9.2 NATIONAL OR STATE MANAGEMENT?

The question of which jurisdiction should have the carriage of law reform in relation to ballast water in Australia is fundamental. It is complicated, however, by the fact that there are two different types of shipping- domestic and international - with two different management jurisdictions which must be taken into account.

Ballast water management of international shipping in Australian waters is supervised by AQIS. AQIS does not accept responsibility for the regulation of domestic shipping on the basis that the Commonwealth's jurisdiction is restricted to the international barrier⁴¹³

Ballast water management of domestic shipping is regulated by local authorities. In Victoria for example, ballast water from domestic vessels is regulated by the EPA. The EPA has advised the Committee that;

...the management of ballast water arising from international shipping is primarily the responsibility of AQIS, the management of domestic ballast water is less well defined.

This stems from a belief that Victoria is unable to legislate extra-territorially⁴¹⁴

The net result is that neither the states and territories nor the Commonwealth take full responsibility for all ships entering Australian port waters.

The Committee considers it important that the two propositions underlying this dual responsibility - 'international barrier' and 'extra-territoriality' - are addressed as questions of law in order to gain a clearer perspective on which governments are able to take responsibility for which aspects of the problem.

9.2.1 Extra-territorial powers of states

The issue of the extra-territorial powers of the states is relevant in determining the extent to which states may regulate ballast water operations outside state limits. This is relevant, for example, to the imposition of compulsory ballast management practices for vessels which intend to visit Victorian waters but which must perform the required operations while still outside those waters (eg. Exchange of ballast while on the high seas and ballast uptake practices in foreign ports).

In the Coastal Waters (State Powers) Act 1980, the Commonwealth ceded to the states the power to legislate in relation to coastal waters to 3 nautical miles from the coast. In s 7(b), the Act expressly preserved the right of states to legislate extra-territorially. The general constitutional principle in relation to state extra-territorial legislation was that states could only legislate to regulate affairs outside their borders if that legislation was for the peace, order and good government of the stateiii. That principle was enshrined in legislation in s 2(1) of the Australia Acts.

The Committee has received legal advice that ballast operations outside Victorian coastal waters are sufficiently connected to the peace, order and good government of the state to justify extra-territorial legislation in relation to them⁴¹⁵

Accordingly, the Committee considers that the lead Victorian agency -currently the EPA - could extend its regulatory jurisdiction to international shipping if other regulatory mechanisms were thought to be inadequate. If any such Victorian extra-territorial legislation was inconsistent with federal measures, the issue would then become a constitutional one to be resolved under s 109 of the Commonwealth Constitution with the federal law prevailing.

Legal advice furnished to the Committee indicates that at present there is no inconsistency with existing Commonwealth legislation⁴¹⁶ In these circumstances, there are no valid reasons not to enact Victorian ballast water legislation with extra-territorial effect. In the event that the Commonwealth challenges this interpretation, Victoria could justifiably argue that it is not the Commonwealth's intention to `cover the field' of ballast water regulation as its legislation targets only international shipping.

9.2.2 Federal jurisdiction over domestic shipping

AQIS believes that while the quarantine power in s 51(ix) of the Commonwealth Constitution gives the Commonwealth power to legislate in relation to international shipping, coastal domestic shipping remains within the province of the states⁴¹⁷ This approach ignores the trade and commerce power under s 51(I) of the Constitution which allows the Commonwealth to make laws with respect to trade and commerce with other countries and among the states. This is extended by s 98 of the Constitution to cover navigation and shipping.

There has been much judicial interpretation of these provisions, but the basic approach of the High Court has been to hold a relatively open view on what constitutes trade and commerce, while maintaining a sharp distinction between interstate and international trade on the one hand, and intrastate trade on the other⁴¹⁸ The High Court has also accepted that the power conferred by s 51(I) extends to activities which are ancillary or incidental to trade and commerceiv. Given that trade has been construed as the movement of goods across state and national lines and that shipping is one manner of achieving this, the Committee believes that the Commonwealth has the constitutional power under s 51(I) to regulate issues incidental to interstate shipping, such as ballast water⁴¹⁹

The Committee concludes, therefore, that the Commonwealth has the power to legislate regarding ballast water controls on both interstate and international shipping, subject to the guarantee of free trade between the states created under s 92 of the Constitution. The only factor which would be outside the scope of Commonwealth regulation would be intrastate shipping⁴²⁰

9.2.3 Preferable jurisdiction

The Committee believes that the current division between domestic and international shipping is not conducive to a cohesive and comprehensive ballast water management scheme, and that the value of taking such an approach needs to be questioned rather than simply asserted as correct.

When considering the risks posed by a ship's ballast water, it is largely irrelevant whether a vessel is entering port from overseas or from another Australian port - the important issue is whether that vessel's history of ballast water uptake and/or non-compliance with management schemes is sufficient for it to be considered a risk. From a port perspective, the operational requirements of vessels are the same regardless of a "coastal" or "international" distinction. In addition, it was pointed out to the Committee by the Victorian Channels Authority, that problems of regulation could be compounded because a vessel classed as `domestic' one day, may change trading patterns the next if chartered for an international voyage and would then be classified as `international'⁴²¹

With regard to systems of ballast regulation requiring some form of risk assessment, the Committee believes that it would be both impractical and inefficient to have two sets of risk assessments carried out in a single port; that is, international vessels overseen by AQIS and coastal shipping overseen by state authorities. For example, vessels would have to direct ballast water information documentation to two different agencies (depending on the type of ship visit) and the port authority would have to liaise with two agencies regarding risk assessment results.

