Amendments to the National Greenhouse and Energy Reporting (NGER) Act 2007, requires a nomination of operational control to be made, in circumstances where more than one person that could reasonably satisfy the operational control test. This is essentially a new requirement and the amendments will take effect on 1 July 2012.

Operational control is central in determining who has the reporting (and carbon price) liability for a facility. Generally speaking it sits with the person that has greatest authority to introduce and implement; operating, OH&S and environmental policies at the facility. This can be quite ambiguous to apply in practice and often causes confusion where more than one organisation is involved in activities at a facility.

Everyone captured under the NGER and Clean Energy Acts will soon have to nominate who has operational control (via a formal process), where it is not immediately clear who has the greatest authority to introduce and implement operating, OH&S and environmental policies. Significant penalties can apply to late and absent nominations.

Don’t go looking in the NGER Act for the amendment, as it will not be added until 1 July 2012 when it comes into effect (the amending legislation is the Clean Energy (Consequential Amendment) Act 2011). That being said there are a few things you need to know now:

  • If operational control is not clear (which it often is not) a formal, joint application must be made where interested parties ‘officially’ nominate who has operational control.
    • In the past, under NGERs, where operational control was ambiguous, reporters would often have a gentleman’s agreement where one party would ‘assume’ operational control and report. Often this would only be as formal as an email or letter confirming such an agreement.
  • Two different due dates apply for nominations:
    • 30 April 2013 for an entity that has to provide an interim emissions number (if an entity emitted >35 ktCO2-e in 2011/12, is likely to emit  >35 ktCO2-e in 2012/13, and had an NGER report submitted for 2011/12 you will need to provided an interim emissions number); and
    • 31 August 2013 where an interim emissions number is not required (<35 ktCO2-e in 2011/12).
  • The amendment comes into effect 1 July 2012, and applies to the 2012/13 compliance year onwards.
  • Penalties can apply for late or absent nominations (1,000 penalty units which is currently equal to $110,000).
  • If no nomination is made, the penalty may apply to all participants and the carbon price liability is divided equally among the participants.
  • Forms and further explanatory materials should be provided in the coming months.

‘So what does this mean for my company?’ You need to start by completing a thorough stock-take of facilities and identify those likely to be affected by the amendment. Some examples might be where:

  • a large contractor is responsible for implementing many of the policies;
  • more than one corporation operates out of the same site; and
  • the facility boundaries are difficult to define.

Essentially it appears the Department of Climate Change and Energy Efficiency (DCCEE) has attempted to formalise liability and remove the ambiguity. We are continuing to liaise with DCCEE on exactly how this might be applied in practice, and some questions still stand, such as:

  • ‘How clear cut does operational control have to be before a nomination is not required?’
  • ‘How will this be enforced?’ and;
  • ‘How does this effect liable entities within the same corporate group?’