Offshore Petroleum Resource Management Review
In November 2015, the Federal Government released an interim report of its review of the governing framework for oil and gas resource management in Commonwealth waters (which commenced in 2014).
The Review highlighted issues of a maturing resources industry. As the tenement-holders of mature exploration areas have focused on in-fill resources for existing projects, smaller resource areas are becoming stranded, infrastructure is being prematurely decommissioned and the costs are rising due to global competition.
The Review does not propose any drastic changes to the current framework but makes numerous recommendations, including:
- provide a regular annual report which identifies the current and emerging resource management concerns and a transparent basis for engagement with the industry and the public;
- clear focus on promoting investment in exploration;
- engage with the industry to determine how to better support exploration;
- clear articulation of the regime's processes to provide better transparency for the industry and the public;
- a holistic, rather than title-by-title, approach to development;
- recognise and utilise the latest technology to identity producible modest-sized resources
- establish a clear policy framework for decommission of projects and infrastructure; and
- streamline legislation and administration arrangements to increase efficiency.
The Review identifies four strategic areas in which to implement them:
- move towards a systems-based management of Australia's resources;
- stimulate exploration;
- improve timelines and efficiency of development and production; and
- provide a clear framework for managing post-production commissioning.
The Government sought stakeholder comments on the interim report with the consultation period ending on 28 February 2016. No formal date has been set for delivering the final report to Parliament.
EPBC Act consent for renewal or extension of the term of "prior usage rights" petroleum titles
On 29 February 2016, the Offshore Petroleum and Greenhouse Gas Storage Amendment Bill 2016 received assent. The legislation amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act) to validate past Joint Authority decisions to grant renewals or extensions of "prior usage rights" petroleum titles to correct an administrative oversight.
The amendments will only validate those Joint Authority decisions to grant renewals or extensions of the term of "prior usage rights" titles, where the consent of the Minister was neither sought, nor given under the EPBC Act, and which were made prior to 1 January 2016.
NEW SOUTH WALES
NSW Integrated Mining Policy
The NSW Integrated Mining Policy (IMP) is a whole-of-government project designed to improve the assessment, determination and regulation of significant mining projects.
The IMP was publicly exhibited in stages during 2015 and a brief overview of the documents that were finalised following public consultation is below.
Guidelines for the Economic Assessment of Mining and Coal Seam Gas Proposals – assists applicants with providing the necessary information under section 79C of the Environmental Planning and Assessment Act 1979 (NSW). The guidelines focus on the following two key considerations of a consent authority when determining a development application:
- the collective public interest of households in NSW; and
- the likely impacts of development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality.
The Guidelines also consider the following two key methodologies to inform a consent authority about the likely impacts of a proposal:
- cost-benefit analysis: an assessment of the public interest by estimating the net present value of the project to the NSW community; and
- local effects analysis: an assessment of the likely impacts of the development in the locality.
The Guidelines set out the methodologies, parameters and assumptions for undertaking an economic assessment of a proposed project.
According to the Guidelines, the two key steps to estimate economic value are:
- identifying the physical change in the environmental condition (ie. the duration and extent of impact, whether the change is temporary or permanent or irreversible); and
- estimating the economic value associated with the physical change (using non-market valuation techniques such as choice modelling and benefit transfer where necessary).
Indicative Secretary's Environmental Assessment Requirements – the Indicative Secretary's Environmental Assessment Requirements (SEARs) were prepared with input from the NSW Environment Protection Authority and the Division of Resources and Energy of the Department of Trade and Investment (now the Department of Industry). The Indicative SEARs assist proponents with advance notice of standardised assessment requirements for a development application, an application for an EPA licence and an application for a mining lease.
Key areas of focus include the mine design, particularly in respect of rehabilitation potential and options for post-mining use. This is consistent with the increasing emphasis on lifecycle assessment and compatibility with surrounding land uses.
Mine Application Guideline – major mining projects are typically State significant development, which means they need development consent from the NSW Government, and an Environmental Impact Statement (EIS) will be required.
The Guideline briefly outlines what the NSW Government expects to see in a Preliminary Environmental Assessment (the assessment that guides the preparation of SEARs) and an EIS, providing a more strategic guidance to proponents.
Annual Review Guideline – helps State significant development operators to prepare annual reviews.
Web-based Reporting Guideline – encourages mine operators to electronically publish relevant operational and compliance information on their websites in a clear and transparent manner.
Independent Audit Guideline – ensures that independent audits of State significant developments in NSW have a consistent approach and minimum delivery standard.
Water Regulation Overview – provides an overview of the current policies and regulations in relation to possible water impacts from mining and petroleum developments in NSW
Future IMP reform – further IMP documents are being revised following public consultations, including the following documents that were exhibited during 2015:
- Planning Agreement Guidelines – assists councils and mining companies in negotiating planning agreements for State significant mining developments; and
- Swamp Offsets Policy – addresses the calculation and provision of biodiversity offsets for subsidence impacts of longwall coal mining on upland swamps and associated threatened species.
Metgasco Limited v Minister for Resources and Energy  NSWSC 453
The Supreme Court of NSW addressed, amongst other issues, whether irrelevant considerations had been taken into account by the Minister for Resources and Energy, by his delegate, when his determination to suspend mining operations.
Justice Button considered the meaning of the provision for "genuine and effective community consultation" in the NSW Strategic Regional Land Use Policy Delivery Guidelines.
He held that the failure of a consultation process to actually persuade the community to support a project is an irrelevant consideration for a decision-maker to take into account in determining whether consultation has been genuine and effective, in accordance with the guidelines. Instead, the focus of "effective consultation" is on the quality of the consultation process, as opposed to the outcome.
The Court was not required to determine the merits of the consultation process. However, it did find that "the guidelines are not prescriptive and admit a degree of flexibility depending on the circumstances" and have a "tone of constructive suggestions".
