A first look at the Product Emissions Standards Bill

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The Product Emissions Standards Bill is here at last; introduced to Parliament on 10th August. With the support of the Government, Labor and the Greens it was declared “non-contentious” and, when its turn came up on a Tuesday it was all finalised by the Senate the next Monday, 9th September. The very next day the Department and around 12 Industry representatives spent a full day locked in a room near Canberra Airport labouring over the details. More on this when it becomes clearer in the next edition.

• It’s an “enabling” Bill. It sets out the powers of the Minister to make Rules and sets out the penalties. Actually, it is four Bills and an Explanatory Memorandum. Download your own copy at https://tinyurl.com/PEBill.
• The real details will come later in the Rules (Regulations). We should get some limited opportunity to comment on the Rules, scheduled for November. They were essentially laid out last January in the Information Paper (http://tinyurl.com/updatepaper).
• The Bill is a bit of a blank cheque and can cover any equipment the Minister chooses to nominate. In other places I have called this the birth of a Clean Air Act in Australia. NRSIEE (non-road spark ignition engines and equipment) is first (petrol only – mowers, etc. and marine engines), but work started three years ago on diesel engines so that will probably follow in two or three years. In the USA, they have emissions laws on locomotives, off road bikes, aircraft and other machinery we have not yet considered in Australia.

• Imports of certain products that are not certified to a certain standard (“certain” will be defined in the Rules)
• Manufacture of certain products that do not have a certain certification label (“certain” will be defined in the Rules)
• Putting a false label on a product (which will carry the highest penalties)
• “Supply” of a product that is not certified OR not labelled (even if it is certified)

“Supply” is a hairy one and is very broadly defined. It includes:
• Displaying or advertising, or even making available
• Sale, swap, gift, lease, loan, hire or hire purchase
• It won’t cover ordinary boat hire or mower rentals as they are not new items
• Part of another thing, like a boat includes a motor, so does a generator
• Includes wholesale or retail
• No consideration (payment) is needed – no money, nothing. Even gifting is banned.

The bottom line is that if someone was planning on stockpiling non-compliant engines, and, after 1 July 2019, transferring these at $0 to another company so they become “used”, it is still considered an offence and a potential hefty fine applies. The transfer at $0 is a gift and still comes under the definition of “supply”, so another loophole slams shut.

There is provision for exemptions. These will be detailed in the Regulations but some of the expected exemptions will be for manufacturers’ pre-production samples and perhaps special applications like fire and rescue.

The maximum penalty for most offences:
• for an individual is 60 Points (x $210 = $12,600)
• for a business is 120 Points (x $210 = $25,200)

The heaviest penalty is reserved for a business caught applying certification labels to a product that is not actually certified (fake labelling). That maximum penalty is 300 points ($63,000) plus of course forfeiture of the machines. However, the Courts rarely impose the maximum fine. In fact, such matters probably won’t go to court. The Bill allows for Infringement Notices: an “on the spot fine” of sorts.

What is not yet clear is the exact amount of these fines. Usually they are set at 20 per cent of the maximum fine. Something like $2,520 for an individual and $5,040 for a business for most offences, and $12,600 for a business that uses fake labels. Technically a container load of 100 engines could mean 100 Infringement Notices, but that is unlikely.

Forfeiture and seizure of the goods will also occur. There is no provision to re-export and the products must be destroyed, not sold. Of course if you are importing non-complaint engines for re-export to PNG or NZ there may be a solution under the Rules. If not, the standard solution is to use Bond Storage.

In Bonded Storage the item technically does not enter Australia. There is no GST and no import duty to be paid. The goods need to stay locked in a separate storage facility (lockup) on your premises or at a licenced Bond Storage facility. Basically, like the Duty-Free Shops at the Airport. Australian Border Force (Customs) manages this and you will need to start the application process now to be ready in time for 1st July if that is what you need. The enforcement is tough too. The infringements are what is termed “Strict Liability”. Basically, “I didn’t know” or “I had no intent to do the wrong thing” are not excuses. There are no offences that can end up with jail time. But non-payment of fines may be another matter.

We have known for a decade that all of this is to be cost neutral to the Government; that is how it’s done these days, but it is still irrational.

You see, the standards were justified based on reduced emissions delivering lower health costs. In 2012 these were calculated at $240 million per annum; the legislation will cost around $1 million to administer each year, so I said, “Send the invoice to the Health Minister, he can keep the $239 million change”, but that idea didn’t fly. I can’t wait to become Emperor so I can change some thinking in Canberra.

So, industry is going to be slugged around $1 million – not much in the scheme of things at around 80cents per lawnmower.

But some in Industry are saying that is not enough. Why? I agree with their insistence that we need enforcement to be tougher than is planned. Weak enforcement just leaves the responsible companies high and dry, surrounded by a sea of illegal machines that slipped though eBay and the like.

The Laws (not just the Rules) will require both importers and suppliers to maintain certain record keeping. We await the details in the Rules when they are released but they are serious with this. An on the spot fine of $3,360 for a hardware store for failing to record their brushcutter sales seems unrealistic so my guess is that only importers and wholesalers will need to keep records. Got any questions? Please ask, your questions will help me as much as you.

At this late stage, Gary has been helping companies sort through the details by joining email conversations and teleconferences with overseas offices. This is a free service to readers, who can contact him via PEA Editor, Elaine Sharman.

Gary Fooks is Chair of the Blue Sky Alliance: a collaboration between the OPEA and the marine engine sector. Gary has been working on small engine emissions standards since 2005 and was announced as the Environment Minister’s Clean Air Champion in 2015.