16 Jun 2011

Major changes for NSW mining and petroleum project approvals

by Nick Thomas, Samy Mansour

If you have lodged or will lodge coal, coal seam gas or petroleum applications in NSW, you will be affected by the Government's proposed Strategic Regional Land Use Policy and changes to the approvals regimes.

Prior to its election to Government, the New South Wales Liberal and National Coalition published a Strategic Regional Land Use Election Policy which set out a plan to deal with competing interests in regional land in New South Wales. It also made clear its intention to repeal the controversial major projects approval regime in Part 3A of the Environmental Planning and Assessment Act 1979, which currently applies to most mining projects.

Since decisively winning government on 24 March, the Coalition has confirmed its election commitments by announcing proposals to change laws which affect mining and petroleum projects, changes to the way in which exploration licences are processed, and the preparation of an overarching Coal and Gas Policy.

While the New South Wales Government is yet to release details on its proposed new laws and how its other election commitments will operate in practice, it is clear these changes will have a major impact on mining projects in New South Wales.

Part 3A regime

The Government has stated that it will introduce legislation shortly to replace the Part 3A regime. Since its election, the Government has:

  • already taken steps to remove some classes of project from the Part 3A regime (ie. some residential, retail, commercial and coastal developments) and to allow some other projects proponents to "opt out" of Part 3A with the approval of the Director-General of the Department of Planning and Infrastructure; and
  • also indicated that the replacement regime will provide for State approval for projects of State significance.

We expect that the new State approval regime will apply to most mining projects, and that transitional arrangements will apply to some projects which have already progressed under the Part 3A approval process. It is likely that most projects which do not require State approval under the new regime will instead require approval from the relevant local council or a regional planning panel.

Immediate impact – transitional measures

On 21 May 2011, the Government formally announced the following transitional measures which will impact parties that have lodged or will lodge coal, coal seam gas or petroleum applications:

  • an immediate 60 day moratorium on the granting of new coal, coal seam gas and petroleum exploration licences in the State, to allow the Government time to establish new arrangements for the issue of exploration licences;
  • a requirement that all applications for coal, coal seam gas and petroleum exploration licences be exhibited for public comment;
  • a requirement that all new coal, coal seam gas and petroleum extraction applications be accompanied by an Agricultural Impact Statement. The Government is currently drafting guidelines for these impact statements, but has already announced that, during the transitional period, approvals will not be granted where "there will be a detrimental effect on the agricultural productivity of the land and associated water resources"; and
  • the introduction of an Aquifer Interference Regulation. The Government will put on exhibition for public comment an Aquifer Interference Policy, which will introduce a suite of new measures to better regulate activities that impact on aquifers.

Future impact – further initiatives

In addition to the transitional arrangements discussed above, the Government has proposed longer term measures including the following initiatives:

  • work to commence within 12 months on Regional Strategic Plans in the Upper Hunter (including Gloucester), New England North West (including Gunnedah and Liverpool Plains), Central West and the Southern Highlands;
  • Regional Strategic Plans to subsequently be developed across the State; and
  • the introduction of an overarching Coal and Gas Policy which will provide an overview of the current state of the industries and likely growth over the next 25 years.

The Government also proposed a number of other initiatives before the election but no further detail has been provided regarding these proposals:

  • implementation of agricultural productivity and associated water data collection requirements for all new mining and coal seam gas titles;
  • initiation of reviews of exploration licences across the State, which will include:
  • checking if exploration licence-holders are adhering to the conditions set out in their licences; and
  • making certain information in relation to exploration licences publicly available for community review.
  • establishment of an Office of Food Security and Agricultural Sustainability. The Policy does not set out the function and powers of this body.

It remains to be seen if these initiatives will form part of the new Government policy.

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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 communication. Persons listed may not be admitted in all States and Territories.