Reduced emphasis on significance of the resource
On 2 September 2015, amendments to State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (NSW) (Mining SEPP) removed clause 12AA of the Mining SEPP, which previously made the significance of the resource the primary consideration under the Mining SEPP for the determination of applications for planning approval of large-scale mining or onshore petroleum projects.
The amendment reflects the legislative requirement for decision-makers to consider the likely environmental, social and economic impacts of a mining development proposal. Under the Environmental Planning and Assessment Act 1979 (NSW) it is clear that economic and social factors as well as environmental factors must be taken into account in assessing an application for planning approval. The removal of clause 12AA does not change that and, in our view, the significance of the resource will remain a relevant consideration.
It's also worth noting that the "principal consideration" requirement in the now repealed clause 12AA only applied to the various considerations in Part 3 of the Mining SEPP, and it did not make the significance of a resource the "principal consideration" of all considerations under the Act.
NSW Government response to the Minerals Industry Action Plan
On 6 November 2015, the NSW Government released its response to the Minerals Industry Action Plan prepared by the Minerals Taskforce. The NSW Minerals Industry Taskforce had published its final "Industry Action Plan: NSW Minerals" in February 2015.
The response addresses a number of reforms undertaken by the NSW Government in 2015, commits to further action and flags recommendations that are unlikely to be adopted.
We outline some key NSW Government responses below.
Faster, more accountable Planning Assessment Commission decisions
The NSW Government declined to remove the PAC or return decision-making to the Minister for Planning. Currently the PAC determines most applications for planning approval for mining projects, under delegation from the Minister for Planning.
Alternatively, the NSW Government's response is to focus on making the NSW planning system more streamlined, accessible, transparent, predictable and balanced. It highlighted that:
- the PAC's assessment timeframes, and its accountability to meet those timeframes, would be made clear;
- an independent expert panel would be set up to advise the NSW Government and the PAC on technical issues; and
- the NSW Government would give the PAC clearer guidance on the application of government policies in determining planning applications.
No lead agency
The NSW Government rejected the recommendation for a single lead agency and instead introduced end-to-end assessment timeframes for mining development applications and the assignment of case managers to work with proponents to facilitate project assessment and minimise delay. It also proposed an inter-departmental panel to co-ordinate agency input on mining applications and develop inter-agency assessment protocols.
Ongoing regulatory reform
The Improved Management of Exploration Regulation (IMER) and Integrated Mining Proposal (IMP) (which we highlighted earlier in this part) are two key policy reforms that the Government has adopted to streamline decision-making processes and address policy gaps as recommended for immediate action by the Taskforce.
The IMER is a risk-based regulatory framework that has reduced 158 resources exploration activity conditions to a standard set of 13 conditions, while maintaining a high level of environmental protections.
The IMP has been released in stages to improve access to information and regulation and assessment of major mining projects.
Lower administrative costs
The NSW Government elected to not to adopt a freeze to the ad valorem royalty rate for 25 years. However, in 2015-16 an internal review will be conducted by the Department of Trade and Investment (Division of Resources and Energy) (now the Department of Industry) in relation to the fees and levies imposed on explorers and mine production companies.
Keeping NSW informed
The Government will regularly report its implementation progress and the impact of actions undertaken in response to the Action Plan to the Department of Industry. Stakeholders and the general public will be able to access consolidated and factual information through various online information hubs, which include:
- Common Ground, launched in June 2015, provides exploration, mining and production titles for minerals, coal, petroleum and gas in NSW; and
- Environmental Data Portal, stage one to be released in July 2016, will provide a single access point for environmental information related to water, land and air currently held by various Government entities.
Land resources legislative reform
On 2 November 2015, the NSW Government's reform package for the regulation of resource exploration and production in NSW received assent.
The package introduced required legislative changes that form part of the recently introduced Improved Management of Exploration Regulation (IMER) framework.
Strategic release of coal and gas exploration areas
The Mining and Petroleum Legislation Amendment (Grant of Coal and Petroleum Prospecting Titles) Act 2015 (NSW) introduced a new system for the granting of various mining and petroleum prospecting titles. Key changes include the:
- designation of "controlled release areas" that will apply to coal;
- introduction of "operational allocation licences" which will only be permitted in limited circumstances as prescribed by the regulations;
- introduction of a mandatory competitive tender process for exploration licences in "controlled release areas" and a broad range of tender assessment criteria, including a commitment to exploration and work programs. All of NSW has been designated as a "controlled release area"; and
- creation of the Advisory Body for Strategic Release to oversee the release of areas for allocation.
However, transitional provisions allow for existing consents and pending applications prior to commencement to be dealt with under the previous regime.
Amendments under the Mining and Petroleum Legislation Amendment (Harmonisation) Act 2015 (NSW) relate to the regulatory framework governing the administration, compliance and enforcement of mining and petroleum titles. Key amendments include:
- an increase in the maximum term of the exploration licence from five to six years;
- a more defined criteria to be applied by the decision-maker when deciding whether to grant, renew, transfer, suspend or cancel a title (eg. minimum financial and technical capacity standards and environmental performance);
- a requirement for prospecting title-holders to obtain an "activity approval" for any prospecting operations that are not exempt development under planning legislation from 1 July 2015;
- the Minister may impose conditions on a title, including a mining lease, will be able to be varied for any reason and at any time with written notice to the title-holder;
- broader investigative and enforcement powers for the Minister and inspectors;
- introduction of a corporate penalty for provision of false and misleading information (maximum penalty of $110,000) and increased penalties in respect of contravening authorisation conditions (maximum penalty of $1 million for a corporation); and
- the ability to enter into enforceable undertakings where there has been an alleged breach of the Mining Act 1992 (NSW) or Petroleum Onshore Act 1991 (NSW).