The Committee considers that the current emphasis on dividing all shipping entering the same ports into either `international' or `domestic' is an approach which focuses less on a remedy to the problem than on established but questionable interpretation of its jurisdictional aspects. Because there is no legal impediment to state management of international shipping or federal management of domestic shipping, the Committee believes that the current distinction is somewhat artificial.

The Committee concludes, therefore, that the management of ballast water for shipping in Australia should not be a divided responsibility, but should be carried out either by the Commonwealth exclusively or by states exclusively.

9.2.4 Uniformity of ballast water management

In the course of its Inquiry, the Committee has heard much evidence of the preference for uniformity of ballast water management across the states. This uniformity would be achieved through national regulation with the cooperative participation of the states and territories in accordance with federal measures. The Committee sees the advantages of this approach as twofold:

· there would be little or no duplication of effort and so costs to government would be minimised; and

· there would be minimal inconvenience to the shipping industry in understanding and observing different regulations in each port of call within Australia, which should in turn benefit the economy of the port state by minimising costs associated with regulatory intervention.

Conversely, implementing a uniform system of ballast management nationwide may have a number of disadvantages. The main problems include the time delays associated with procuring agreement on appropriate measures. The Committee notes, that since the Inquiry commenced, at least three further serious exotic marine species have been found in Port Phillip Bay (northern Pacific sea star, Codium, Japanese kelp).

It has been estimated that the Ballast Water Annex to the MARPOL Convention will take approximately 3 years to come into force internationally and that it could take up to ten years for it to be converted into State legislation⁴²² The Committee also notes that it is the intention of the Annex that ballast water provisions are optional⁴²³ and that signatory nations to MARPOL will not automatically be bound to the Ballast Water Annex. Draft Regulation 4.2 states that⁴²⁴

Any port State may exempt any ship from compliance with all or part of these regulations in an area under its jurisdiction.

Australia has supported this position because it is believed that several member states are unlikely to support a mandatory Annex⁴²⁵ Member states will therefore have the option of making the provisions of the Annex mandatory for shipping in their waters.

The Committee is also aware that if differing environmentally effective measures are implemented at state level, this may have the potential effect of diverting shipping from protected ports into unprotected ports and simply displacing the environmental problem from one place to another. The Committee believes that it is therefore desirable to maintain consistency of protection across Australian ports, which returns the Committee to the uniformity argument. The Committee emphasises, however, that uniformity of management could be achieved by application of the Australian (International) Guidelines as a basis for ballast management schemes either at the state or national level.

The Committee considers that in the long term, national regulation of ballast water with the cooperative participation of the states and territories is the preferred option. As noted above, this could be achieved by the Commonwealth applying its trade and commerce powers to the regulation of domestic shipping. There is no reason, however, why individual states and territories could not, in the intervening period, introduce management strategies based on uniform principles as a matter of urgency. This could be achieved through the states' powers to legislate extra-territorially. If, and when, the Commonwealth ultimately decides to coordinate ballast water management nationally, and given the consistent application of the Australian (International) Guidelines, there would be little potential for conflict or inconsistency.

The Committee was advised by the EPA⁴²⁶that the Australian Maritime Safety Authority (AMSA) also considers it desirable that the states and territories act in concert regarding ballast water enforcement measures. If, however, a preventative regime is necessary in the short term, the states and territories could agree to a model based on the present Australian (International) Guidelines, or those developed by AQIS for coastal waters. The EPA is also of the opinion that in view of the potential delay in the introduction of the MARPOL Annex, it would be open to the states and territories to legislate to apply the Guidelines as they are now⁴²⁷ The EPA also believes that⁴²⁸

..to avoid a major loss of time in what is an urgent issue the states should anticipate Commonwealth and international conventions and regulations and implement State measures, which can be done much more rapidly than waiting for MARPOL .

The Committee notes that if, in the future, the Commonwealth coordinates ballast water management nationally, it is likely that the states and territories will still be responsible for administering ballast water management systems in their ports. Any infrastructure already in place in Victoria would therefore remain an essential part of ballast water management in the State.

The Committee recognises the important role which AQIS continues to play in the management of ballast water in Australia and believes that AQIS has a key role in assisting the states and territories in the coordination of ballast water management. In addition to coordinating research nationally and providing advice and direction to the states and territories, the Committee believes that in the event that State monitoring of international vessels identifies a 'high risk' international vessel which has not complied with Australian (International) Guidelines, AQIS may prefer to exert its quarantine powers to deal with the vessel concerned. Continued cooperation between AQIS, the states and territories, industry and research organisations is essential to ensure effective management of the issue of exotic organism transfer via ships.

In the absence of clearly mandated powers, and given the need for the states and territories to prevent further incursions of exotic marine organisms, the Committee finds as a matter of principle that a local, Victorian-based response is urgently required. This principle leads the Committee to conclude:

Recommendation 1 That Victoria, in consultation and cooperation with AQIS, implement a Victorian Ballast Water Management System in all Victorian commercial ports to deal with both international and domestic shipping.

The Committee now turns its attention to the key elements that might constitute a Victorian Ballast Water Management System.

iii Trustees, Executors and Agency Co Ltd v Federal Commissioner of Taxation (1933) 49 CLR 220 at 240-1, per Evatt J; Broken Hill South Ltd v Commissioner of Taxation (NSW) (1937) 56 CLR 337 at 375 per Dixon J.

iv Grannal v Marrickville Margarine Pty Ltd (1955) 93 CLR 55.