02 Apr 2020

Have your say on the Productivity Commission Draft Report on Resources Sector Regulation

By Kathryn Pacey

The Draft Report identifies leading practices to reduce unnecessary costs and burden on businesses and regulators without undermining environmental outcomes

The Productivity Commission released its Draft Report on its inquiry into regulation of the resources sector on 24 March 2020.

The Draft Report identifies leading practices to reduce unnecessary costs and burden on businesses and regulators without undermining environmental outcomes, and also recommends amendments to various legislation and the adoption and publication of guidelines to address issues faced by the resources sector and the community.

Submissions on the Draft Report will be accepted until 5 June 2020.

We previously published an article outlining the Productivity Commission's undertaking of a 12-month review into streamlining regulation in the resources sector. The Commission released its Draft Report on Resources Sector Regulation, accompanied by an Overview which summarises the key findings, leading practices and recommendations within the Draft Report.

The key issues highlighted for reform, as identified by the Commission, are explored in greater detail below:

Approval timeframes

The Draft Report identifies that the requirement for projects to obtain multiple approvals, and often at both a State/Territory and Federal level, leads to protracted, sequential approval timeframes, duplication and inconsistent requirements. Approvals and post-approvals (referred to as 'nested' approvals) are unpredictable and lengthy, with concerns that some conditions are inappropriate.

Leading practices highlighted in the Draft Report to address delays in nested approvals include providing applicants with clear guidance on the type and quality of information that post-approval documentation would need to include. Further, decisions in the post-approval stage should be subject to timelines, and the regulator's performance against those timelines should be evaluated and publicly reported.

The Draft Report also identifies leading practices including placing limits on the use of "stop the clock" provisions and better use of deemed decision provisions to allow for decisions not made within statutory timeframes.

Regulator capacity and capability

The Draft Report concludes that inadequate funding for regulators and lack of adequate, scientific technical and industry expertise were major challenges contributing to delays in project approvals. The Draft Report recommends that governments in each jurisdiction should assess whether regulators are appropriately funded and assess opportunities for enhancing regulators' cost recovery processes.

The Draft Report further recommends that regulators in each jurisdiction should consult with the resource industry, including peak bodies such as the Mineral Council of Australia, with a view to developing a program of site visits for the purposes of enhancing staff technical expertise.

Environmental impact statements and information requirements

The Draft Report has identified that environmental impact assessments are often unduly broad and do not focus on the key matters. It identifies as leading practice a risk-based environmental assessment approach, with investigations proportionate to the consequence and likelihood of environmental risk. This includes ensuring the terms of reference focus on the projects' biggest and most likely risks.

A leading practice identified in the Draft Report to ensure the submission of timely and adequate environmental impact statements is the provision of clear guidance on regulators' information expectations to reduce the need for additional information requests.

Commonwealth approvals and agency coordination

A key finding of the Draft Report is that the referral process for the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) in relation to the nuclear and water triggers creates unnecessary regulatory burden. It notes that States and Territories already regulate naturally occurring radioactive material in rare earths and mineral sands. Further, there is no compelling evidence to suggest that the water trigger has filled a significant regulatory gap.

The Draft Report recommends that, just as bilateral assessment agreements are effective in reducing regulatory burden, the EPBC Act should enable the negotiation of bilateral approval agreements between the federal government and States and Territories. Further, bilateral assessment agreements should be subject to additional commitments to address inconsistencies and overlap in project approval conditions.

The Draft Report identifies the need for greater Commonwealth-State cooperation and intra-state coordination. Commonwealth-State cooperation in environmental assessment and approval can be supported by the federal government out-posting staff to State and Territory agencies with a high number of applications. Regulators are also expected to provide clear explanation as to differences in requirements between regulators. Leading practice identified in the Draft Report for intrastate coordination include setting up a lead agency to co-ordinate processes across agencies and cooperative arrangements between agencies.

Reviews and appeals

The Draft Report acknowledges that reviews of environmental decisions create delays; however, it is accepted that certain third parties should be able to institute judicial review proceedings. It further notes that there may be scope to reduce appeals on inconsequential procedural matters. For the benefit of resources companies, the Draft Report identifies leading practice as establishing regulator accountability to allow merits review of approval decisions made by unelected officials. This provides an opportunity for conditions and approval decisions to change to reflect substantive new information.

Additional information required

The Commission has called for submissions that would provide further information on the following:

  • whether there are systematic deficiencies in the compliance monitoring and enforcement effort of regulators overseeing resources projects;
  • whether there are aspects of mining and petroleum licensing systems that pose a material impediment to investment;
  • leading practices for interactions between Indigenous heritage and the resources sector;
  • the effectiveness of resources health and safety legislation across Australian jurisdictions; and
  • specific questions related to native title practices across all jurisdictions.

Have your say

Written submissions responding to the Draft Report will be accepted until 5 June 2020. More information is available on the Productivity Commission website.

The final report is expected to be submitted to the Australian Government by 7 August 2020 and published by the Commission shortly after.

Thanks to Beryl Rachier and Stephanie Centorame for their help in writing this 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.