New land access processes
The Mining and Petroleum Legislation Amendment (Land Access Arbitration) Act 2015 (NSW) gives effect to the recommendations made by Bret Walker SC in his review of the existing access arrangement, negotiation and arbitration processes. Key reforms include:
- a requirement for title-holders and landholders to participate in mediation prior to arbitration and negotiate in good faith;
- the ability for both parties to be legally represented during mediation and arbitration;
- a requirement that the title-holder pay the landholder's reasonable legal costs for each stage of the land access process (up to a specified fee cap);
- a structured and rigorous selection process for the appointment of members to the formal Arbitration Panel by the Minister; and
- the amendment to the definition of "compensable loss" under section 107A of the Petroleum (Onshore) Act 1991 (NSW) which, consistent with section 262 of the Mining Act 1992 (NSW), will include six specific areas of compensable loss, including loss caused, or likely to be caused, by severance of land from other land of the landholder or surface rights of way and easements.
Uniform work health and safety regulation
The Work Health and Safety (Mines and Petroleum) Legislation Amendment (Harmonisation) Act 2015 (NSW) also established a consistent legislative framework for work health and safety across the petroleum and mining sectors.
New Community Consultative Committee Guidelines for State significant projects
The Department of Planning and Environment released its draft Community Consultative Committee Guidelines: State Significant Projects and the public consultation period ended 31 March 2016. The revised guidelines will apply to all new State significant projects in NSW, including major mining projects.
There are eight key differences between the revised guidelines and previous 2007 guidelines
First, a Committee can be established at different stages of a project (for example before an application is lodged) rather than only after approval is given. Previously, a Committee was to be established after approval was given.
It is now an express requirement that the establishment of a Committee will be decided by the Department and will either be included in the:
- Secretary's environmental assessment requirements (SEARs) for the project; or
- conditions of approval for the project.
A Committee may now have a defined life and can be dissolved after a particular stage of the project is completed or if the Committee decides there is little benefit in continuing the operations of the Committee.
There are revised selection criteria for community representatives, to include:
- current residents of the area;
- demonstrated involvement in local community groups and/or activities;
- knowledge and awareness of the project and related issues of concern to the local community;
- an ability to represent the local community and other stakeholders; and
- a willingness to adhere to the Committee's code of conduct;
New selection criteria for environmental organisations now require:
- ..a representative of a recognised environmental organisation;
- knowledge and awareness of the project and related environmental issues of concern to the broader community;
- an ability to represent the environmental concerns of the broader community; and
- a willingness to adhere to the Committee's code of conduct.
There are revised procedures for the establishment of a Committee, including:
- ..a new process for selecting and appointing the Independent Chairperson;
- involving the Independent Chairperson in the selection of community representatives. The Independent Chairperson will now review all applications and provide those applications to the Department along with the recommended candidates; and
- clear procedures for replacing committee members.
A new toolkit contains prescribed form templates to be used in the process of establishing and operating a Committee.
Finally, there is stronger guidance on the conduct of Committee meetings, including a requirement for Committee members to sign a Code of Conduct Agreement, a template of which is contained in the toolkit, and steps for non-compliance with that Code.
Once finalised, the revised guidelines will apply to all new State significant projects where a requirement to establish a Committee is contained in the SEARs for the project conditions of approval.
We understand from discussions with the Department that the revised guidelines may also apply retrospectively to existing projects which require a Committee, however only to the extent of guiding the continued operation of the Committee. The details of how the revised guidelines will apply to existing projects will be clarified further once submissions have been considered and the revised guidelines finalised.
The revised guidelines apply to mining projects, but also to other projects of State significance.
Updated DRE Codes and Guidelines
In March 2016, the NSW Department of Industry (Division of Resources and Energy) released a number of revised Codes and Guidelines as outlined below.
- Exploration reporting: A guide for reporting on exploration and prospecting in New South Wales – assists authority holders in NSW to prepare geoscientific reports and data required by the Mining Act 1992 (NSW) and Mining Regulation 2010 (NSW). The purpose of the guideline is to specify the format, contents and standards required to prepare and submit geoscientific reports and data.
- Exploration Code of Practice: Community Consultation – sets out mandatory requirements and provides title holders with related guidance regarding the expected performance for engagement in adequate, inclusive and appropriate community consultation in relation to the planning for, and conduct of, exploration activities under a prospecting title. The code enables proponents to:
- adopt a risk-based approach to ensure compliance with mandatory requirements related to community consultation;
- commit to measurable performance standards;
- monitor performance and take corrective action if outcomes are not being achieved; and
- keep and maintain relevant records of activities and/or actions.
- Mineral Exploration Drilling: Drilling and Integrity of Petroleum Exploration and Production Wells – provides guidance for drilling for the exploration of coal and minerals and align with the Exploration Code of Practice: Environmental Management.
- Guideline: Enforceable undertakings – outlines the process of obtaining, and general purpose of, an enforceable undertaking under the Mining Act 1992 or Petroleum (Onshore) Act 1991.
- Guideline: Prosecutions – explains prosecution under the Mining Act 1992 (NSW) and the basis for the department making a decision to prosecute offences.
Mine Safety Regulatory Reforms
In May 2016, the Department of Industry (Division of Resources and Energy) issued an update on the implementation of its Mine Safety Regulatory Reform: Incident Prevention Strategy dated 16 February 2016 to outline the mine safety regulatory reforms and provide an overview of future mine safety.
The update details changes to the internal operation of NSW Mine Safety and implementation of:
- a centralised framework for the reporting of all verbal and written notifications of incidents;
- streamlined processes for the lodgement of written notification of incidents through standardised online forms; and
- a human and organisational factors tool kit to be used by NSW Mine Safety in regulatory inspections and investigations, and by industry in reviewing incidents. Comprehensive human and organisational factor training and education packages will also be developed to support industry.
