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24 Oct 2013

NSW gateway process and coal seam gas exclusion zones commence, and there's more to come

by Nick Thomas, Claire Smith

The mining and CSG industries in NSW now have some clarity and certainty, but also considerable additional requirements and a longer process for project applications.

The much anticipated gateway process for mining and coal seam gas (CSG) projects, and exclusion zones for CSG projects, commenced on 4 October 2013, as a central part of the NSW Government's Strategic Regional Land Use Policy.

The mining and CSG industries now have some clarity and certainty as to the controls and process for their project applications, but this involves considerable additional requirements and a longer process for those applications.

The gateway process and CSG exclusions were introduced by amendments to the Environmental Planning and Assessment Act 1979, the Environmental Planning and Assessment Regulation 2000 and State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2005 (Mining SEPP).

In this article, we provide an overview of the amendments and highlight some key implications.

Gateway certificate

The Gateway process requires a proponent of specified State significant mining or CSG projects on specified "Strategic Agricultural Land" to obtain a gateway certificate for the project from the Gateway Panel before lodging an application for development consent, or for modification of an development consent, for that project.

There are two types of Strategic Agricultural Land:

  • biophysical strategic agricultural land (BSAL), which the Government has assessed to have a rare combination of natural resources highly suitable for agriculture; so far, about 2.8 million hectares have been identified across NSW; and
  • land in a critical industry cluster (CIC), which is used for specified productive agricultural industries; so far the viticulture industry (464 properties) and equine industry (297 properties) in the Upper Hunter Valley have been identified.

Strategic Agricultural Land is identified on the Government's map or, for areas of BSAL (where the mapping is not as detailed as it is for CICs), in a site verification certificate at the request of the project proponent or landowner in certain circumstances issued under the Mining SEPP.

The gateway certificate process does not cover all aspects of a mining or CSG project - it only addresses:

  • for projects on BSAL – whether the project will significantly reduce the agricultural productivity of any affected BSAL; and
  • for projects in a CIC – whether the project will have a significant impact on the relevant CIC.

In addition, the proposed development's impact on water resources will also be assessed as part of the gateway certificate process.

A certificate will be either:

  • unconditional (ie. it states that the project satisfies the relevant criteria); or
  • conditional (ie. it states that the project doesn't satisfy the relevant criteria, and provides reasons and recommendations as to how the project can satisfy those criteria as part of the project application process).

Which projects need a gateway certificate?

The Gateway Process applies to projects which meet the following criteria:

  • the project is on land which is identified as strategic agricultural land, either on the government's map or in a site verification certificate;
  • the project is "State significant" mining or CSG development under the State significant development classes in State Environmental Planning Policy (State and Regional Development) 2011 (note that this covers mainly production projects, but also captures some significant exploration projects – see below);
  • the project:
  • needs a mining lease or a petroleum production lease (because either it goes beyond the boundaries of an existing lease or there is no lease in relation to it);
  • is for the purpose of extracting a bulk sample as part of a resource appraisal or a trial mine comprising the extraction of more than 20,000 tonnes of coal or any mineral ore; or
  • is for petroleum exploration wells in an environmentally sensitive area of State significance; and
  • the project application is for development consent where the Director-General's statutory assessment requirements were not issued on or before 10 September 2012, or for modification of an existing development consent after that date (including modification of approved projects under the now-repealed Part 3A of the Act).

Gateway certificate process

The Government has established a Gateway Panel comprising experts in agricultural science, hydrogeology or mining and petroleum development. Three Panel members determine each application for a certificate. They have 90 days to do so, plus up to 30 extra days if they request additional information from the applicant.

The Panel must refer an application for a certificate to the Federal Government's Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development (IESC), and the NSW Minister for Primary Industries for advice regarding the impact of the proposed development on water resources (who must consider the Government's Aquifer Interference Policy), and must take into account any comments they make. This effectively implements the referral protocol agreed between the Federal and NSW State Governments under the National Partnership Agreement that requires all coal seam gas and large coal mining projects which could have an impact on a water resource to consider the advice of the IESC.

An application for a gateway certificate must be notified either in writing to the owner of land on which the project will be undertaken, or in a newspaper at least 30 days before the application is made. Applications and determinations are published on the Panel or Department of Planning and Infrastructure (DP&I) website.

The Gateway Panel must issue a certificate (either conditional or unconditional) unless the applicant does not provide information which the Panel requested after receiving the application.

Gateway certificates may be amended by further application to the Panel. This is important because the consent authority, when determining an application for the project, must have a "current" gateway certificate at that time, and so changes to a project after a gateway certificate has been issued might generate a need for amendment of the certificate.

Development applications and gateway certificates

The Director-General of DP&I must consider any recommendations in a gateway certificate for a project when issuing statutory assessment requirements (DGRs) for that project. While DGRs may be issued before a gateway certificate is issued, it may be necessary to amend the DGRs once a gateway certificate is issued.

In addition, the consent authority for a project which needs a gateway certificate (usually, the Planning Minister or the Planning Assessment Commission) must:

  • again refer the project to the Primary Industries Minister and consider any written advice from him/her;
  • consider any recommendations in the gateway certificate;
  • consider any written advice which the IESC provided to the Gateway Panel; and
  • consider any "cost benefit analysis" of the project submitted with the application.

What's the effect of the gateway process?

The gateway process does not provide an opportunity to reject projects. Instead, it requires assessment of key agricultural impacts of a mining or CSG project prior to the application for approval of the project. It will also flag at an early stage whether or not the project is likely to have any significant impacts on water resources.

Detailed assessment of all relevant impacts of a project (including an agricultural impact statement) will still be required as part of the project application, but hopefully there will be no need to duplicate the gateway assessment (except to address the gateway panel recommendations).

Key issues to consider for the gateway process include:

  • the additional assessment time for the project (especially if a site verification certificate is required);
  • the level of understanding which stakeholders in a project have about what the gateway process does and doesn't do, and stakeholder expectations of involvement in the process; and
  • how the terms of a gateway certificate will affect the assessment of a project during the subsequent project application process.

CSG exclusion zones

The Mining SEPP now also prohibits CSG exploration or production development within a "coal seam gas exclusion zone", or within a "buffer zone" which is land within 2km of such an exclusion zone. According to the Government, this covers about 95% of homes currently subject to petroleum exploration licences.

A coal seam gas exclusion zone is currently land which has a residential zoning or land within a designated "future residential growth area zone" (which currently includes the North-west Growth Centre and the South-west Growth Centre on Sydney's outskirts). A local council may specify land within its area which is to be excluded from this prohibition, and that land will be excluded when the Mining SEPP is amended to address that specification.

The CSG "buffer zone" exclusion does not apply to pipelines which are ancillary to a CSG project or development classified as "exempt development".

What's next?

The Strategic Agricultural Land map which the Mining SEPP has already adopted identifies about 1.74 million hectares of BSAL. The Government has prepared a draft revised map showing another 1 million hectares of BSAL. This is on public exhibition until 8 November.

The Government also has on public exhibition until 8 November a proposal to extent the CSG prohibition to:

  • land zoned for large residential lots but in an area designated as a "rural village", and a 2km buffer zone around that land; and
  • CIC land.

Stakeholders are also awaiting the Government's decision on its proposed "resource significance" amendments to the Mining SEPP earlier this year, which would:

  • prioritise some of the key considerations for mining and CSG project applications (such as economic benefits); and
  • establish non-discretionary development standards (eg. aquifer interference, air quality and ground vibration) which if met, could not be used to refuse a project.

 

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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.