the user pays principle, small firms to no greater than 5 per cent of the value
however it is based on the size of the works of the works. Further down the track, the fee for
which may not be an accurate proxy for the cost works approvals should be calculated based on a
of EPA(cid:213)s resources. reflection of user pays principles that more closely
matches the time and financial cost of EPA
resources, rather than on the size of the works.
Changes to fee calculation should be considered
when the Fees Regulations are reviewed in the near
future.
Works approval The potential delays of the process are an added Whilst the four month limit is appropriate for the
process cost imposed on certain industries (estimated to most complex of processes, EPA should consider a
occur in 10 to 15 per cent of approvals). This shorter allowable maximum processing period for
could potentially place them at a disadvantage to less complex cases.
the producers of less regulated competing
products or substitutes, or competitors from other
states.
Licensing Licensing as a regulatory tool is a fundamental The licensing system is justified on public benefit
restriction on competition because it dictates who grounds.
can operate a business, by restricting the
activities of a business and prohibiting those There are no restrictions on who can obtain a
firms that cannot meet the requirements of the licence other than meeting standards which are
licence from operating. designed to protect the environment.
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Chapter Subsection Competition issue Conclusions / Recommendations
Licence fees The charging of licence fees can be argued to The case for increasing the levels of the existing
restrict competition by adding to the cost of load—based licensing scheme could be considered
production of certain activities, in particular when the Fees Regulations are reviewed. However,
compared to activities regulated in alternative the present system already provides incentives for
ways. An issue is whether the fees should be set pollution reduction, and there may be other less
at a level that is greater than cost recovery and costly means of reducing pollution, such as through
therefore include an incentive to limit polluting greater communication of the benefits of cleaner
activities (eg a load—based licensing scheme). production to industry.
The Accredited The low number of participants in the scheme The scheme should be made more attractive to firms
Licensee suggests that the conditions for participation may of all sizes. EPA should consider options for
Scheme (ALS) be restrictive or that the perceived benefits of communicating the benefits of ALS and should also
participation are low. examine whether there are benefits in developing
an alternative or modified scheme for smaller firms.
Smaller companies are at a disadvantage as it is
proportionally more expensive to institute the
management systems required to participate in
the scheme.
Environment Whilst not a significant restriction on competition The levy should be reviewed with the purpose of
Protection Levy in itself, the objective of the levy is not clear in more clearly defining its objectives (and
the Act. The levy is imposed on selected effectiveness in meeting those objectives), abolished
scheduled businesses. There is no flexibility in or incorporated into the licence fee.
the levy to cater for individual circumstances.
Financial The requirement for financial assurance imposes Although it is likely that companies would insure
assurance a cost on companies due to the cost of funds. against liability of environmental hazard anyway,
the risk that this may not occur, added to the
potential delays and costs of litigation, are sufficient
to justify the retention of financial assurance
requirements. This is more a regulatory design issue
rather than a competition policy issue.
7. Management Prescribed waste Stakeholder reservations were expressed about This is an ongoing issue between industry and EPA
of waste some of the wastes that have been prescribed in that should be dealt with in established forums. The
the regulations. discussion should be mindful of any competition
policy issues that may arise from prescribing each
type of waste. This is more a regulatory design issue
rather than a competition policy issue.
Transport of The requirement for a permit is a restriction on There are no restrictions on who can obtain a permit
waste competition as it restricts who can transport other than meeting standards which are designed to
waste. protect the environment from spills and leakages.
The restriction passes the public benefit test under
the precautionary principle. The option of making a
permit part of a licence, and therefore combining
approval processes, should be made available to
help to reduce administration costs. Greater use of
electronic technology should be a high priority to
reduce compliance and administration costs.
Increased levels of enforcement, or periodic
(cid:212)blitzes(cid:213), should also be considered to monitor
compliance.
Industry waste There are some industries that are not covered IWRAs are an appropriate tool for waste reduction
reduction by IWRAs. This has to be seen in the context that and should continue to be developed where
agreements agreements are not mandatory (although EPA agreements currently do not exist at a state-level or
has (cid:212)persuasive(cid:213) powers under the Act), so it is nationally. Rigorous analysis of the economic and
not appropriate to imply a legislative competition public benefit justifications for IWRAs should
restriction. continue to be undertaken by both EPA and the
industry.
IWRAs are one of a number of instruments for
controlling and reducing waste, from national
agreements and industry codes through to licence or
notice requirements. It is difficult to evaluate the
effect of waste reduction agreements in Victoria
purely by an examination of IWRAs because of the
existence of these other similar instruments.
