As the COVID-19 crisis continues to evolve rapidly, governments are taking increasingly restrictive measures on the types of activities that may be undertaken, when activities may be conducted, with whom the activities may be conducted and for how long. These measures are now also being imposed on large companies and organisations that run businesses in various sectors. Unfortunately, there is still much uncertainty as to what further restrictive measures will be imposed and for how long those measures will be in force before being removed or at least eased.
Importantly, in Australia, many environmental regulators have already taken steps to emphasise that companies operating in all sectors, including waste, utilities/energy, mining, industry, resources and so on, must continue to ensure that they are complying with environmental obligations under law and statutory approvals or licences.
In this alert, we identify three things that all companies and organisations should be considering in terms of managing compliance with environmental obligations during the COVID-19 crisis. It is critical that entities keep monitoring these factors having regard to the rapidly evolving and changing regulation of COVID-19 by Australian governments.
Is your business permitted under law to continue operating during the period of crisis?
The Australian Government, as well as the State/Territory Governments, have all introduced restrictions on the carrying out of businesses in various sectors (subject to some restrictions). For example, restaurants and cafés (excluding takeaway services), casinos and entertainment venues and gymnasiums are all currently restricted from opening at all. Each of the Australian jurisdictions have "essential services" legislation or emergency/health legislation that is enabling the relevant Governments to make directions or orders as to restricting or permitting (as the case may be) the carrying out of particular businesses.
At this stage, each of the Australian governments have permitted the continuation of particular businesses or services as "essential services" and have also indicated a preparedness to issue exemptions to businesses to continue to operate in circumstances where it is unclear whether they qualify under law as an "essential service" and it is essential for that business to continue to operate. For example, in NSW, an "essential service" is defined in s 4(1) of the Essential Services Act 1988 to include the production, supply or distribution of any form of energy, power or fuel, and the provision of garbage, sanitary cleaning or sewerage services.
Businesses should consider whether they are permitted to continue operating during the period of crisis.
If my business is permitted to continue operating, how might supply chains be affected during the period of crisis?
At present, the interstate movement of people in Australia is becoming increasingly restricted.
Almost all State and Territory Governments in Australia have imposed requirements on incoming persons to self-quarantine for 14 days upon arrival in their State or Territory, unless an exemption is granted. Typically, exemptions from the need to self-quarantine for 14 days are only being given for people who are providing "essential services" which is defined in various ways in the relevant directions or orders creating the exemptions. This could potentially impact businesses who, for example, have engaged contractors or specialist experts located in other States/Territories to travel to the State/Territory in which the business conducts operations to carry out particular work (e.g. specialist contractors who are engaged to carry out maintenance and upgrade works on pollution control structures at a facility that are required to be maintained and operated in a proper and efficient manner under the conditions of a statutory licence, experts engaged to conduct independent reviews of contamination at a site, and so on).
While States and Territory Governments are continuing to generally permit the interstate transport of goods via freight trucks, rail and air cargo, it may be the case that the governments look to place greater restrictions on the interstate transport of goods in the future. Depending on these restrictions, it may be possible that the restrictions could extent to particular products or goods that are relied upon to discharge particular environmental obligations (e.g. chemicals that are needed for the purpose of maintaining particular plant or equipment at a facility).
Businesses should continue to consider how supply chains for goods and services are being affected during the period of crisis and whether any disruption to supply chains will impact on their ability to comply with specific environmental obligations under law or a statutory licence.
If my business is permitted to continue operating, what impact does this have on obligations for environmental compliance?
In recent days, a number of environmental regulators from various Australian State and Territories have made announcements about COVID-19.
- the regulators are implementing measures that enable it to continue its regulatory oversight role and responsibilities under environmental legislation;
- businesses that are subject to regulation (e.g. in the form of environmental licences) are expected to continue to comply with all environmental obligations they have under law or licence conditions, including in relation to maintaining and operating pollution control equipment, and notifying pollution incidents if they occur;
- businesses should prepare and implement "business continuity plans" that details what measures they will take or implement to enable ongoing compliance with legal obligations, integrating all necessary advice from Government health departments on managing the health risks associated with COVID-19 (e.g. social distancing protocols, self-isolation and quarantine measures, best practices for hygiene, no gatherings in crib rooms and so on); and
- business are encouraged to maintain open and regular lines of communication with regulators - in particular, regulators are strongly recommending that businesses contact them sooner rather than later to discuss any anticipated significant risks to being able to comply with environmental obligations, if they need advice on preparing their own "business continuity plans" or if they wish to apply for (temporary) exemptions from the need to comply with particular environmental obligations.
It is interesting to note that the US EPA has recently released guidance on how it will approach enforcement of environmental laws across the US during the COVID-19 crisis. The US EPA has indicated that it will exercise its enforcement discretion and not pursue enforcement or stipulated penalties in Agency orders for compliance shortcomings caused by COVID-19. Relief will extend to compliance monitoring and reporting, training requirements, reporting obligations and other milestones under government settlement agreements and orders, violations of 90 day hazardous waste storage requirements and exceedances of applicable permit standards. For more detail on the US EPA's approach situation see here.
Potentially, environmental regulators in the various Australian jurisdictions may, in light of learnings from other jurisdictions throughout the world, announce further and similar guidance to the US EPA in the coming weeks on how it will approach enforcement of environmental obligations under laws and statutory licences during the COVID-19 crisis. At this stage, some planning regulators in the various Australian jurisdictions have introduced laws to by-pass normal planning laws and controls so as to permit the carrying out of essential developments to aid the management of COVID-19: see, for example, in NSW. However, it appears that none of the environmental regulators have sought to outline in detail, in a similar manner to the US EPA, as to how they will approach enforcement during the COVID-19 crisis beyond indicating an expectation that businesses are to comply with their environmental obligations under law and statutory licences.
Management of environmental obligations during the COVID-19 crisis
It is clear that Australian environmental regulators expect businesses to continue to comply with all existing environmental obligations, whether under statute or statutory licences. As a consequence, businesses should consider whether COVID-19 presents a problem in terms of complying with specific obligations and, to the extent that it does, consider how that problem can be managed and engage with the relevant regulators as appropriate.
We can assist clients with the preparation or review of "business continuity plans" for managing compliance with environmental obligations during the COVID-19 crisis, including in relation to considering legal issues such as:
- communication with relevant regulators about issues of complying with environmental obligations in light of COVID-19 and applying for or procuring exemptions either from the need to comply with particular obligations or to permit things that are currently not permitted (in circumstances where such exemptions are available)
- devising protocols for keeping records on management of environmental compliance issues, including potential statutory defences that may be available to businesses for situations where they are practically incapable of complying with a particular environmental obligation (e.g. due diligence)
- seeking temporary variations to obligations such as monitoring and reporting, particularly where such monitoring is redundant, not essential and/or difficult to undertake without exposing people to significant risks of exposure to COVID-19 or other health or safety risks
- the ability for businesses to procure goods and services from suppliers and contractors during the period of crisis, particularly where required in order to meet environmental obligations.
We are keeping a close eye on developments and announcements concerning the management of COVID-19 in Australia, including how such developments may impact on compliance with environmental obligations.
Baker McKenzie's Environmental Markets Group is available to answer any questions you might have and provide legal support and counsel as you navigate the environmental issues that arise as the COVID-19 crisis continues to evolve.