Commencement of the Resource Legislation Package in NSW

We recently published an article on the Resource Legislation Package passed by the NSW Parliament on 2 November 2015.

The Resources Legislation Package is made up of five separate pieces of legislation which make extensive changes to the Mining Act 1992 (NSW) (Mining Act) and Petroleum (Onshore) Act 1991 (NSW) (Petroleum Act).  The following parts of the reform package came into effect on 18 December 2015.

All sections of the Mining and Petroleum Legislation Amendment (Grant of Coal and Petroleum Prospecting Titles) Act 2015 (NSW) commenced except for one minor provision related to opal mining. Most importantly, this means that the new process for allocating coal and coal seam gas titles will now apply.  As a result, the direct allocation of an exploration licence for coal will be limited to circumstances where the application is made by an existing holder of a exploration licence, assessment lease or mining lease for an ‘operational allocation purpose’.

The Mining Amendment (Licences for Operational Allocation Purposes) Regulation 2015 (NSW) which amends the Mining Regulation 2010 (NSW) (Mining Amendment Regulation), together with the ‘Guidelines for coal exploration licence applications for operational allocation purposes’, also commenced on 18 December 2015 and prescribes the following as ‘operational allocation purposes’:

• in relation to applications by holders of exploration licences or assessment leases – the purpose of both developing a better mine design proposal and recovering coal resources that would otherwise be likely to be sterilised, and
• in relation to applications by holders of mining leases, each of the following: 
• the purpose of extending the life of a mine 
• the purpose of developing a better mine design
• the purpose of recovering coal resources that would otherwise be likely to be sterilised, and
• the purpose of obtaining an exploration licence for coal over the subsoil above or below the stratum to which the mining lease concerned relates or over the surface above the land to which that mining lease relates. 

The Mining Amendment Regulation also provides that:

• an application for an ‘operational allocation purposes’ can only be sought over a maximum surface area of 33% of the area of the land to which the existing exploration licence, assessment lease or mining lease concerned relates, and
• with reference to clause (b)(iv) above, the boundary of subsoil or the surface area of the land to which the application relates must not exceed the boundary of the area of land to which the mining lease concerned relates.  

One section of the Mining and Petroleum Legislation Amendment (Harmonisation) Act 2015 (NSW) commenced enabling the beneficial use of gas on an exploration licence or assessment lease.

Limited sections of the Mining and Petroleum Legislation Amendment (Land Access Arbitration) Act 2015 (NSW) commenced enabling seismic works under either an exploration licence or assessment lease (Mining Act) or petroleum title (Petroleum Act) on a road without owner’s consent.

The remaining sections of the above legislation are yet to commence.

Petroleum (Onshore) Amendment (Beneficial Use of Gas) Regulation 2015 (NSW) commenced under the Petroleum Act.  This new regulation amended the Petroleum (Onshore) Regulations to enable the beneficial use of gas on an exploration licence or assessment lease following the commencement of the relevant section of the Harmonisation Act.

As noted in our previous publication, the Protection of the Environment Operations Amendment (Enforcement of Gas and Other Petroleum Legislation) Act 2015 (NSW) commenced 1 December 2015.

The Work Health and Safety (Mines and Petroleum) Legislation Amendment (Harmonisation) Act 2015 (NSW) has still not commenced.  

Samantha Daly, Kate Swain

Commencement of enforceable undertakings in Queensland

From today, legislation passed by the former State Government allowing enforceable undertakings (EUs) to be entered into under the Environmental Protection Act 1994 (Qld) (EP Act) will commence. 

The EUs add to the suite of enforcement mechanisms already available to the Department of Environment and Heritage Protection (EHP), including:

• warning notices and letters
• penalty infringement notices
• environmental evaluations
• environmental protection orders
• clean-up or direction notices
• suspension or cancellation of licence, permit or authority, and
• prosecution.  

EUs are binding agreements with EHP in relation to a contravention, or alleged contravention, against the EP Act.  The undertaking should deal with remedying or preventing non-compliances, or other actions proposed to achieve legislative compliance, as well as measures for enhancing the protection of the environment.

