1. BRIEF HISTORY OF THE PRINCIPLE - A KEY TO ITS MEANING

• German usage the first - linked to best technology;
• developed as a tool within the international context to deal with major issues such as marine pollution particularly in the North Sea; ozone and (more recently) greenhouse gases;
• international formulation intentionally general and capable of varied interpretations;
• integration into national legislation patchy in Europe;
• US international position "no regrets policy" ie: take protective environmental action when such actions are fully justified or make economic sense in their own right. Due to economic pressures US EPA policies and procedures now risk assessment based.

2. DEVELOPMENT WITHIN THE AUSTRALIAN CONTEXT

• Importation of the international formulation virtually unchanged into national policy statements eg: National Strategy for Ecologically Sustainable Development ("ESD"); and into 1990 Intergovernmental Agreement on the Environment ("IGAE") - see Annexure A;
• Adoption as part of ESD objective in NSW Protection of the Environment Administration Act 1991 ("PEA Act") - see Annexure B; .
• No extensive discussion of meaning or implications of principle in NSW parliament prior to introduction of PEA Act;
• Incorporation of the concept indirectly into legislation over many years eg: "likely harm to the environment" part of statutory offences - see Environmental Offences & Penalties Act (NSW) and Environment Protection Act (Vic);
• Measured and more expansive formulation of the principle in draft South Australian Environment Protection Bill - see Annexure C.

3. POSSIBLE MEANINGS OF THE PRINCIPLE IN GENERAL TERMS

• a range of definitions from "dealing cautiously with risk" through "using best available technology at reasonable cost" to "best available technology" to "shifting the burden of proof to show no harm" to "no development";
• a concept which is linked to ideas of "acceptable risk" - different perceptions of risk; different community values;
• a concept which challenges scientific understanding and research. When is science/technology "uncertain"?
• a major issue is whether cost effectiveness is part of the concept, and, if so, under whose determination;
• review of IGAE, Agenda 21 formulations - See Annexure D.

4. LEGAL MEANING AND JUDICIAL INTERPRETATION OF THE CONCEPT WITHIN THE NSW PROTECTION OF THE ENVIRONMENT ADMINISTRATION ACT

• Judicial attitudes to and legal principles of review of administrative decisions; - in the US - in Australia - generally "hands off";
• Judicial approach to the concept in the PEA Act will be one where the court is unlikely to intervene: imprecise meaning of ESD itself combined with difficulty of assessing activities as outside proper scope of objective likely to lead to a reluctance to find licences granted invalidly see Brown v. EPA (1992 78 LGERA 119);
• Third party rights to bring legal proceedings (with the consent of the Land and Environment Court) for breach of any Act causing or likely to cause environmental harm raises issue of third parties challenging EPA licences or development approvals inconsistent with PEA objectives;
• Value judgments and lack of definition in concepts of "threat", "serious and irreversible harm"; "measure to prevent environmental degradation" - much room for expert disagreement;
• Extent of economic considerations in formulation is unclear.

5. IMPLICATIONS FOR INDUSTRY

• "Parenthood" formulation - as formulated the principle is hard to criticise; no-one can afford to be viewed as "anti-environment";
• Imprecise meaning - intentionally imprecise within original international context but incompatible with Australian tradition of statutory interpretation;
• At present, agenda of industry and government concerning the principle may be compatible as revealed in IGAE formulation, Agenda 21 and Intersectoral Report of ESD Working Groups. Refinement of principle and incorporation into other statutes without appreciation of consequences may be dangerous for example if an Act provided that licences may be granted on the basis of certain criteria (a)-(g) but if there is any doubt about the desirability of granting the licence then, on the basis of the precautionary principle, the licence should not be granted. This would effectively not only shift the burden of proof but also allow the regulator an extremely wide discretion which would be difficult to challenge. A better approach to the issue of a licence may be one involving monitoring, frequent review of the licence, etc;
• wide administrative discretions combined with third party rights to bring legal proceedings lead to greater risks of litigation with consequential uncertainty.

6. INDUSTRY'S MAJOR CONCERNS

• Uncertainty and risks of legal challenge affect and discourage capital investment decisions. In particular, financiers require certainty. At present, formulation too ambiguous. Perhaps, impossible for a legal definition ever to be certain enough because concept involves other value judgements eg acceptance of risk. Issues of agreed processes arise. Industry needs greater certainty of outcomes and processes;
• When dealing with scientific uncertainty, caution is acceptable. Shifting the onus of proof to require proof of absence of harm is impossible. All development will impact on the environment;
• Incorporation into legislation as a specific requirement or fallback position (eg if in doubt about permit, refuse) rather than as an objective effectively shifts burden of proof;
• Project development a mix of complex factors (social, technical, environmental, political). Processes can be transparent but fixed or blanket legal requirements reflecting a precautionary approach eg: fixed discount factor or financial bonds, are incompatible with site or project specific focus of industry and different to commercial risk assessment approach;
• Disinclination of courts to intervene at this stage may change with more specific formulation and incorporation of the principle;
• Role of the public - community right to know legislation reflective of growing importance of community involvement;
• Will the principle mean different things in different industries and in different contexts eg: new and existing projects?
• Can a uniform meaning or application of processes be agreed with different regulators?

7. ENVIRONMENTAL MANAGEMENT AND THE PRECAUTIONARY PRINCIPLE: PROBLEMS TO PONDER

• Existing due diligence programs - do they need to be amended? Does the "precautionary principle" go beyond due diligence or does due diligence itself extend beyond compliance?
• Audit programs - should the precautionary principle be factored in, and if so, how?
• Application for licences - how should issues of compliance by regulators with the principle be dealt with? What responsibility does the licence-holder have?
• New developments - what impact will the principle have on the EIA process? ANZECC discussion paper on guidelines and criteria for EIA in Australia raises issue of confidence of prediction of impacts as a key factor to be taken into account in the EIA process.

8. PRECAUTIONARY PRINCIPLE MANAGEMENT TOOLS FOR INDUSTRY

• Risk Assessment - should special "discount rates" for the environment be adopted ie: should the risk to the environment be assessed and then a "margin of safety" be added to the assessment to take into account the uncertainty of the full impact on the environment? Can "safe minimum standards" be set or will there always be a level of uncertainty?
• Economics - are bonds a viable tool in this context? Should a developer lodge a sum of money to cover uncertain environmental impact?
• A Holistic Approach - will "environment off-sets" work ie: can a developer impacting one ecosystem make amends by preserving or restoring another?
• Development Responsibility - can the developer/proponent take and demonstrate satisfactory responsibility for a project through a mixture of risk assessment, bonds, off-sets and monitoring?
• What role should the public have in the process of risk assessment and acceptance?
• Will an incremental approach to development with constant monitoring, adjustment and revaluation be acceptable and constitute sufficient application of the principle?

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