Landfill levy The levy is an impost on waste managers and The objectives of the landfill levy to reduce waste
producers, although it constitutes a relatively and provide funds for waste management and
small cost as a proportion of landfill costs and reduction processes should be made clearer in the
total waste management costs. The difference in Act. The economic justification for the metro/rural
the rate imposed on waste disposed at difference in fees, if any, should be made clear. If
metropolitan and rural landfill sites is an anomaly no such justification can be made, the differential
that needs to be justified. should be eliminated.
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Chapter Subsection Competition issue Conclusions / Recommendations
8. Appointment Appropriateness EPA-required environmental audits are a The assessment criteria do not appear to impose any
of auditors of assessment significant portion of the environmental audit unjustifiable restrictions and the process for
criteria market. While EPA does not regulate the selection appears to be largely transparent.
profession of environmental auditor as such, it
does stipulate who can be an accredited
environmental auditor for the purposes of
undertaking EPA-required audits. The audits
are a significant source of business for some
environmental auditors. EPA accreditation may
also give an auditor a competitive advantage in
undertaking other environmental audit work not
required by EPA eg some voluntary audits,
because of the credibility of EPA accreditation.
Therefore, it is important that EPA adopt
selection criteria that do not restrict competition
on unjustifiable grounds.
Regulatory force While the Act includes the provision that allows To ensure the present principles are observed in
of assessment for the appointment of auditors and penalties future, the Act should be amended to include a
guidelines for providing false or misleading information, provision for the appointment of auditors, which
there are no provisions in the Act that govern would set out general criteria for appointment,
the appointment process itself. consistent with competition policy principles. More
specific criteria should continue to be published in
the Guidelines. This is more a regulatory design
issue rather than a competition policy issue.
Potential conflict The requirement for auditors to reveal their There should be a requirement in the Act that
of interest conflicts of interests would provide a clear auditors reveal any potential conflicts of interest in
benefit and meet community concerns in terms undertaking an audit required by the Act. This is
of transparency. It would complement existing more a regulatory design issue rather than a
strong deterrents under the Act in the form of competition policy issue.
severe penalties for which auditors are
personally liable.
Appointment of Potentially, a restriction on competition could Requirements on applicants do not contain any
motor vehicle arise due to inappropriate requirements for unreasonable standards.
noise testers EPA accreditation or if there is a restriction on
the number of accredited testers. EPA does not restrict the number of Accredited
Noise Testers so applicants need only meet the
requirements of EPA to become accredited.
No changes are recommended.
9. Enforcement Infringement The issue of notices is a concern for An analysis of the issue of infringement notices did
notices competition policy if they are not served not reveal any competition policy concerns. No
according to the principles outlined in EPA(cid:213)s changes are recommended.
enforcement policy, ie they need to be fair,
predictable and consistent.
Enforcement and In terms of competition policy, EPA(cid:213)s Stakeholders did not raise any examples where this
third party monopoly on enforcement is primarily a cause was the case and there were no submissions from
prosecution for concern if it is seen to be industry claiming unfair enforcement.
discriminatory(cid:209)therefore anti-competitive.
The availability of third party enforcement is a
If companies are obtaining an unfair advantage policy decision for government rather than a
from (cid:212)selective(cid:213) enforcement of the Act or a competition issue. There does not appear to be
general lack of enforcement of the Act then it significant evidence from the review that the
may be suitable for third party prosecution to current approach is not effective. There are risks of
occur or some other response such as an higher transaction costs from third party
increase in funding for prosecutions by EPA. enforcement.
10. Regulation Lack of clear It is claimed that providers of some alternative This is not a legislative restriction, but one caused by
of septic tanks guidelines for products to septic tanks, such as composting local councils(cid:213) lack of knowledge about alternative
and sewage municipal toilets and grey water systems, cannot compete systems. EPA should expand its role as the delegated
treatment councils because, although they have been approved for authority to assist local councils to better understand
use by EPA, there are no clear guidelines for alternative systems to septic tanks.
their use. The absence of such guidelines has
acted effectively as a barrier to entry because
local councils are unwilling to issue specific
on-site permits if they are uncertain about the
alternative systems.
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Chapter Subsection Competition issue Conclusions / Recommendations
10. Regulation Conflict between Provisions under the Water Act permit water The suggestion to transfer the regulatory function
of septic tanks the regulatory authorities to force premises to connect to that currently resides with the water authorities to
and sewage and provider sewerage systems constructed by those the EPA would sit well with existing regulations for
treatment (cont.) roles of water authorities (and even make a capital septic tanks and should be considered in the NCP
authorities contribution toward those systems) . These Review of the Water Act. It is not perceived that the
provisions will be the subject of a separate regulatory function would lead to any competition
competition review of the Water Act. issues under the auspices of the EPA because the
EPA is not in the business of installing or maintaining
sewerage systems.