The work of NSW Mine Safety will be shaped by two key programs:
- the Targeted Assessment Plan (TAP) – provides a planned, proactive approach to assessing how effective an operation is overall when it comes to controlling critical risk. A TAP will involve a team of inspectors from various disciplines to assist NSW Mine Safety to determine which mines to visit and which critical risk issues to target; and
- the Targeted Intervention Program (TIP) – provides a responsive approach to assessing how effective critical risks are being managed. A TIP will involve a team of inspectors from various disciplines that will document assessments, engage with mine operators, conduct site visits and monitoring of follow-up activities.
Reforms to environmental assessment and mining (oil and gas) industry
Strategy for oil and gas industry
In 2014 the NT Government commissioned Dr Allan Hawke AC to conduct an independent inquiry into the use of hydraulic fracturing as a method to extract oil and gas resources in the Territory. The Terms of Reference for the Inquiry included an assessment of the environmental risks and actual environmental impacts of hydraulic fracturing, and the effectiveness of methods for mitigation potential environmental impacts before, during, and after hydraulic fracturing is undertaken. The findings of the Inquiry were released to the public on 26 February 2015; these included that there is no justification for the imposition of a moratorium on hydraulic fracturing in the NT.
In November 2015, the NT Government release the draft Oil and Gas Industry Development Strategy for public consultation until 31 December 2015. When finalised, this Strategy will be used when assessing future petroleum exploration and production licences.
Reforms to environmental assessment and approvals processes
The Hawke Inquiry also recommended that the NT Government consider possible amendment of the NT Environmental Assessment Act to ensure alignment with the existing petroleum and mineral royalty framework. The NT Government subsequently commissioned Dr Hawke to conduct a review of the Northern Territory's environmental assessment and approvals processes.
Dr Hawke delivered his second report in May 2015 and in November 2015 the NT Government released its response. Essentially, the review report provide the following three options for reform, with Option 3 being Dr Hawke's recommendation for the NT Government:
- Option 1 – retain the current system with incremental improvements; or
- Option 2 – create a single "stand-alone" environment approval process with the Environment Minister as decision-maker; or
- Option 3 – strengthen the "sectoral one-stop-shop" model, supported by enhanced transparency and independent performance monitoring. A "sectoral one-stop shop" refers to project authorisation based on approvals issued under various legislative instruments (such as the Minister for Mines and Energy or Minister for Planning) which are brought together under a primary sectoral approval.
The report also contained 22 recommendations which could be applied irrespective of which option was chosen) to strengthen the NT environmental management system's operations, build community confidence and improve decision-making efficiency.
In its response, the NT Government adopted Option 3, with a long-term goal of moving towards an Option 2 model, and outlined its in-principle support of the other 22 recommendations.
Measures announced for the release of land for oil and gas activities
On 18 November 2015, the NT Government announced its criteria for determining whether to approve oil and gas activities can occur in the Territory. This followed the earlier release of the Onshore Oil and Gas Guiding Principles which are being utilised by the NT Department of Mines and Energy for the assessment of future petroleum exploration and production licences. The Guiding Principles and measures will act as an interim measure while the Government continues with its review of the existing regulatory framework.
The Guiding Principles contain five overarching guiding principles in addition to a range of operational guidelines which apply to key risks and areas of impact (such as well design, construction and operation; water management; land access; air and noise emissions; community and social impacts; general operations; hydraulic fracturing; chemical and waste handling and management; rehabilitation and decommissioning; local context). They will need to be considered by any future permit applications.
The NT Government announced three additional measures on 18 November.
First, it will remove the exemption in the Water Act relating to oil and gas activities.
Secondly, it will not grant titles in residential areas as they are not considered as being compatible with oil and gas exploration or development.
Finally, it will not grant acreage release and exploration permits where there is a land use conflict, based on the following criteria:
- Urban living areas including rural residential areas - where land is not zoned, but the land use is consistent with these purposes, oil and gas activities will not be permitted.
- Areas of intensive agriculture - Department of Mines and Energy will assess the compatibility of land use, however oil and gas activities will not take place on areas such as melon farms, mango orchards and aquaculture operations.
- Areas of high ecological value – as determined through the NT's environmental assessment process following implementation of the Hawke review into the NT's environmental assessment and approvals processes.
- Areas of cultural significance as advised by the Aboriginal Areas Protection Authority - there is no change for Aboriginal land under the Aboriginal Land Rights or Native Title Acts.
- Areas that include assets of strategic importance to nearby residential areas - including areas with high potential for other uses such as tourism related development around Bitter Springs at Mataranka.
It was announced on 24 November 2015 that applications for Palatine Energy's proposal for Watarrka National Park and NT Gas' proposal for the Coomalie Council Region were refused as they were assessed as not satisfying all of the recently announced criteria.
New process for land access agreements between mining, petroleum and agriculture industries
On 30 November 2015 the Northern Territory Government announced a new process for land access agreements between the mining, petroleum and agriculture industries to achieve a balance between the rights of resource companies to explore and the rights of pastoralists to be advised, informed and consulted before exploration begins.
Under the current regulatory process for the approval of mining and petroleum activities, Mining Management Plans (MMPs) and Environment Plans (EPs) (respectively) are to be approved before the relevant approvals under the Mining Management Act or Petroleum Act are given to allow those activities to commence.
The Government announced that the process will also include:
- The establishment of a land access agreement for those exploration activities considered to create more disturbance and requires the lodgement of an MMP or EP.
- If agreement over conditions for land access cannot be reached within 60 days by mutual consent, the matter will be referred to an arbitration panel to be made up of high-level Government and industry representatives.
- The arbitration panel will arbitrate between the parties for a successful agreement within 21 days of the formation of the panel.
- Once agreement has been reached, the Department of Mines and Energy may approve the MMP or EP, as the case may be.
