Australia: Implementation of the Upper Hunter air quality monitoring network - implications for energy producers

On 15 February 2013, the Protection of the Environment Operations (General) Amendment (Upper Hunter Air Quality Monitoring Network) Regulation 2013 (NSW) (Amending Regulation) commenced. The aim of the Amending Regulation is to monitor the impact of certain coal mining and electricity generating activities on air quality in the Upper Hunter Region.


Prior to the commencement of the Amending Regulation, operators of coal mines and coal-powered electricity generators in the Singleton and Muswellbrook local government areas funded the Upper Hunter Air Quality Monitoring Network (Network) under two voluntary Deeds of Agreement (Deeds). The Deeds were negotiated between the Environment Protection Authority (EPA) and various holders of environment protection licences (EPL Holders) for the operation of coal mines and coal-powered electricity generators. Under these Deeds, the EPL Holders agreed to fund the capital cost of establishing the Network, including an annual operating cost.

However, the Deeds expired in December 2012 and there was no obligation on the licence holders to renew their obligations. As a result, a future funding model was needed for the ongoing operation of the Network. The EPA determined that renegotiating the Deeds could lead to inequities if individual EPL Holders refused to sign new Deeds. The EPA determined that the Amending Regulation was a "more equitable" funding arrangement.

Under Part 9.3C of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act), the EPA is authorised to develop and implement environmental monitoring programs which aim to monitor the impact of activities on the environment and human health. The Network has been implemented under Part 9.3C of the POEO Act as it is an environmental monitoring program which aims to monitor regional air quality in the Upper Hunter Region.


The Amending Regulation makes provision for:

  1. a requirement on EPL Holders permitted to carry out coal mining and the generation of electricity (other than wind and solar power) in the Upper Hunter Region to pay a levy towards the cost of the Network;
  2. the calculation of the amount of the levy payable by the EPL Holders;
  3. a requirement for EPL Holders to provide emissions information to the EPA;
  4. persons authorised by the EPA to enter land owned and occupied by the EPL Holders for the purposes of the operation of the Network; and
  5. a requirement for the EPA to make air quality data available on its website and to publicly report on the Network.

The Amending Regulation is established under Chapter 5A of the Protection of the Environment Operations (General) Regulation 2009 (NSW).

Funding of the Network

Each EPL Holder is required to pay an environmental monitoring levy, comprising an annual levy, and in certain circumstances, a construction levy. The annual levy seeks to cover the operating costs of the Network while the construction levy will cover the cost of infrastructure on a needs basis.

The annual levy

The annual levy will be payable on or around 1 July each year and will fund the operating costs of the Network, including costs associated with the use of equipment and infrastructure and administration costs.

The levy is calculated in accordance with the 'polluter pays' principle and the formulas are set out in clauses 79D (for electricity generation EPL Holders) and 79E (for coal mining EPL Holders) of the Amending Regulation. The formulas take into account:

  1. the estimated cost of the Network;
  2. the emissions from the premises of individual EPL Holders in the previous levy period; and
  3. the sum of emissions from all licensed premises during the previous levy period.

Once the actual cost of the Network is known each year, adjustments are made in accordance with clause 79G of the Amending Regulation by either increasing or decreasing the levy as appropriate.

The construction levy

The construction levy is payable by an individual EPL Holder (or multiple EPL Holders on a proportionate basis) if the EPA is of the opinion that it is necessary for a new facility to monitor air quality because of the activities or works carried out by the EPL Holder. In this circumstance, the EPL Holder(s) is required to contribute towards the costs of construction of the new facility and any costs associated with its construction.

Previously, under the Deeds, the EPL Holders were required to pay for the set up costs of monitoring stations, irrespective of whether or not the monitoring stations actually monitored the air quality of the activities and works carried out by the EPL Holder. Following the commencement of the Amending Regulation, EPL Holders will now only be required to pay a contribution towards the costs of monitoring stations if its activities and works are being monitored.

Application of licence conditions

The conditions of environment protection licences (EPLs) for coal mining and electricity generation will be amended to require the following information to be provided to the EPA by 30 September of each year:

  1. the amount of particulate matter emitted from the premises during the previous year;
  2. the amount of oxides of nitrogen and sulphur dioxide emitted from the premises during the previous year; and
  3. in the case of coal mining, the amount of material moved at the premises to which the licence applies during the previous year.

In addition, EPL Holders will be required to:

  1. permit persons authorised by the EPA to enter the land owned or occupied by the EPL Holder; and
  2. provide such reasonable assistance and facilities as may be required by that person, for the purposes of, or in connection with, the operation of the Network.

The EPA's obligations

The Amending Regulation requires the EPA to:

  1. prepare a report each year that contains an analysis of the results of the air quality monitoring carried out under the Network;
  2. arrange and report on an independent audit of the Network to review its efficiency and cost effectiveness every five years;
  3. ensure that all data from the Network and EPA reports are accessible on the internet; and
  4. calculate the cost of the Network in each levy period.


The Amending Regulation seeks to formalise, at a statutory level, the operating and funding arrangements of the Network. The Network will continue to be operated independently by the EPA, but aims to operate with greater security, transparency and equity. Coal miners and electricity generators will need to be aware of these amendments, and consequential amendments to the conditions of the relevant EPL, in order to understand their responsibilities in respect of paying the annual levy (and, in some cases, the construction levy) and reporting requirements.

This amendment underpins the success of the Network as a means of informing the community in real time about the air quality of the region.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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