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06 Dec 2018

Comments sought on proposed changes to Northern Territory petroleum legislation

By Nicole Besgrove, Margaret Michaels

Amendments to petroleum legislation in the Northern Territory are being proposed to give effect to a number of recommendations of the Independent Scientific Inquiry into Hydraulic Fracturing.

A new bill requiring open standing for judicial review, a "fit and proper" test for exploration permits and production licences and compliance with Codes of Practice for the oil and gas industry will now be the subject of inquiry and report by the Economic Policy Scrutiny Committee. Submissions can be made until 30 January 2019.

On 29 November 2018, the Petroleum Legislation Amendment Bill was introduced into the Northern Territory Parliament to make the following key amendments:

  • provide provisions for open standing judicial review for decisions under the Petroleum Act and Petroleum (Environment) Regulations;
  • require that oil and gas companies, as applicants, are “fit and proper” to hold exploration permits or production licences; and
  • require oil and gas companies to comply with, and be penalised for breaches of, of Codes of Practice made under the regulations as recommended by the Inquiry.

After its introduction to the Legislative Assembly, the Bill was referred to the Economic Policy Scrutiny Committee for inquiry and report by 12 March 2019.

Open standing for judicial review

It is proposed that any person may seek judicial review (ie. legal proceedings challenging the lawfulness of the decision-making process) by the Supreme Court of a range of decisions or determinations under the Petroleum Act and the Petroleum (Environment) Regulations, whether or not any right of the person has been affected by, or as a consequence of, the decision or determination.

Under the Petroleum Act the open standing for judicial review is proposed to apply to decisions or determinations with respect to the following (amongst others):

  • decisions with respect to reserve blocks;
  • a range of decisions with respect to exploration permits and production licences, including decisions to refuse, grant, renew, cancel or extend the term of the permit or licence or to vary, suspend or waive conditions;
  • decisions with respect to show cause notices;
  • decisions with respect to retention licences;
  • decisions to grant, refuse, impose conditions on, renew or cancel an access authority or to vary the access authority area or condition;
  • decisions with respect to surrender, transfer of interest of and security for a petroleum interest; and
  • determinations with respect to a prescribed petroleum act (ie those acts specified in section 57B of the Petroleum Act).

A complete list of the decisions and determinations under the Petroleum Act which may be the subject of judicial review are contained in the new Schedule 1 proposed by the Bill.[1]

Under the Petroleum (Environment) Regulations, the open standing for judicial review is proposed to apply to decisions contained in Schedule 1A and include decisions:

  • to approve a plan subject to conditions or refuse to approve an environment management plan (plan);
  • that revision of a plan is still required; and
  • to revoke approval of current plan.

Similar open standing judicial review arrangements were originally proposed in the NT Government's draft Environment Protection Bill, which was recently the subject of eight weeks of public consultation. However, the NT Government subsequently announced that the draft Environment Bill would be amended to limit standing for judicial review to only those directly affected, or those who made a valid and genuine submission to the decision making process.

The "fit and proper" test

A new section is proposed to be inserted into the Petroleum Act to require that that when determining whether to grant a permit of licence, the Minister must be satisfied that the applicant is an appropriate person to hold a permit or licence under the Act, having regard to the following matters:

  • whether the person has contravened the prescribed legislation;
  • whether the person has held a licence or other authority under the prescribed legislation that has been suspended or revoked;
  • the person's record of compliance with the prescribed environmental legislation;
  • whether in the opinion of the Minister, the action or thing to be authorised by the permit or licence is or will be under the control of a technically competent person;
  • whether in the opinion of the Minister, the person is of good repute, having regard to character, honesty and integrity;
  • whether the person has, within the previous 10 years, been convicted in the Territory or elsewhere of an offence involving fraud or dishonesty;
  • whether the person, within the previous 3 years, was an undischarged bankrupt or applied to take the benefit of any law for the relief of bankrupt or insolvent debtors, entered into an arrangement with the person's creditors or made an assignment of the person's remuneration for their benefit;
  • whether the person is or was a director of a body corporate that is the subject of a winding-up order or for which a controller or administrator has been appointed within the previous 3 years;
  • whether the person has demonstrated to the Minister the financial capacity to comply with the person's obligations under the permit or licence;
  • whether the person is in partnership, in connection with the action that is the subject of the permit or licence, with a person whom the Minister does not consider to be an appropriate person under this regulation; and
  • any other matters the Minister considers relevant in determining whether a person is an appropriate person to hold a permit or licence.

It is also proposed that the following additional matters must be considered by the Minister if the person is a body corporate or in the case of a body corporate being the subsidiary of another body or company, the parent company:

  • Whether a director of the body corporate or parent company has contravened the prescribed legislation or has held a licence or other authority under the prescribed legislation that has been suspended or revoked.
  • Whether a director of the body corporate or parent company is or has been the director or another body corporate that has contravened the prescribed legislation or has held a licence or other authority under the prescribed legislation that has been suspended or revoked.
  • The record of compliance with the prescribed legislation.
  • Whether in the opinion of the Minister, a director of the body corporate is of good repute.
  • Whether a director has been convicted of an offence involving fraud or dishonesty in the last 10 years.
  • Whether the body corporate is the subject of a winding up order or has had a controller or administrator appointed within the previous 3 years.

The "prescribed legislation" includes a range of State and Commonwealth environmental, work health and safety and petroleum legislation.

Codes of practice

The Bill proposes to insert provisions so that the petroleum regulations have the power to make and enforce a code of practice, and that a breach of those codes is an offence under the regulations.

Codes of practice were recommended in the Inquiry's Final Report with respect to the following:

  • setting out minimum requirements for the decommissioning of any onshore shale gas wells in the NT;
  • setting out the minimum requirements that must be met to ensure the integrity of onshore shale gas wells in the NT; and
  • ongoing monitoring, detection and reporting of methane emissions from any onshore shale gasfields and wells.

Committee inquiry and report – have your say

The Terms of Reference for the inquiry and report require the Committee to consider:

  • whether the Assembly should pass the Bill;
  • whether the Assembly should amend the Bill;
  • whether the Bill has sufficient regard to the rights and liberties of individuals; and
  • whether the Bill has sufficient regard to the institution of Parliament.

A report is to be provided by the Committee by Tuesday 12 March 2019.

The Committee is now inviting all interested parties to provide comment and feedback on the Bill. Submissions are to be provided to the Secretary, Economic Policy Scrutiny Committee by Wednesday 30 January 2019.

If you would like any assistance with your submission please contact us.


[1] See clause 12 of the Bill. Back to article

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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.