There are serious consequences for failure to comply with the obligations set out in the Clean Energy Act 2011 (CE Act) and the National Greenhouse Energy Reporting Act 2007 (NGER Act). The CE Act sets out a wide range of obligations in relation to carbon and also establishes the Clean Energy Regulator (Regulator), which has a broad set of powers.
To ensure compliance, the Regulator has wide powers to investigate and enforce the CE Act and the NGER Act. For more serious and continuing offences, the Regulator will take corrective action. This may involve the issuing of infringement notices, enforceable undertakings or even pecuniary penalties.
Under the CE Act there are general obligations to keep records about liability and compliance with obligations. The Regulator under the CE Act has the power to obtain information (including records). The powers extend to the requirement to produce documents through to an inspection of premises. The inspection powers may only be used with the consent of the occupier or under a warrant obtained from the Magistrates Court to enter the premises.
The enforcement powers vary depending on the nature and seriousness of the offence committed. Enforcement powers range from administrative penalties to substantial civil penalties and criminal sanctions for dishonesty and fraudulent behaviour.
Audit powers under the National Greenhouse and Energy Reporting Act 2007 (NGER Act)
The NGER Act provides for audits of companies required to report under the NGER Act. The purpose of these is to determine the extent to which a company (based on the reports) has complied with the requirements of the NGER Act and the Regulations. There are two ways that the Regulator can initiate audits where it suspects breaches of the legislation. The Regulator can compel a corporation to be audited if there are reasonable grounds to suspect that a registered corporation has not met, is not meeting or is proposing not to meet its obligations. However where there is no suspicion of non-compliance, the Regulator may still organise an audit that forms part of a broader compliance strategy. Written notices must be issued in both instances.
Response to contraventions
The Australian Government Clean Energy Regulator’s Compliance, Education and Enforcement Policy indicates that the Regulator will use targeted education, where appropriate, when responding to contraventions. The policy has a strong focus on educating participants as opposed to using punitive action. The Regulator is offering a compliance carrot, by primarily focusing on making participants aware of their statutory obligations, and providing them with the appropriate education and guidance to meet these obligations in the future. However where it is necessary, contraventions will attract automatic fines, an example being a failure to pay a shortfall charge (imposed on a company that does not have sufficient carbon units or that surrenders insufficient carbon units) under the CE Act.
The Regulator will publish details of infringement notices where it has commenced court action against a corporation. Under the CE Act, the Regulator has an obligation to publish certain types of information, such as administrative penalties or when an enforceable undertaking is accepted.
Implications for businesses
Given the enforcement powers available to the Regulator under the CE Act and the NGER Act, it is important that companies required to comply with these Acts have the necessary business mechanisms (financial, accounting and legal) in place. It is much better for a company (and its directors) to accept the compliance carrot and to ensure appropriate mechanisms are in place to record and report data rather than receive the compliance stick from the Regulator.