The legislation allows an operator in Queensland to propose an EU to EHP, which can accept or reject the proposal.  An EU can be accepted even if prosecution proceedings have been started, so long as they have not concluded.  Once accepted, an EU prevents the commencement of proceedings for so long as it is complied with (existing proceedings must be discontinued after acceptance).  All accepted EUs will be published on EHP’s website. 

Failure to comply with an EU will amount to a separate offence against the EP Act, in addition to any underlying conduct, which is immediately actionable in the Magistrate’s Court. 

The EHP has added a guideline on EUs to its set of compliance guidelines, providing a clear policy indication of circumstances in which an EU will not be accepted (similar to amendments made to the Guidelines for Transitional Environmental Programs recently). 

For Queensland operators, EUs provide a viable alternative to prosecution or the suspension or cancellation of an authority under the EP Act.  The legislation specifically provides that entering into an EU is not an admission of guilt.  Given some of the requirements surrounding EUs, however, we consider they are unlikely to be a practical or popular alternative to lower order enforcement or for relatively minor non-compliances.  EUs have been used by operators and regulators in NSW for some time following non-compliance.  We anticipate that they will be used in similar circumstances here in Queensland.  

 

Tim Hanmore, Jessica Snell, Claire Meiklejohn

Extension to NSW mining purposes exemption

On 15 November 2010, amendments were made to the Mining Act 1992 (NSW) which made it an offence to carry out certain ‘mining purposes’ without holding a mining lease that was in force over the relevant land.

The relevant ‘mining purposes’ are defined as:

• the construction, maintenance or use of any reservoir, dam (including a tailings dam), drain or water race, and
• the removal, stockpiling or depositing of overburden, ore or tailings to the extent that it is associated with mineral extraction or mine beneficiation.

Mining purposes that had commenced prior to the above amendment coming into force on 15 November 2010 could rely on transitional arrangements to allow them to continue, provided that the person carrying out the activity obtained a mining lease before 15 November 2015.

By way of order dated 9 September 2015 the Minister has extended this transitional arrangement by exempting persons carrying out the above mining purposes from the requirement to obtain a mining lease where:

• the mining purpose was carried out, or in the course of construction, immediately prior to 15 November 2010, and
• the mining purpose has not been abandoned for a continuous period exceeding twelve months since 15 November 2010 (other than repair or maintenance).

This exemption will cease to have effect on 15 November 2017.

Samantha Daly, Patrick Holland, Kate Swain

Judicial immunity in Land Court proceedings

State Development and Public Works Organisation and Other Legislation Amendment Bill 2015

Anthony Lynham, Queensland’s Minister for State Development and Minister for Natural Resources and Mines, introduced the State Development and Public Works Organisation and Other Legislation Amendment Bill 2015 (Qld) into Parliament late on Wednesday. 

The Bill, if passed, will reinstate community objection rights for mining projects and clarify that judicial immunity applies to Land Court members presiding over these objections hearings, and other administrative matters.  This addresses concerns arising from the recent Queensland Supreme Court decision of BHP Billiton Mitsui Coal Pty Ltd v Isdale & Ors [2015] QSC 107 which cast some doubt over the scope of this immunity.

Background

The Queensland Supreme Court recently handed down its decision of BHP Billiton Mitsui Coal Pty Ltd v Isdale & Ors [2015] QSC 107.  That decision had the (likely unintended) consequence of causing delays in the progression of a number of mining approval matters currently before the Land Court of Queensland. 

The BHP decision considered whether disclosure under Chapter 7 Uniform Civil Procedure Rules 1999 (Qld) (UCPR) was required in objections hearings referred to the Land Court under the Mineral Resources Act 1989 (Qld) (MRA) and Environmental Protection Act 1994 (Qld) (EPA).  His Honour Justice McMurdo held that Chapter 7 UCPR does not apply to the hearing of objections referred to the Land Court, because the relevant court rules allow the Land Court to apply the UCPR in relation to a ‘proceeding’, but that a hearing of objections was not a ‘proceeding’ in the Land Court Rules. 

