9.6 COMPLIANCE WITH VICTORIA'S BALLAST WATER MANAGEMENT SYSTEM

9.6.1 Sanctions against offenders

The Committee believes it is important to identify those who must bear the responsibility for sanctions in the event that non-compliance with elements of the Victorian Ballast Water Management System occurs. In the case of shipping, the Committee believes that although the prime candidates are the shipowner and/or ship's master, the nature of operation of shipowners' mutual protection and indemnity insurance may significantly reduce the deterrent effect of financial sanctions directed against shipowners and masters.

Almost all commercial ships are entered in mutual protection and indemnity associations known as P and I Clubs. These provide insurance cover against a very wide range of liabilities arising out of shipping operations, including liability for pollution fines imposed on owners and masters⁴⁵⁷ As a result, the impact of any fine imposed on the shipowner or ship master is not borne by the shipowner alone, but is effectively spread among all the members of the shipowner's P and I Club. A persistent offender will find that its P and I Club "calls", as premiums are known in mutual insurance associations, will be increased by the club's management, but even then the fine is marginal and indirect, rather than targeted directly against the shipowner⁴⁵⁸ As a result, the Committee considers that only very large maximum fines, such as those found in the oil pollution legislation, have any prospect of acting as an economic deterrent to shipowners.

Although not specifically designed to address ballast water issues, the Environment Protection Act 1970 provides a sufficient basis for effective regulation of ballast water discharge (Chapter 5). The EPA has pro-active powers under s 62B to give directions where it is reasonably believed that a condition of pollution of imminent danger to the environment is likely to arise. This would have a significant role in a risk assessment based ballast water management scheme. Where difficulties may arise by the notion of 'imminent danger' an amended version of s 62B might extend the EPA's powers to give directions whenever pollution (in the sense of 'potential harm') is threatened, whether or not there is imminent danger to the environment. Because pollution is defined as 'potential harm to the environment', s 62B would provide a basis for refusing high-risk ships permission to discharge ballast while in Victorian waters.

Following risk assessment, a vessel deemed to be carrying high risk ballast could be advised that should it discharge ballast while in Victorian waters, it would be in breach of the Act. Such a breach may subject an individual to a fine of up to $20,000, imprisonment, or a fine of up to $1 million for a body corporate, for example, the ship owner. The Committee believes that this course of action should constitute a deterrent to both shipowners and masters, given that s 63 specifically provides that they are personally liable in the case of discharge from a ship. The Committee notes that, because the cost of fines are shared between the members of P and I Clubs, jail sentences may be a stronger deterrent.

The Committee considers that in light of the alternatives available to the EPA, injunctions are not a time- or cost-effective method of regulating ballasting practices. The maximum fines for breach of relevant provisions are not large, and the EPA would be required to go to court every time a suspect ship entered a Victorian port which would be neither effective nor desirable.

There are, however, a number of different avenues through which sanctions can be imposed upon vessels which fail to comply with any aspect of the Victorian Ballast Water Management System. The Committee notes, that in addition to the large penalties available under the Environment Protection Act 1970, other aspects of the proposed Ballast Water Management System provide incentives and deterrents for compliance with the System. For example, vessels which have failed, or have been unable to exchange their ballast water prior to entry to Victoria and which have received a 'high risk' ballast water risk assessment, may be subject to costly delays.

In addition, failure by a vessel to obey a harbour master's instruction not to discharge ballast, in addition to attracting a fine of up to $12,000, may compromise the vessel's future relationship with the port.

Failure to comply with the Victorian Ballast Water Management System as prescribed by SEPPs or regulations to the Environment Protection Act 1970 may also attract penalties. For example, failure to comply with delegated regulations under the Act may result in a maximum fine of $20,000.

Recommendation 9 That the Environment Protection Authority use all appropriate mechanisms available under the Environment Protection Act 1970 and other relevant Victorian legislation to impose sanctions against shipowners and masters for non-compliance with the Victorian Ballast Water Management System.