Coalition controlled committee questions legality of new ARENA regulations

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A Coalition controlled parliamentary oversight committee has raised the prospect that new regulations issued for the Australian Renewable Energy Agency may be illegal, seeking answers from federal energy minister Angus Taylor.

The new ARENA regulations, issued by Taylor in May, were reviewed by the Senate Standing Committee for the Scrutiny of Delegated Legislation. This oversight committee has the responsibility to review regulations and other instruments issued by government ministers.

Taylor has relied upon provisions within ARENA’s legislation to issue new regulations that task the renewable energy funding body with providing financial support to a range of Morrison government policies, including those relating to carbon capture and storage, soil carbon, and sustainable transport.

The expanded remit extends to providing funding to an undefined category of ‘low emissions technologies’ that officials from the Department of Industry Science Energy and Resources told a hearing of senate estimates that “conceivably it could include gas projects“.

Chair of the oversight committee, Liberal senator Concetta Fierravanti-Wells, has written to Taylor seeking answers to questions about whether new regulations issued by Taylor expanding the functions of ARENA were legally valid.

“From a scrutiny perspective, the committee is concerned that the instrument is expanding the remit of the ARENA beyond what was envisaged by parliament when the Act was passed. The committee notes that the object of the Act is to improve the competitiveness and supply of renewable energy in Australia,” the letter says.

The letter from Fierravanti-Wells says that the committee suggested that rather than trying to change ARENA’s functions through regulations – which do not need to be approved by parliament – that the better approach would be for Taylor to formally make amendments to ARENA’s Act, that would need to win approval from both houses of parliament.

“The committee is concerned that the instrument deals with the significant matter of expanding the jurisdiction of the ARENA from investing in renewable energy technologies to programs relating to energy efficiency and low-emissions technology. Given the scope and impact of the measures, from a scrutiny perspective, it is the committee’s view that they are more appropriate for parliamentary enactment,” the letter says.

The operation of primary legislation, such as acts of parliament, may be supplemented by regulations and other instruments issued by government ministers. Such regulations are generally used to flesh out some of the more specific details of how legislation and government agencies may operate – but well established legal principles require that any such regulations must be consistent with the primary legislation.

If a minister issues regulations that stray too far beyond the powers of primary legislation – they may be struck down as legally invalid.

Fierravanti-Wells also raised concerns about the lack of consultation with relevant stakeholders, who are likely to be affected by the new regulations. The oversight committee appeared to reject an explanation provided by Taylor when issuing the regulations that the changes were minor and so public consultation was not necessary.

“The committee considers that the measures provided for in the instrument are more than machinery in nature, given that they substantially expand the jurisdiction of the ARENA to invest public funds. As such, from a scrutiny perspective, it is the committee’s view that stakeholders and experts should have been consulted in relation to the instrument,” the letter adds.

Taylor has until 1 July to respond to the letter.

Taylor has argued that the regulations were necessary to enable ARENA to manage a number of new emissions reduction initiatives awarded funding in recent federal budgets. But many within the clean energy sector have raised concerns that ARENA’s funding would be redirected away from renewable energy projects.

The former Gillard government established ARENA to provide dedicated funding support for renewable energy research and demonstration projects. Its legislation makes clear that the purpose of the agency is to support the increased uptake of renewable energy and to help make renewable energy technologies more commercially competitive.

Both federal Labor and the Australian Greens have raised questions about the validity of Taylor’s new regulations and whether it was possible for Taylor to task ARENA to provide funding to such a wide range of programs unrelated to renewable energy technologies.

Attempts by both parties to overturn the regulations failed in a vote in the House of Representatives on Tuesday, with the Morrison government using its majority to block the move.

Labor’s energy spokesperson Chris Bowen and Australian Greens leader Adam Bandt each raised the prospect that the regulations could be open to legal challenges.

“If you support this regulation, which is manifestly illegal, if you allow this regulation to continue, whatever you think about renewable energy, you are opening up a legal minefield,” Bandt told parliament on Tuesday. “You are putting the public on the hook for legal bill after legal bill and challenge after challenge to every grant that is made under this program, including grants that might be made elsewhere, because it is so manifestly unlawful to say that coal and gas are now renewable.”

The Smart Energy Council has also indicated that it was considering launching a legal challenge to the regulations.

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