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25 Nov 2011

New Federal Government role in assessing water impacts for resources projects

Resources projects (including coal mines and coal seam gas projects) will soon be subject to rigorous water impact assessments by a Federal Committee before they can obtain State approvals, under a scheme unveiled by the Federal Government this week.

There's also the potential for a new federal approval trigger if agreement with State and Territory Governments is not reached next year.

Following negotiations with key independents in relation to the Mineral Resources Rent Tax (MRRT), the Federal Government has announced it will establish a new Independent Expert Scientific Committee to:

  • provide scientific advice to governments about significant water impacts from coal mining and coal seam gas (CSG) projects, to feed into project approval processes;
  • oversee research on impacts on water resources from CSG and large coal mining projects; and
  • commission and fund water resource assessments for priority regions.

Although key parts of the announcement refer to coal mining and CSG projects, it appears the Government's proposal could extend to all resources projects.

The Government has proposed a scheme for formalising the Committee's role, but has said that it will create an interim Committee board to fast track the assessments and call on the States to apply those assessments as soon as possible.

We have outlined below the proposed scheme and what it means for resources projects.

Independent Committee

The Government will aim to establish the Committee as a statutory body under the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), via a Bill to be introduced when Parliament sits in autumn 2012.

The Committee will comprise leading scientists and will be funded initially with $150 million from the MRRT over five years. Funding will also be provided to local natural resource and catchment management groups to participate in bioregional assessments.

The Committee will commission studies and assessments by independent bodies such as Geoscience Australia, the CSIRO and university research bodies.

Its advice will be made publicly available.

Commonwealth-led National Partnership

The Government proposes to implement the water assessment scheme by means of a National Partnership Agreement through the Council of Australian Governments (COAG), at COAG's first meeting in 2012.

Key elements of the Agreement would include a commitment by all governments that their approval agencies will take the Committee's advice into account when determining applications for resource projects. Governments will be required to incorporate this into their planning or other relevant legislation.

A Government media release indicates that the States and Territories will remain the primary regulators for resource projects. "Businesses will not be required to change the way they apply for a licence – the framework is not designed to add extra work or increase the regulatory burden for upcoming projects", it says.

States which adopt the scheme within 12 months of the Agreement will be given additional funding of up to $50 million (or possibly more for States facing the greatest potential impacts on water resources).

What if States don't get on board?

The Government has also foreshadowed that, if COAG agreement is not reached, it may introduce legislation under the EPBC Act to create an appropriate trigger for it to assess cumulative impacts of extractive activity on water resources. This suggests that the Government might have in mind another approval trigger under the EPBC Act, for water impacts.

Here, it is worth noting that the EPBC Act specifically allows for the addition of new approval triggers pursuant to a Regulation instead of an amending Act.

What does this mean for resources projects?

Most major development projects require approval from at least one State or Territory Government regulator. Usually, the proponent of a major project will prepare its own environmental assessment for the project, and subject that assessment to public and regulator scrutiny. Sometimes, the Government will require an additional, independent assessment or review for a particular environmental issue.

The Federal Government's proposal will require State and Territory regulators to take into account assessments commissioned by the Federal Committee. This could give rise to a difference of scientific views on the impacts and mitigation measures for a particular project, and could therefore add to the time-frames and complexity in project approval processes.

The scheme could have real benefits for resource projects, by providing additional independent information for all stakeholders in a resources project, and supporting sound, evidence-based discussion of those projects.

However, the practical effect of the scheme will depend a lot on the nature and scope of the brief for the Committee's assessments, and how those assessments are applied in the project approval process.

Of real concern is the potential for an additional EPBC Act approval trigger if COAG agreement is not reached. This could duplicate State and Federal approval processes, and affect the time-frames and certainty of outcome for resources project applications.

No doubt the scheme would benefit from close co-operation between the experts engaged by a project proponent and the Committee.

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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.