Bills Digest No. 25, 2022–23

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Geoffrey Wade
Foreign Affairs, Defence and Security Section
24 October 2022

 

Key points This Bill amends the Customs Act 1901 to ensure the appropriate security of offshore electricity infrastructure through extending provisions which govern existing offshore infrastructure. The amendments to the Customs Act will allow the Australian Border Force to treat Offshore Electricity Infrastructure (OEI) on the same basis as sea and resources installations for customs purposes, and for the Anti-Dumping Commission to treat OEI on the same basis for the purposes of anti-dumping and countervailing matters. The Bill also amends the Offshore Electricity Infrastructure Act 2021 to provide for appropriate administrative arrangements for the appointment of an Offshore Infrastructure Registrar and ancillary staff.

Contents

Purpose of the Bill
Structure of the Bill
Background
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions

 

Date introduced:  28 September 2022
House:  House of Representatives
Portfolio:  Climate Change, Energy, the Environment and Water
Commencement: The day after Royal Assent

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at October 2022.

Purpose of the Bill

The purpose of the Offshore Electricity Infrastructure Legislation Amendment Bill 2022 (the Bill) is to amend the Customs Act 1901 to effectively manage border security risks related to offshore electricity installations and to amend the Offshore Electricity Infrastructure Act 2021 (OEI Act) to provide for appropriate administrative arrangements that will facilitate the appointment of the  National Offshore Petroleum Titles Administrator as the Registrar responsible for licensing Offshore Electricity Infrastructure (OEI) participants.

The amendments to the Customs Act will allow the Australian Border Force (ABF) to treat OEI on the same basis as sea and resources installations for customs purposes, and for the Anti-Dumping Commission (ADC) to treat OEI on the same basis as sea and resources installations for the purposes of anti-dumping and countervailing matters. This is aimed at ensuring that the ABF and the ADC can continue to secure the border using existing controls that are currently administered in the offshore environment.

The proposed amendments to the OEI Act are intended to accommodate a recent change to the Administrative Arrangement Orders (AAOs), which might otherwise impact the powers and identity of the Offshore Infrastructure Registrar (the Registrar).

Structure of the Bill

The Bill comprises two Schedules:

Schedule 1 – Amendment of the Customs Act

Schedule 2 – Amendment of the OEI Act.

Background

According to the Offshore Constitutional Settlement, the states have responsibility for activities in the zone of ‘coastal waters’ (onshore and as far as three nautical miles seaward of the territorial baseline). The Commonwealth has responsibility for ‘offshore areas’ (those beyond three nautical miles). There has been a long-standing framework for the exploration of petroleum and greenhouse gas activities in Commonwealth waters through the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act).

The Offshore Electricity Infrastructure Bill 2021 was passed into law as the Offshore Electricity Infrastructure Act 2021 on 2 December 2021, and commenced on 2 June 2022. It is intended to support the development of an offshore electricity sector in Commonwealth waters. It establishes a regulatory framework to enable the construction, installation, commissioning, operation, maintenance, and decommissioning of offshore electricity infrastructure (collectively, offshore infrastructure activities) in the Commonwealth offshore area. Offshore Electricity Infrastructure (OEI) includes offshore wind farms, as well as tidal, wave, rain, solar, and geothermal power generation and transmission facilities. (See the Parliamentary Library’s Bills Digest for further information.) 

The OEI Act:

• prohibits unauthorised offshore infrastructure activities in the Commonwealth offshore area
• permits the Minister to declare specified areas suitable for offshore infrastructure activities
• requires the establishment of a licensing scheme and allows the Minister to grant various kinds of licences authorising offshore infrastructure activities in specified areas
• provides for the protection of OEI in the Commonwealth offshore area
• establishes the statutory authorities to administer and regulate the framework
• provides for compliance and enforcement of the regulatory framework and
• provides for the protection of worker safety through modified application of the Work Health and Safety Act 2011 (Bills Digest p. 5).

The Offshore Electricity Infrastructure (Regulatory Levies) Act 2021 established an offshore electricity infrastructure levy to be imposed on industry, with details to be set out in future regulations.