It remains to be seen whether this new process will be successful in striking the right balance between the competing rights as some of the detail is missing. Concerns have already been raised that this new process may be introducing more red tape which could stifle the capacity for new investment in the mining and petroleum industry. However, in theory it appears to be a step in the right direction as it should allow all parties involved in land access arrangements to have meaningful engagement prior to mining and petroleum activities commencing and time limits for those agreements have now been set.
New draft environment regulations for oil and gas industry
On 5 March 2016, the NT Government released its draft Petroleum (Environment) Regulations which have been prepared as the next step to establishing a robust best-practice environmental regulatory regime.
The key principles of the draft Regulations have been identified as:
- Risk-based - focus on the key risks and impacts that must be managed.
- Outcome-focused - do not prescribe what actions oil and gas companies must take, but require clear definition of environmental outcomes and performance standards and measurements criteria to ensure outcomes are met.
- Ecologically Sustainable Development (ESD) - all onshore oil and gas activities must be consistent with the principles of ESD.
The key principles will be delivered through a mandatory requirement for an interest holder, who proposes to carry out a regulated activity, to prepare, and have approved, an EMP before the activity can commence.
The draft Regulations set out the requirements for the form and content of an EMP and the "approval criteria" against which the Minister will assess the EMP, which includes a detailed list in Schedule 1.
The other key features of the draft Regulations include:
- The requirement for revision of an EMP where certain events occur.
- The EMP is to be published by the Minister.
- Revocation of approval of an EMP where certain events occur.
- Review of certain decisions to the Civil and Administrative Tribunal.
- Offence provisions for failure to comply with requirements under the Regulations.
The draft Regulations also include transitional provisions, under which:
- An approved plan in place immediately before commencement of the Regulations will continue to apply after commencement for the lesser period of either the period for which it is approved or 12 months after commencement.
- Environmental directions will continue to apply after the commencement.
- Where an EMP has already been prepared and submitted to the Minister for approval but no decision has been made immediately prior to commencement of the Regulations, the Minister must continue to consider that EMP as if the Regulations had not commenced and once approved the EMP has effect as if it were approved under the Regulations.
The draft Petroleum (Environment) Regulations were approved with amendment on 28 June 2016 and are now in force.
Amendment to NT Petroleum Act for making regulations to protect the environment
On 26 May 2016, the NT Government passed the Petroleum Amendment Bill 2016 which will allow the Administrator under the Petroleum Act to, when prescribing regulations for the protection of the environment, provide for the functions and powers of the Minister including the way in which the Minister may perform those functions and exercise those powers and exercise his discretion.
It is understood that in developing the draft Petroleum (Environment) Regulations (discussed above) it became clear to the NT Government that the current provision under the Petroleum Act was not broad enough to allow the Administrator to make the draft Regulations in their current form, namely to prescribe powers and functions which allows the Minister to exercise discretion and make decisions about EMPs for onshore petroleum activities, including the discretion to consider the principles of ESD and matters such as the recommendations from the NT Environment Protection Authority.
Upon commencement, the Bill will insert into the Petroleum Act that in regulations prescribing matters for the protection of the environment, the Administrator may provide for:
- functions to be performed, and powers to be exercised, by the Minister; and
- the way in which the Minister may perform a function or exercise a power, including the way in which the Minister may exercise a discretion.
North East Gas Interconnector Pipeline
In November 2015, the Northern Territory Government selected Jemena Northern Gas Pipeline Pty Ltd to construct and operate the North East Gas Interconnector Pipeline from Tennant Creek in the NT to Mount Isa in Queensland. This pipeline will connect NT's gas supplies to the eastern seaboard gas markets. In December, the North East Gas Interconnector Pipeline (Special Provisions) Act 2015 commenced to make special provision for the pipeline, including facilitating construction and operation of the pipeline.
EPOLA changes for mining – delayed commencement
The Mineral and Energy Resources (Common Provisions) Act 2014 (MERCP Act) made changes to the notifications and objections process for mining projects in Queensland. The State Development and Public Works Organisation and Other Legislation Amendment Act 2015 was assented to on 22 July 2015.
The Amendment Act repeals section 47D of the State Development and Public Works Organisation Act, which prevented submitters to an environmental authority from requesting their submission be taken to be an objection on an environmental authority application for mining proposals evaluated by the Coordinator-General (but only where the Coordinator-General has stated all conditions), and reinstates the rights of objectors to what was in place prior to the commencement of section 47D on 24 October 2014.
The remainder of the provisions of the MERCP Act relating to notifications and objections have not yet commenced, and their commencement has in fact been further postponed to allow for the Queensland Government to enact changes in line with its election promises.
The commencement of the relevant provisions has been postponed until 27 September 2016.
Amendments to water legislation effecting the take of groundwater by resource industries
The Water Reform and Other Legislation Amendment Act 2014 (Qld) (WROLA Act) was passed in November 2014 and made a number of changes to the Water Act 2000 (Qld). The aims of the WROLA Act included creating a consistent framework for managing the take of underground water by resource industries.
The Water Legislation Amendment Bill 2015 was introduced to Parliament on 10 November 2015 to reverse some of the changes made by the Water Reform and Other Legislation Amendment Act 2014 (Qld), in order to align the water legislation with the policy of the Palaszczuk Government. The Bill proposes to allow the chief executive to determine whether tenure is considered to be within a cumulative management area in instances where a tenure is only partially within the area.
Under the Water Act, declaring a cumulative management area enables assessment of future impacts using a regional modelling approach and the development of management responses (such as monitoring programs) that are relevant to the potential cumulative impacts. It also enables responsibilities to be assigned to each tenure-holder in the area for monitoring, bore and baseline assessments, as well as negotiating make good arrangements.
The Bill makes no other changes to the underground water framework.
Under the existing regime, there has been some confusion as to whether a mining lease authorised the taking or interference with groundwater, and whether the impact on groundwater was a matter for the Land Court to consider when determining to grant a mining lease and related environmental authority.
