Federal Constitution

The terms of the treaties should now be construed. The terms set out in “the Climate Change Convention” may arguably be considered a “broad objective with little precise content and permitting widely divergent policies by parties”. The objectives listed out in Article 4 are too broad with no precise regime for the Commonwealth to follow and as such, no international obligations was created. However, the Kyoto Protocol did impose such an international obligation to Australia, narrowing its objective to reduce or stabilise greenhouse emission to a maximum numerical value of 8% increase above its 1990 emissions level.

The next issue upon contention is whether the legislation was ‘appropriate and adapted’ to the implementation of the obligations embodied in the treaty.

Having a limited and set amount of emissions unit and distributing them via the means of a national auction raises questions as to whether the legislation is reasonable proportionate to the obligations embodied in the treaty. A profitability objective is evident and can be explained via an economics argument – that demand exceeds supply. The resultant effect of a national auction is the inevitable overpricing of the right to pollute. As such, the Commonwealth legislation did not meet the primary objectives of the treaty as it merely shifts the emission of greenhouse gases between large and financially dominant companies. Also, the utilisation of emission units would develop economical incentives to exhaust outstanding units of emission and hence liable entities would be producing more greenhouse gas. Further, Australia, being one of the 40 countries listed under Annex 1, is well in excess of the maximum of 8% above its 1990 emissions levels. The legislation neglects to satisfy the objective of national reduction or stabilisation of greenhouse gases. It was thus not reasonably capable of being considered ‘appropriate and adapted’ to the purpose of implementation of the obligations of the treaty.

In addition, the Conformity Doctrine dictates that legislation will not be authorised as an exercise of treaty implementation under s51(xxix) of the Constitution if it plainly undermines the object and purpose of the treaty. 

Consequently it is not within power of ‘external affairs’ and hence may arguably be invalid.

The prospect of success for LFP to challenge the constitutional validity of the CPRA is low. As long as the subject matter possesses sufficient connection to the law, according to the dual characterisation principle, the law may be characterised under other heads of power simultaneously. Hence, although LPF may establish that the CPRA is invalid under external affairs, for it to succeed, it must be able to show that the CPRA is invalid under the other heads of power as well which, as aforementioned, is unpromising.

2. Whether, assuming the validity of the Carbon Pollution Reduction Act 2010 (Cth), there is any basis for Leather Forever Pty Ltd to argue that it is exempt from the requirement that it surrender one emissions unit per tonne of carbon dioxide produced by reason of its compliance with the Noxious Substances (Small Business Protection) Act 1982(NSW)

The issue of contention in deciding whether there is an exemption is whether there exists any inconsistency between the two valid laws.  S151 of the CPRA stipulates that failure to surrender the requisite emissions units constitutes a criminal offence, whereas s15 Noxious Substance Act (NSA) provides no penalty where the rate of emission is below 3 tonnes per annum. If one enactment makes or acts upon as lawful that which the other makes unlawful, the two are to that extent inconsistent.

Although s252 CPRA does not limit the concurrent operation of any law of a state and that in the case of any inconsistency the state shall prevail, a restrictive provision as such does not undermine the enforceability of s109 Constitution. Hence, the second component of s252 CPRA that the Commonwealth law did not intend to “cover the field” and be exclusive, the only law in that topic, will be severed even though the CPRA is valid due to it being unconstitutional in contradicting with s109. Ultimately the application of s109 Constitution would thus mean that the Commonwealth legislation would prevail over the State legislation meaning that Leather Forever Pty Ltd (LFP) will not be exempt from the requirements of surrendering emission units. The State legislation renders invalid by s109 Constitution.

However, one possible argument in favour of LFP is that the 2 valid laws should be read together in a compatible way. The court is often able to preserve the validity of the provision in its other applications by reading it down so as not to apply where it cannot validly do so, while still having a meaningful operation in other cases that are within power. In this sense, s151 and s252 CPRA, viewed in conjunction with s15 NSA, may be read as imposing a criminal penalty only in the absence and failure to surrender emission units for excessive carbon dioxide emission, that is, greater than 3 tonnes per annum. This achieves the objective of controlling emission as well as protecting the life of small businesses by not imposing an unreasonable cost burden upon them that might require them to close down as in the present case.

Furthermore, s51(i) does not give Commonwealth power over intrastate trade and commerce.[r v burgess] LFP, being a small business trading exclusively within NSW, should prima facie not be subject to the penalties and obligations set out in CPRA.  Viewed alternatively, s252 CPRA recognised a clear intention of Parliament of “clearing the field”. This may suggest that the two legislations should be read down such that both laws may operate together to eliminate any inconsistencies. The only means of achieving this is by interpreting CPRA as applying to only trades and commerce among states, and NSA to only apply to trades and commerce within states. As a result, Nigel would not be bound by CPRA and hence exempt from the emission unit requirement. This argument is only possible given that the CPRA within the power of s51(i) of the Constitution and not other heads of power.