Judicial immunity

The decision had wider implications for the Queensland resources industry as it raised concerns about whether the judicial immunity provided to Land Court members under the Land Court Act 2010 (Qld) (Land Court Act) extends to objections hearings, which are administrative in nature and not considered a ‘proceeding’ under the Rules.  The immunity granted to advocates and witnesses might have been questioned on the same basis.  This uncertainty effectively stalled a number of objections matters which would otherwise have progressed over the past few months.

Land Court Act Amendments

The Bill introduced on Wednesday (15 July) contains proposed amendments to section 35 of the Land Court Act to confirm that judicial immunity applies whether the Land Court Member is exercising a judicial power or performing an administrative function, such as objections hearings.  The proposed amendments also ensure that this immunity applies retrospectively. 

Importantly, the proposed amendments will not only encompass hearings in the Land Court relating to objections to mining leases and environmental authorities, but also ensure the immunity applies to Land Court matters relating to the determination of compensation to landholders for the grant of mining leases under the MRA.

Additional amendments to section 21 (Rules of the Land Court) will also enable the Land Court to make rules in relation to all functions and powers conferred to it.  This includes rules related to disclosure during both proceedings or when exercising an administrative function. 

Stakeholder engagement

The transitional provisions provide that the amendments may be modified by regulation, with any transitional regulation to expire after 12 months.  These provisions herald the desire for stakeholder engagement, including with the Land Court Members, over the ensuing months to assess the effectiveness of the amendments and any need for future amendments to the Land Court Act or Rules.  Stakeholders should keep an eye out for the next opportunity to engage on the issues.

Today (17 July) is the last Parliamentary sitting date for the month.  It is likely that Parliament will be seeking to ensure the Bill is passed before the end of today’s sitting to ensure objections matters can con continue expeditiously. 

Peter Stokes, Tim Hanmore

US investigation into BHP Billiton concluded

• $25 million civil penalty imposed

• No findings of corrupt intent or bribery

• Remedial efforts to enhance compliance program and full cooperation by the company acknowledged

After a lengthy investigation by the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) relating to potential breaches of anti-corruption laws which began in 2009, global resources company BHP Billiton announced this week that the matter had been resolved.

The investigation by the US regulators primarily related to the company’s minerals exploration and development efforts and its hospitality program in connection with its sponsorship of the 2008 Beijing Olympic Games.  BHP Billiton cooperated fully with the SEC and DOJ since the investigation began and has since developed a world class anti-corruption compliance program.

The SEC imposed a civil penalty of US$25 million (which is relatively low in comparison to the penalties imposed in the top 10 enforcement actions for breaches of US anti-corruption laws ranging from US$185 million to US$800 million).  Interestingly, the SEC made no findings of corrupt intent or bribery by BHP Billiton.  The DOJ completed its criminal investigation without taking any action.

The SEC noted that the settlement ‘reflects BHP Billiton’s remedial efforts and cooperation with the SEC’s investigation’.  The company is required to report to the SEC on the operation of its compliance program for a 12 month period.

The SEC found that BHP Billiton failed to devise and maintain sufficient internal controls over its hospitality program in connection with its sponsorship of the Beijing Olympics, where the company invited 176 government officials and employees of state-owned enterprises to attend the Games.  Sponsored guests mainly from Africa and Asia were provided with hospitality packages that included event tickets, luxury hotel accommodation, and tours.

The SEC stated in its cease-and-desist order released earlier this week that, ‘as a result of its failure to design and maintain sufficient internal controls over the Olympic global hospitality program, BHP Billiton invited a number of government officials who were involved with, or in a position to influence, pending negotiations, efforts by BHP Billiton to obtain access rights, or other pending matters’.
The company stated publically that while it made efforts at the time to address the risks relating to inviting government officials to the Olympics, the controls it relied on were insufficient to satisfy the internal accounting controls requirements of the US anti-corruption laws.

Mining and resources companies, particularly those operating in high risk countries, should ensure that they have adequate procedures in place to manage the corruption risk associated with giving gifts, meals and entertainment to government officials, especially where the official is in position to influence pending negotiations or decisions regarding the grant of mining and petroleum licences. 