The WROLA Act proposed to make changes to the rights and obligations of a mining lease or mineral development licence-holder in respect to the take, interference and use of underground water, and brings those rights and obligations in line with those applicable to holders of petroleum tenements. Under the proposed new regime, the holder of a mining lease or mineral development licence may take or interfere with groundwater in the area of the mining lease or mineral development licence if the taking or interference occurs during the course of, or results from, the carrying out of an authorised activity. The holder need no longer obtain a water licence for these activities. The holder must measure and report the volume of associated water taken and the Land Court has jurisdiction to determine disputes between the holder and the landowner, if make good agreements cannot be made.
While the Bill makes no changes to this framework. the Government has stated that the provisions cannot commence until the amendments in the Water Legislation Amendment Bill 2015 are passed. The Bill has been referred to the IPNR committee with a public hearing to be conducted on 15 February 2016. The final report was provided to Parliament on 1 March 2016.
Financial assurances are security deposits held by an administering authority (such as the Department of Environment and Heritage Protection) that are often required under the conditions of an environmental authority in order to cover potential rehabilitation costs or required for some prescribed environmentally relevant activities. The amount of financial assurance is calculated based on:
- the risk of environmental harm;
- the likelihood that rehabilitation will be required once the approved activities cease; and
- the environmental record of the person carrying out the activity.
Following concerns about the financial assurance system, the Queensland Government undertook a review under the Environmental Protection Act 1994 (Qld).
A discussion paper was released in June 2014 which proposed the introduction of a "pool fund model" for the holders of environment authorities undertaking mining and petroleum activities in Queensland. Holders of environmental authorities would have been required to contribute to a pool fund that could be used to meet any future outstanding rehabilitation costs.
Following the consideration of submissions on the Discussion Paper, the Queensland Government announced that it would not be proceeding with the reforms in the structure that was proposed. It is understood that the Government's budget contains allocation for a review of the financial assurance framework and we expect that details of that review will be known in the coming months.
Tenure reforms project
The Department of Natural Resources and Mines released a discussion paper in August 2015 outlining proposed reforms to the tenures framework for the resource industry. The Department states that the current tenure framework does not operate effectively within the modern and globalised resource sector. being perceived as inflexible and focused on prescriptive compliance, not more effectively promoting performance outcomes.
Recent pressures on the resources industry, including the downturn in commodity process and the difficulties in raising capital to fund exploration and commissioning of resource projects have highlighted to the Queensland Government the need to design a regulatory framework that is responsive to these changes. Specific issues have been identified with the current framework, including:
- the requirement of strict compliance with exploration permits;
- relinquishment provisions for exploration that are considered to be too short to achieve effective exploration results;
- lack of effective pathways to production; and
- shortage of available land for exploration due to low land turnover.
The current framework is perceived as being unable to provide certainty of tenure, which is critical to enable holders of exploration permits to develop long-term commercial strategies. The industry is regulated by six pieces of legislation that deal with different aspects of mining and petroleum exploration and production:
- Mineral Resources Act 1989 (Qld);
- Petroleum Act 1923 (Qld);
- Petroleum and Gas (Production and Safety) Act 2004 (Qld);
- Geothermal Energy Act 2010 (Qld);
- Greenhouse Gas Storage Act 2009 (Qld) and
- Mineral and Energy Resource (Common Provisions) Act 2014 (Qld).
It provides different frameworks for various resources, with inconsistent pathways and types of tenure. The Department recognised that this can be confusing for landowners and other stakeholders. The discussion paper, "Innovative resource tenure framework: policy position paper", aims to address these issues and to modernise the way that tenures are regulated.
The key changes relate to the exploration phase of the resource lifecycle so that the new resource tenures framework facilitates effective exploration. New exploration authorities are proposed for maximum terms of:
- eight years for minerals;
- 10 years for coal; and
- 12 years for petroleum, geothermal and greenhouse gas.
One of the major changes proposed is to introduce uniform tenure types across the different resource legislation. It is also proposed that tenures could be managed on a project basis by obtaining "project status", meaning that proponents will be able to group and manage several related tenures as one project.
A regulatory impact statement is expected to be released sometime this year, which will examine areas of the proposed policy that are identified as having the most impact. Once a Bill is drafted there will also be consultation on any proposed changes to the legislation and feedback will be sought as part of the Parliamentary Committee process.
More amendments to resources legislation
The Mineral and Other Legislation Amendment Bill 2016 (MOLA) was passed by Parliament on 24 May 2016 and commenced on assent on 14 June 2016. This new Act amends the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) (MERCPA), which is expected to fully commence on 27 September 2016 (unless proclaimed earlier). This is an unusual scenario where amendments are being made to legislation which was passed in 2014 but still (in most part) has not commenced.
With the passing of MOLA:
- All members of the community will have the right to object to the Land Court about any mining lease, irrespective of whether the objector is an owner of land within or adjacent to the mining lease application area, or has any connection to the land or the area in which the mining lease is being sought.
- Public notification obligations will be reinstated, so that the proponent of a mining lease application will need to publish a notice of the application in the relevant local newspapers and not simply provide notice of the application to those directly impacted by the mining operations as proposed by MERCPA.
- The restricted land framework proposed by MERCPA will be extended (or substantially return it to the pre-MERCPA position) to include this agricultural infrastructure being principal stockyards, bores, artesian wells, dams and water storage facilities within a protection zone of 50 metres. MOLA also proposes to distinguish between the above provisions which will apply to production and exploration resource authorities and other resource authorities where the protected zone will be 50 metres for all of the prescribed infrastructure.
- MERCPA will be amended to clarify the intended operation of the transitional provisions for land access arrangements in MERCPA.
- An amended framework for entering land to identify mining boundaries (such as for a mining lease application) for proposed mining tenements will be introduced.
