Enforceable undertakings

We can take corrective action for serious or continuing non-compliance. This can include accepting enforceable undertakings.

About enforceable undertakings

An enforceable undertaking is a legally binding agreement between us and a participant. They are one of a number of remedies available to address non-compliance and avoid the need for legal action. Enforceable undertakings are written statements that a person or organisation will do, or stop doing, certain things. For example, if a participant created more renewable energy certificates than they were entitled to under the Renewable Energy Target, they might have to surrender a number of certificates within a set timeframe.

Undertakings are an effective and efficient way to address non-compliance without court proceedings. We may accept an enforceable undertaking at the same time as taking other regulatory actions.

Enforceable undertakings are enforceable through the Federal Court. Breaching an undertaking may result in legal action.

Current enforceable undertakings

There is a public interest in ensuring scheme participants are aware of, and informed about, enforcement action. This helps educate scheme participants about their obligations and promotes deterrence.

We are legally obliged to publish undertakings under the CFI Act and REE Act. We may publish undertakings under the NGER Act.

We will not enter into an enforceable undertaking on the basis that its terms or parties will be confidential. We will make all details of the enforceable undertaking available to the public.

How an undertaking works

An undertaking can be initiated by a scheme participant or result from a discussion with us.

Enforceable undertakings are voluntary. We can't require a scheme participant to enter into an enforceable undertaking. A scheme participant can't make us accept one.

We consider each case on its merits and address each instance of non-compliance based on the circumstances. Scheme participants can't use the undertaking to obtain a more favourable outcome. They also can't use it to avoid our punitive enforcement action.

An enforceable undertaking is different from an undertaking to a court:

• we don't have to start court action before we can accept an undertaking
• if the participant doesn't comply, we can take other regulatory actions or apply to the court for orders.

If we accept an undertaking, it shouldn't be considered as precedent for any future actions we may take.

Entering into an undertaking

1. The scheme participant discusses the request with the regulatory officer assigned to their case
2. An authorised senior official will decide whether to accept or reject the offer
3. The undertaking is drafted and we will negotiate terms with the scheme participant
4. The undertaking takes effect when both parties have signed it

When we accept enforceable undertakings

We will consider a range of factors when deciding if we will approve an offer to enter an undertaking. This includes:

• the impact of the non-compliance on the objectives of the relevant scheme
• the compliance history of the scheme participant
• if the scheme participant is responsible for the non-compliance
• the extent to which the scheme participant is genuinely solving the problem
• whether the scheme participant is making a full commitment to ongoing compliance
• whether the problem has stopped
• whether the agreed outcome would parallel the orders we would seek if enforcement in a court was sought
• our ability to properly monitor compliance with the undertaking.

If the non-compliance was intentional, criminal, or fraudulent, we will likely take stronger compliance action.

Examples of undertakings we may accept

We tailor every undertaking to the specific circumstances.

REE Act

Example 1: The scheme participant improperly created small-scale technology certificates (STCs) that didn't comply with regulation 20AC of the REE Regulations. They also didn't comply with section 24A of the REE Act.

The scheme participant undertakes to:

• develop and implement increased compliance procedures prior to any STC creation
• rectify all existing non-compliance
• comply with all requirements under the Act and the Regulations
• report monthly to us on rectification work and include evidence of work done in accordance with agreed timeframes.

Example 2: The scheme participant agrees to hire an accredited installer to re-inspect the solar PV systems we identified. The inspection must ensure that the systems comply with Solar Accreditation Australia requirements, as well as all state and local requirements.

CFI Act

The scheme participant undertakes to:

• obtain and resubmit the correct eligible interest holder consent forms for the relevant projects
• review internal records management procedures.

NGER Act

The scheme participant undertakes to submit and complete a schedule of technical works. This aims to resolve the issues regarding measurements of flow and concentration. These issues resulted in non-compliant reporting.

Terms of an undertaking

We only accept an enforceable undertaking if the scheme participant makes a commitment to stop the non-compliant conduct. They must also promise not to start it again.

Undertakings must:

• state the name of the scheme participant and the date we accepted the undertaking(s)
• address the non-compliance and specify what caused the non-compliance
• outline clear and measurable actions they will take to prevent or address the non-compliance
• where relevant, rectify any damage or negligence caused by the non-compliance
• make sure that the timeframes for completing specific tasks fit within the agreed duration of the undertaking
• include satisfactory mechanisms for monitoring, reporting and auditing
• be signed by the scheme participant (e.g. company director) and accepted by us.

Changing an undertaking

A scheme participant can't withdraw or vary an undertaking without our agreement.

We will only consider a request to vary an enforceable undertaking if:

• the variation will not alter the spirit of the original undertaking
• compliance with the original undertaking is found to be impractical
• there has been a material change in the circumstances which led to the original undertaking being given.

Monitoring compliance with undertakings

Scheme participants should monitor and report to us on their compliance with the undertaking. They must provide us progress updates, as required by the undertaking.

The undertaking will usually include a compliance monitoring plan. The scheme participant may have to provide evidence of implementation and independent compliance reports.

Completing an undertaking

When we are satisfied that all parts of the undertaking are complete, we will send the scheme participant a letter to confirm. We will also update the public register of undertakings.

Once completed, we expect the scheme participant to maintain high levels of compliance. If more non-compliance occurs, we will take stronger regulatory action in line with our compliance approach.

Breaches of enforceable undertakings

If we believe a scheme participant has not complied with a term of an enforceable undertaking, we will contact the participant.

We may also take further regulatory actions, including:

• applying to the court to enforce the undertaking and make any other appropriate order
• increase scrutiny of applications for benefits (e.g. small-scale technology certificates, large-scale generation certificates, Australian carbon credit units)
• suspension from our schemes
• removal from our schemes
• civil or criminal prosecution.

We will usually only pursue court action if the breach is significant, or involves a failure to perform an obligation by a certain time.

The court can:

• direct the person to comply with the undertaking
• direct the person to transfer money to us
• direct the person to compensate any other person who has suffered loss or damage as a result of the breach
• make any other order that the court considers appropriate.

If the scheme participant does not comply with the court order they will be in​ contempt of court.