If anything of value is given or offered to government officials, it should be appropriate in the circumstances, having regard to whether any other things of value have been given to the government official in the previous six months, whether it is of an appropriate value and nature considering the government official’s position and whether it serves only a legitimate business purpose.

Since the commencement of the US investigation, BHP Billiton has undertaken the following significant remedial action, which was important in demonstrating its strong culture of compliance and its commitment to operating to the highest standards:

• creating an independent compliance function that reports to the head of the legal function and the Risk and Audit Committee of the board
• enhancing its policies and procedures regarding hospitality, gift giving, use of third party agents and business partners and other high-risk areas
• enhancing its financial and auditing controls
• conducting extensive employee training globally on anti-corruption issues, and
• overhauling its processes for conducting internal investigations of potential violations of anti-corruption laws.

Tiffany McLean

Risk based approach to compliance and enforcement - NSW Division of Resources and Energy

The NSW Division of Resources & Energy (DRE) has published its new Compliance and Enforcement Policy which introduces a risk-based approach.  

The DRE will determine its enforcement approach by identifying the likelihood of a particular event occurring and the consequence to the community, industry and DRE should that event occur. 

The DRE’s Compliance & Enforcement branch (established on 31 July 2014) oversees and investigates non-compliances with obligations created by the grant of a right to explore, extract or produce petroleum or minerals in NSW, as well as unlawful mining or petroleum extraction activities.  Its functions include:

• monitoring overall industry compliance
• developing compliance initiatives and programs, and
• determining the level of enforcement to be applied in cases of non-compliance.

The risk-based approach to compliance and enforcement means that businesses who have not complied with relevant polices, regulations, approval or licence conditions are deemed ‘high risk’, while business that do comply are determined to be ‘low-risk’.

The DRE’s stated regulatory objectives are:

• to maximise a titleholder's compliance with legislation and policies governing coal, mineral, petroleum and coal seam gas activities
• to provide for a healthy and safe work environment for mineworkers resulting in zero deaths and a reduction in serious injuries occurring in the workplace
• to promote a culture of environmental protection and best practice environmental management in the exploration, mining and petroleum industries
• to educate and provide guidance to industry and the community
• to demonstrate consistency in the compliance and enforcement actions taken by DRE
• to promote transparency in DRE's decision making processes
• to conduct thorough and timely investigations of potential non-compliances or alleged breaches of legislation, policies or approvals
• to exercise enforcement action in a professional, transparent and effective manner
• to encourage self regulation and timely reporting of non-conformances to Government, and
• to protect the interests of the State and the people of NSW.

The DRE has identified that it will focus its regulatory actions on ‘those who consciously choose not to comply with the law’, and will be undertaken in order to raise industry awareness and to encourage a change in attitude or behaviour.  The 2015-2016 compliance priorities will be:

• titleholders, prospectors or mine operators whose activities potentially have significant safety implications
• titleholders, prospectors or mine operators whose activities actually or potentially have a significant impact upon the environment, community or government revenue
• titleholders, prospectors or mine operators whose activities whose activities attract significant public interest
• titleholders, prospectors or mine operators whose activities who have a history of non-compliance with title conditions, and
• titleholders, prospectors or mine operators who are not undertaking effective exploration.

The DRE’s auditing program will include compliance inspections and assessments, desktop audits, targeted audits and comprehensive audits, which will review information about business operations through onsite investigation and intelligence gathering.

 

Enforcement actions can include financial penalties, permit penalties (imposition of restrictive conditions) and suspension or cancellation of licences, permits and authorities. 

 

Explorers and miners in NSW should be aware of the new Compliance and Enforcement Policy being implemented by DRE and should ensure that they comply with the conditions of any mining or petroleum tenement. Additionally, if your activities attract significant public interest you may get extra attention from DRE notwithstanding a strong environmental record. We can assist you with understanding your obligations under your tenement conditions.