- MERCPA will be amended to address industry concerns and clarify the operation of the overlapping tenure framework for coal and coal seam gas. The proposed amendments include the following:
- reduce the requirement to have a joint development plan in situations involving overlapping production tenures (ie. a Mining Lease and a Petroleum Lease);
- replace the concepts of proposed and agreed mining commencement dates with a single mining commencement date, which is identified by the coal resource authority holder;
- strengthen requirements for information exchange between overlapping tenure holders; and
- clarify the operation of the dispute resolution process.
Published Minerals Regulatory Guidelines
In 2015 the Department of State Development published the following minerals regulatory guidelines for programs for environment protection and rehabilitation required under Part 10A of the Mining Act 1971 (SA):
- ..Preparation of a program for environment protection and rehabilitation for metallic and industrial minerals (excluding coal and uranium) in South Australia;
- Preparation of a program for environment protection and rehabilitation for low impact mineral exploration in South Australia.
Both outline the content and form required for a program for environment protection and rehabilitation required under their respective Ministerial Determinations (005 and 006).
These Ministerial Determinations were amended on 5 November 2015 and the new guidelines reflect these amendments.
New PACE initiatives
Since PACE (Plan for Accelerating Exploration) was first launched in April 2004 it has been a leading driver of growth in the mining sector of South Australia. PACE provides online geological and geophysical information to support the mining industry.
PACE Copper Program and PACE Copper Strategy
On 30 November 2015, the PACE Copper program was launched as part of the early implementation of South Australia's Copper Strategy. The PACE Copper program is a $20 million initiative which aims to:
- ..fund the creation of a state-of-the-art airborne geophysical and terrain imaging program for exploration in South Australia's Copper Belt;
- encourage industry and government collaboration on new drilling targets; and
- use the geophysical and imaging program to provide data and analysis for untouched mineral provinces in the far west region of South Australia which was discovered by PACE using a large airborne survey earlier this year.
On 23 February 2016, the Premier of South Australia and the Minister for Mineral Resources officially launched South Australia's Copper Strategy. The Copper Strategy provides an action plan that aims to triple South Australia's copper production over the next two decades.
The Copper Strategy provides an action plan that falls into each of the following three themes:
- exploration, discovery and information;
- developing innovative infrastructure, services and research; and
- building industry and community capacity.
PACE Supply Chain Development Program
On 3 December 2015, as part of the overall PACE program, the PACE Supply Chain Development Program was launched. The program provides industry mentors for companies exploring the resource industry for the first time.
Under the program:
- stage one will identify companies that wish to access the resources sector for the first time and conduct roundtables and industry seminars to provide market information;
- stage two will aim to strengthen these companies' capabilities by studying the company business model and making recommendations;
- stage three will connect up companies that display technical and commercial capability to industryspecific mentors.
Nuclear Fuel Cycle Royal Commission
On 19 March 2015, the Nuclear Fuel Cycle Royal Commission was established to undertake an independent and comprehensive investigation into the potential of South Australia's participation in the nuclear fuel cycle. An issues paper in relation to each area was released and submissions received in 2015. The final report was delivered to the Governor of South Australia on 6 May 2016 and released to the public on 9 May 2016.
The report focused on:
- exploration, extraction and milling;
- further processing and manufacture;
- electricity generation; and
- management, storage and disposal of nuclear and radioactive of waste.
The report considered the risks and opportunities associated with each activity and any measures that might be required to facilitate and regulate each activity. The Commission made the following recommendations to the South Australian Government:
- define a concept for the storage and disposal of international used fuel and intermediate level longlived waste in South Australia, on which the views of the South Australian community be sought;
- establish a dedicated agency to undertake community engagement to assess whether there is social consent to proceed;
- task the agency with:
- preparing a draft framework for future development of the concept;
- seek the support and cooperation of government;
- determine whether and on what basis potential client nations would be willing to commit to participation.
The Commission hoped that by following the above recommendations, the Government will be in the position to take the following future steps:
- pass legislation to facilitate and regulate the development of international used fuel and intermediate level long-lived waste storage and disposal facilities in South Australia; and
- support the community development including a consent-based process for facility siting.
Inquiry into Unconventional Gas (Fracking)
On 19 November 2014, the Inquiry into Unconventional Gas (Fracking) was referred by the Legislative Council to the Natural Resources Committee. The terms of reference for the inquiry are to inquire into potential risks and impacts in the use of hydraulic fracture stimulation (fracking) to produce gas in the South East of South Australia and in particular:
- the risks of groundwater contamination;
- the impacts upon landscape;
- the effectiveness of existing legislation and regulation; and
- the potential net economic outcomes to the region and the rest of the state.
Following extensive consultation, the Committee released an interim report on 17 November 2015. The interim report lays the foundations for the final report which is scheduled to be delivered in 2016 and will contain the Committee's recommendations. After summarising evidence and submissions received, the interim report establishes basic meanings and concepts. It notes that 74% of public submissions to the inquiry do not support hydraulic fracturing in the South East. Finally, the interim report foreshadows that the Committee may seek out expert witness evidence to inform the final report which is due to be delivered this year.
Tarkine National Coalition Inc v Minister Administering the Mineral Resources Development Act 1995  TASSC 11
In March 2016 the Supreme Court considered the ability of an environmental group to access a Minister's reasons for a decision to grant mining leases.
At issue was whether an association concerned with the conservation and management of the Tarkine area, the Tarkine National Coalition, could require the Minister to provide a statement of reasons for the decision to grant two mining leases in Tarkine.
The Court held that the association possessed an interest in the activities greater than an ordinary member of the public and had demonstrated an ongoing commitment to the conservation and protection of the Tarkine area. As such, it was held that the association was adversely affected by the decision to grant the lease, and that it had a genuine interest in knowing why the decision to grant the leases was made. On this basis, the Court ordered that the Minister's reasons be provided.
