16 Aug 2012

Large-scale reforms to the resources legislation aimed at streamlining and efficiency

by Mark Geritz, Ben Cansdale, Kathryn Warner

Wide-ranging reforms to the resources legislation in Queensland have been proposed by a new Bill, designed to streamline and harmonise procedures for granting, and dealing with, various resource interests.

The Mines Legislation (Streamlining) Amendment Bill 2012 was introduced into the Queensland Parliament on 2 August 2012, and provides for some significant reforms to the resources legislation in Queensland.

As the title suggests, the Bill's primary focus is to streamline and harmonise procedures for applying for, and dealing with, various types of resource interests, including exploration permits (EPs), authorities to prospect (ATPs), mineral development licences (MDLs), mining leases (MLs) and petroleum leases (PLs). This includes amendments to:

  • the Petroleum and Gas (Production and Safety) Act 2004 (P&G Act) and the Petroleum Act 1923;
  • the Mineral Resources Act 1989 (MRA);
  • the Geothermal Energy Act 2010; and
  • Greenhouse Gas Storage Act 2009.

The Bill also provides important reforms dealing with water produced from coal seam gas (CSG) operations, the compulsory acquisition of land subject to existing resource interests and other miscellaneous changes to the MRA.

Background

The Bill is derived from the Resources Legislation (Balance, Certainty and Efficiency) Amendment Bill 2011, which was introduced to the Queensland Parliament on 29 November 2011, but lapsed with the change of government earlier this year.

The Bill is in largely the same form as its predecessor (although provisions dealing with restricted land and restricted areas have not been included), and is currently before the Agriculture, Resources and Environment Committee for review.

Streamlining amendments

Common reforms are to be made across the resources legislation, to provide more streamlined procedures with respect to:

  • permitted dealings with resource interests, including the introduction of "assessable transfers" (eg. transfers of mining or petroleum authorities) and "non-assessable transfers" (eg. transfers of a share in a mining or petroleum authority by one holder to another). Importantly: 
    • subleasing a PL or ML will not be an assessable transfer, and capable of registration upon notice to the chief executive; and
    • approval for an assessable transfer will be taken to be given if application for its approval is made within three months of an indicative approval being given (and certain other conditions are satisfied). An indicative approval may however remain valid for six months if notice is given under the Foreign Acquisitions and Takeovers Act 1975 and the chief executive is accordingly notified (with evidence);
  • recording "associated agreements" in the register against resource interests (expected to include farm-in and joint operating agreements);
  • lodging and dealing with caveats over resource interests; and
  • general provisions for making applications, including giving the Minister the power to require applicants for a resource interest (or its renewal) to progress the application.

Common provisions are also proposed to confirm the impact of the compulsory acquisition of land that is subject to existing resource interests. This includes:

  • confirmation that compulsory acquisition will not extinguish resource interests, unless provided for in the resumption notice for the land; and
  • provision that, in assessing any compensation payable to the holder of a resource interest, allowance will not be made for the value of the resource in the land (in response to concerns that otherwise, compensation for lost resources may affect the feasibility of some linear infrastructure projects across resource regions, such as railways).

Amendments specific to the P&G Act: Transportation and treatment of "produced water"

The Bill proposes significant reforms to the P&G Act to address concerns that the current legislation does not adequately provide for water pipelines extending across long chains of PLs or "off-tenure", or centrally processing CSG water produced from multiple tenures. These reforms include:

  • introducing the concept of "produced water", meaning associated water from a petroleum tenure or CSG water (defined as underground water brought to the surface of the earth in connection with exploring for or producing CSG under a petroleum tenure). Produced water expressly includes treated and untreated CSG water, and concentrated saline water (ie. brine) produced during the treatment of CSG water; 
  • allowing the grant of pipeline licences (PPLs) to authorise the construction and operation of pipelines transporting produced water – this is done by amending the definition of "pipeline" in the P&G Act to include one transporting produced water; and
  • authorising a PL holder to process, and construct and operate facilities for the processing and storage of, produced water, whether that water is produced inside or outside of the PL and by the PL holder or not.

Amendments specific to the P&G Act: Incidental activities

The authority of PL holders to carry out "incidental activities" in the area of the PL is to be expanded to include activities that are reasonably necessary for, or incidental to, an authorised activity for another PL or ATP. Incidental activities for ATPs are also to be expanded to include incidental activities for another ATP.

These amendments will allow the construction and operation of infrastructure, such as electricity lines and fibre optic cables, across various petroleum tenures. This authority may also apply to cross-border water pipelines, and consequently section 110 is to be amended to no longer apply to water pipelines.

Amendments specific to the P&G Act: Easements

Holders of PPLs are to be allowed to register easements for pipelines under the PPL, despite the easement not being attached to, or used or enjoyed with, other land (currently only allowed for "public utility providers"). This addresses current difficulties with securing easements for such linear infrastructure crossing multiple lots.

New provisions are also proposed to ensure a land owner's permission to a PPL holder to construct and operate a pipeline binds future owners, but only until an easement is registered, or up to nine months after the PPL holder has given the requisite notice of completion of the pipeline's construction.

Amendments specific to the P&G Act: Infrastructure reports

PL holders will be required to lodge annual "infrastructure reports" on or before 1 September each year, detailing the authorised activities carried out, and the infrastructure and works constructed (including their locations), in the PL area during the preceding financial year. The first report required after the commencement of these provisions will require details of all such activities carried out since the PL was granted.

Amendments to the "annual return" provisions under the Environmental Protection Act 1994 (EP Act) are also proposed, to require the reporting of activities carried out under an ATP or PL which are "incidental activities" for another ATP or PL (and the environmental risks thereto).

Amendments specific to the P&G Act: Production commencement days

PL holders will be able to apply to change the production commencement day for a PL, provided certain conditions are met, including there being a relevant arrangement in place and the application being made no more than one year before petroleum production is to start.

Amendments to the P&G Act, and the Work Health and Safety Act 2011 are also proposed to provide further clarity as to when (and in what respects) these Acts will apply in relation to operating plants.

Amendments specific to the MRA

Reforms specific to the MRA are also proposed under the Bill, including:

  • reducing the term for mining claims from 10 years to five years;
  • clarifying the rights of EP holders to enter land for the purposes of doing all things necessary to apply for a MDL or ML for the area and for an environmental authority, and to comply with the EP Act or the State Development and Public Works Organisation Act 1971 for an environmental impact statement relating to such applications;
  • new land reduction requirements for EPs – where currently the land reduction requirements for coal EPs are left at the Minister's discretion, the following reduction requirements are to be set for all EP types:
    • 40% of the original area by the end of three years after the EP is granted;
    • further 50% of the remaining area by the end of five years after the EP is granted; and
    • each time the EP is renewed, 40% of the remaining area by the end of three years after renewal and a further 50% of the remaining area by the end of five years after renewal;
  • various functions of the Governor-in-Council (including the grant of MLs) now to be performed by the Minister; and
  • provision that, where objections or other matters brought before the Land Court are subsequently withdrawn, the Land Court may cease hearing the matter (and avoid the scenario where it may still be required to hear the matter raised).

We will continue to monitor the progress of this Bill and provide further updates as developments arise.

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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.