 

Samantha Daly, Patrick Holland, Kate Swain, Felicity Douglas 

Planning Minister announces review of Mining SEPP

The New South Wales Planning Minister Rob Stokes recently announced an upcoming review of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP) which will occur before September 2015. 

In making this announcement the Minister indicated that:

• there will be an overhaul of the way large mining and coal seam gas projects secure approval
• environmental considerations must be a foundational concern in any decision about resource use
• the community will be given a greater chance to test the planning decisions
• society and the environment will get a more equal weighting with the economy in decision making, and
• there will be a focus on monitoring and compliance so that the consent doesn’t sit on a shelf after it is granted.

Proponent’s that rely on the Mining SEPP to carry out their operations should start giving consideration to how the SEPP can be improved, such as by the following means:

• examples of exempt and complying development that have minimal environmental impact and which should be included in the Mining SEPP
• dealing with issues faced in the implementation of the Gateway process, and
• changes to the application of clause 12AA regarding the significance of the resource.

Further updates on the proposed reforms to the Mining SEPP will be provided in due course.

Samantha Daly, Patrick Holland, Kate Swain

 

Reforms to NSW state significant development assessment

The Minister for Planning, The Hon. Pru Goward, has announced proposed changes to how state significant development (SSD) proposals are processed.  In an effort to reduce the current lengthy delays, the NSW Government has made a commitment to cut the average time that it takes to process SSD applications (including mines) by up to 170 days. 

The reduction in processing time for SSD applications will be achieved through the introduction of:

• clear timeframes for certain assessment processes
• clearer guidance to the Planning Assessment Commission (PAC) on the application of government policies, and
• the appointment of case managers to manage planning applications. 

The Minister also proposes to establish a panel of independent experts to advise the NSW Government and the PAC on technical issues.

The timeframes are not enshrined in law and the proposed changes do not include deemed approval provisions, so it remains to be seen whether the reforms will result in a significant reduction in processing times for SSD applications. 

 

Samantha Daly, Patrick Holland, Kate Swain

New land acquisition and mitigation policy for NSW mining, petroleum and extractive industries

The NSW Government has released a new State Environmental Planning Policy Amendment (Gas Exploration and Mining) 2014 (SEPP Amendment) which came into force on 19 December 2014. 

The SEPP Amendment introduces a new land acquisition and mitigation policy to formalise landholder protection from noise and dust for State Significant Developments (SSD) in the mining, petroleum and extractive industries. 

This means that decision-making bodies are now obliged to take into account the new 'Voluntary Land Acquisition and Mitigation Policy' in determining development applications.  This policy provides guidance on measures to reduce the impact of noise and dust on adjoining properties from proposed new activities.  It applies to all undetermined SSD applications and any future applications to modify existing operations. 

The policy provides that the acquisition price to be paid by a proponent be an amount no less favourable that a 'market value' rate calculated as if the land was unaffected by the development and with reference to section 55 of the Land Acquisition (Just Terms Compensation) Act 1991 (Land Acquisition Act).  This requirement is controversial as the Land Acquisition Act is a statutory scheme introduced for use by NSW government authorities during compulsory acquisition of private land for a public purpose. 

The policy also has the potential to significantly impact proponents of SSD in the mining, petroleum and extractive industries, as it introduces voluntary land acquisition criteria for particulate matter applicable to the majority of workplaces on privately owned land (in addition to residences). Importantly, the consent authority maintains discretion as to whether or not to apply the particulate matter acquisition criteria to workplaces, with a range of factors for the consent authority to consider including the nature of the workplace.

Under the policy, a 'workplace' is defined to include 'a lawfully operating office, industrial premises or intensive agricultural enterprise where employees are grouped together in a defined location, but does not include broad-acre agricultural land, heavy, hazardous or offensive industry or businesses intentionally located close to mining operations.'

Outcome

The requirement that the Land Acquisition Act criteria be applied to acquisition of some types of workplaces affected by dust has the potential to make smaller SSD applications and modifications unviable, as the cost of relocating and compensating a business owner could be substantial. 

Samantha Daly, Patrick Holland, Kate Swain