Hydraulic fracturing moratorium extended
The Tasmanian Government will maintain a moratorium on hydraulic fracturing (fracking) until March 2020 after the results of the Review of Hydraulic Fracturing in Tasmania Project which concluded in February 2015. The report resulted in 17 findings, including that further exploration by industry is required to establish the potential for any economically viable resources in Tasmania.
In a policy statement released in March 2015, the Tasmanian Government stated that fracking in Tasmania is a possibility, not a probability. The Tasmanian Government commented that there is considerable concern around potential negative consequences from the use of fracking relating to Tasmania's agricultural industries, branding and markets and public and environmental health. A further review will be conducted prior to the moratorium expiring in March 2020.
Resources Legislation Amendment Act 2015
On 23 September 2015, the Resources Legislation Amendment Act 2015 (Vic) (RLA Act) commenced, amending the Mineral Resources (Sustainable Development) Act 1990. The amendment was introduced partly in response to recommendation four of the Hazelwood Mine Fire Inquiry. The RLA Act seeks to increase penalties for unlawful activity by mine and quarry operators, and to give the Government new powers to ensure they minimise risks.
Specifically the RLA Act:
- introduces new maximum fines of $151,670 for corporations that breach the Mineral Resources (Sustainable Development) Act or its regulations;
- mandates that work plans for mines must consider a broader range of risks, and specifically address fire prevention, mitigation and suppression requirements for coal mines;
- empowers the Minister to require extractive industry to report publicly on its performance in meeting licence and approval conditions; and
provides that authority-holders may be requested to bring existing work plans in line with new risk-based provisions.
Mining Act Amendment Bill 2015
On 20 October 2015 the Minister for Mines and Petroleum introduced the Mining Legislation Amendment Bill 2015 (WA) to the Legislative Council. The Bill proposes to amend the Mining Act 1978 (WA), the Environmental Protection Act 1986 (WA) and the Mining Rehabilitation Fund Act 2012 (WA).
The Bill consolidates environmental protection obligations on tenements into the Mining Act 1978 (WA) and provides a risk-based and outcomes-focused approach.
The key features include:
- exempting low impact mining activity from requiring a programme of works approval – instead an activity notice is sufficient. The definition of "low-impact" activity is expanded from 0.25ha to 1.5ha;
- imposition of an obligation in all mining tenement licenses and leases requiring the tenement-holder to have an environmental management system; and
- exempting mining operations approved under the amended Mining Act 1978 (WA) from the obligation to have a separate vegetation clearing approval under the Environmental Protection Act 1986 (WA).
The Department of Mines and Petroleum has introduced a Proposed Low Impact Authorised Activities Framework which will provide details on the notification process for low impact mining activities. The Framework will come into force once the Bill is in effect.
On 23 February 2016, the Bill was discharged and referred to the Standing Committee on Legislation.
Mining Rehabilitation Fund
The Mining Rehabilitation Fund is part of the Department of Mines and Petroleum's regulatory changes in recent years following a 2011 report by the WA Auditor-General. According to Phil Gorey, head of Environment at the Department, the recent resources industry downturn has "stress tested" the Fund and the Fund has proved that it is adaptable enough to fulfil its role in funding the remediation of abandoned mines.
In July 2015, the Department issued a draft policy for Abandoned Mines which will operate in conjunction with the Mining Rehabilitation Fund Act 2012 (WA) and the Mining Act 1978 (WA). The policy aims to provide a consistent approach to:
- collection of abandoned mine site information;
- prioritise sites for gazetting; and
- manage and/or rehabilitate abandoned mine sites.
Five pilot sites have been identified as high priority for rehabilitation using the Fund's resources.
After more than two years, the Legislative Council's Standing Committee on Environment and Public Affairs has concluded its inquiry and released its report, "Implications for Western Australia of Hydraulic Fracking for Unconventional Gas".
The Report follows the ALP (WA Branch) advocating a moratorium on hydraulic fracturing and provides a prelude to the Senate's recent establishment of a Select Committee on Unconventional Gas Mining.
Significant findings by the Committee include:
- Western Australian regulators and proponents are ideally placed to build upon overseas experience and develop a strong regulatory framework;
- the views of those communities directly affected by hydraulic fracturing should hold significant weight;
- baseline information (required in regulator approved environment plans) is essential to regulate ongoing environmental effects and establishing a successful social licence to operate;
- many of the concerns of environmental and health impacts can be addressed through robust regulation and ongoing monitoring. The Committee has a high level of confidence that the State's regulators are committed to, and competent in, their respective roles; and
- the legislative framework needs to be amended to include an equivalent to the Mining Rehabilitation Fund mechanism.
Other findings include:
- WA requirements for the use of three casing strings during drilling represents international best practice;
- despite a lack of data around long-term well durability, research and modelling of carbon capture and storage concludes that cement well sealing is a successful strategy;
- perceived secrecy surrounding proponent chemical use is an important community issue that must be addressed through disclosure obligations formalised in subsidiary legislation;
- unacceptable and unnecessary environmental and health risks arise from the use of benzene, toluene, ethylbenzene and xylene, and those chemicals should be banned;
- cumulative impact remains an important assessment factor;
- WA's geology and low background seismicity mean that the risk of induced seismicity is negligible;
- the likelihood of hydraulic fractures intersecting underground aquifers is negligible;
- the risks of chemical spills/contamination and fugitive methane impact can be adequately managed. Naturally-occurring "methane seeps" have long been observed around the world and demonstrate that not all methane found in water sources is linked to industrial contamination;
- there are sufficient safeguards and water source protection policies in place to protect Public Drinking Water Source Areas, without introducing 1.5 km buffers;
- proponents should pay for the reasonable legal and other associated costs of landowners during negotiations for land access; and
- an independent statutory body should be established to address inequality in bargaining power between proponents and landowners.
We await the Government's response to this report.
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.