11. Overlapping Costs of Overlapping regulations impose additional The impact of new regulations on the overall
with other overlapping compliance costs. Often these costs are regulatory burden should be assessed, where
regulation regulation proportionally greater for small businesses, and appropriate, under EPA(cid:213)s Protocol for the
may even constitute an effective barrier to Development of Regulations and the Preparation of
entry. Regulatory Impact Statements.
Sometimes these overlaps are necessary to ensure
protection of employees, the environment and the
community. However, where possible, streamlining
of regulations should be considered. This is more a
broader regulatory design issue rather than a
competition policy issue.
12. The Litter Restrictions on Some provisions of the Act, such as those that Restrictions under the Act are justified by a public
Act activities prohibit placing advertising leaflets on motor benefit.
vehicles, may also be seen to be placing
competitive restrictions on smaller operators
who cannot afford major electronic advertising
campaigns.
Strengthening the Some stakeholders supported making the Litter The proposal to incorporate the Litter Act in the
Act Act a more forceful piece of legislation, Environment Protection Act is supported. This is
possibly by incorporating the Litter Act in the more an issue of regulatory design rather than
Environment Protection Act. competition policy.
Some activities Stakeholders raised some activities that should Some of those acts are offences under case law, but
should be be offences under the Act, eg, deposit of the government may wish to consider their inclusion
included in the household or commercial rubbish in a public in the Act. If so, then these should comply with
Act rubbish bin. competition policy principles.
Stakeholder Views
Overall, there was largely agreement among stakeholders that restrictions on
competition due to environmental regulation under the Act can be justified on a public
benefits basis given the externalities involved in the regulated activities. There was
relatively little interest in the review by many stakeholders, with only a few major
issues raised. This was taken to reflect the general stakeholder view that both Acts are
largely working and that the approach to the administration of the legislation by the
EPA is seen as appropriate.
Conclusions
The Environment Protection Act is an example of (cid:210)umbrella(cid:211) legislation designed to
regulate an array of activities under a common theme. In many cases environmental
regulation is very case specific for technological, economic or ecological reasons, which
justifies the level of discretion awarded to the Regulator (the EPA) under the Act. A
number of stakeholders put forward proposals to substantially increase the powers or
coverage of the Act. While these were analysed on their merits, some of these (such as
major new taxes) are more in the realm of major policy changes.
Putting the detailed recommendations aside, the main conclusions of the review were
that both acts substantially comply with competition principles (or would with
relatively minor changes) and that a greater level of prescription of the powers of the
EPA is unlikely to provide for more efficient regulation in many cases.
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Chapter One
Background to the Review
This review of the Environment Protection Act 1970 and the Litter Act 1987 was
commissioned by the Victorian Environment Protection Authority (EPA) and
Department of Natural Resources and Environment (DNRE). The review is part of the
National Competition Policy (NCP) legislation review program endorsed by the
Commonwealth and all State and Territory governments in the intergovernmental
Competition Principles Agreement.
EPA and DNRE selected The Allen Consulting Group to conduct the review.
1.1 The Legislation under Review
The Environment Protection Act is the primary legislation for the protection of the
environment in Victoria. The Act provides the legal framework for air, water and land
protection and the regulation of noise pollution. It also provides for the enforcement of
penalties upon firms and individuals that breach the Act. The Act establishes EPA as a
statutory authority and provides it with a range of functions including setting statutory
policies, conducting research, providing information and education to the public,
monitoring pollution, performing inspections and issuing licences, work approvals,
permits and pollution abatement notices.
The deposit of litter in Victoria is regulated by the Litter Act. This Act details
unacceptable disposal of litter and provides for the enforcement of penalties for
individuals and firms in breach of the Act.
This report discusses the principles of competition policy and environment protection
policy, outlines the legislation under review, and then reviews a set of competition
policy issues that were raised in a Discussion Paper (that was released publicly), in
meetings with key stakeholders and from stakeholder submissions. The main issues
raised in this review were:
• the clarity of the objectives of the Act;
• the discretion of EPA to make policies and regulations and enforce the Act;
• provisions to require occupiers of certain premises to apply for and act in
accordance with works approvals and licences issued by EPA;
• provisions which allow EPA to require persons or firms to enter into waste
reduction agreements, and requirements for transport certification for some wastes;
• provisions for the appointment of environmental auditors and analysts and
provisions for the appointment of approved testers of motor vehicles by EPA;
• provisions for EPA to charge and collect levies;
• the regulation of alternative waste management products and systems; and
• the objectives and the enforcement of the Litter Act, and justification for restrictions
in the Act.
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