The Offshore Electricity Infrastructure (Consequential Amendments) Act 2021 amended the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to (as currently relevant) clarify that the National Offshore Petroleum Titles Administrator may also be appointed as the Offshore Infrastructure Registrar (see the Parliamentary Library’s Flagpost for more information).

From March to April 2022, the Department of Industry, Science, Energy and Resources consulted on Draft Regulations and cost recovery implementation statement for the offshore electricity infrastructure framework. The instruments have not yet been made.

Policy position of non-government parties/independents

The Government, while in Opposition, ‘strongly supported’ the original legislation (the Offshore Electricity Infrastructure Bill 2021), with the then Shadow Minister for Climate Change and Energy, Chris Bowen, noting: ‘One example is offshore wind, which I'm very glad the Government has come, very late to the party, and accepted our demands to legalise offshore wind in Australia, it is going to be a jobs bonanza, through much of regional Australia.’

Labor MP Anika Wells also supported the 2021 Bill, noting:

Offshore renewable energy also has the potential to expand our local manufacturing capacity and expand scalable supply chain benefits for small and medium enterprise in Australia, with the Blue Economy Cooperative Research Centre estimating that manufacturing components for offshore winds creates eight times more jobs than the construction of projects.

The Australian Greens also supported the original legislation and the jobs it was slated to bring. (See the Bills Digest for the 2021 Bill for further information, pp. 9–10.)

To date, there appears to have been no formal statements by non-government parties or independents on the current Bill.

Position of major interest groups

Industry and employer groups were also generally supportive of the original 2021 Bill, as was the Climate Council. Various industry union groups, such as the Maritime Union of Australia (MUA) and Electrical Trades Union of Australia (ETU) also voiced support for the legislation, additionally advocating for a local content mandate. (See the Bills Digest for the 2021 Bill for further information, pp. 10–11.)

To date, there appears to have been no published statements by stakeholders on the current Bill.

Financial implications

The Government‘s Explanatory Memorandum to the Bill (p. 6) notes that ‘The Bill is expected to have no financial impact.’

Funding was provided for the regulatory regime required under the original legislation. The Explanatory Memorandum to the Offshore Electricity Infrastructure Bill 2021 noted, at page 9:

As part of the 2020/21 Budget process, the Government invested $4.8 million over two years to develop the offshore electricity infrastructure regulatory regime, including preparing the legislative framework and setting up administrative systems and processes. These funds have been distributed between the Department of Industry, Science, Energy and Resources, NOPTA, NOPSEMA and Geoscience Australia for these preparatory purposes.

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[1] In this assessment, there was specific examination of the Bill in respect of the right of freedom of movement, the right to liberty and freedom from arbitrary detention, the right to privacy, and the right to the presumption of innocence.

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights had no comment on the Bill (p. 3).

Key issues and provisions

The Bill amends the Customs Act to ensure the appropriate regulation of goods and vessels that enter or exit areas off the coast of Australia in relation to offshore electricity infrastructure. The Bill also amends the OEI Act, to accommodate a recent change to the Administrative Arrangement Orders (AAOs), which might affect the powers of the Offshore Infrastructure Registrar (the Registrar).

Customs Act

Schedule 1 to the Bill amends the Customs Act.

Currently Installation is defined at subsection 4(1) of the Customs Act to mean:

• a resources installation or
• a sea installation.

A resources installation is (broadly) either a resources industry fixed structure (which is not able to moved, such as a pipeline) or mobile unit (such as a vessel or a floating structure that is able to be moved) that is used offshore in operations or activities associated with exploring or exploiting the mineral and other non-living resources of the seabed and its subsoil (subsections 4(1), (5) and (6) of the Customs Act). A sea installation is (broadly) any man‑made structure that, when in, or brought into, physical contact with the seabed or when floating, can be used for an environment related activity, such as tourism, recreation, exploring or exploiting the living resources of the sea, scientific activity or transport activity (subsection 4(1) of the Sea Installations Act 1987).

Item 3 of Schedule 1 will amend the definition of Installation so that it will also include an offshore electricity installation, which will be defined by item 4 as infrastructure, a structure or an installation that is:

• offshore renewable energy infrastructure, which, as defined in section 10 of the OEI Act, is fixed or tethered offshore infrastructure (such as an offshore windfarm) which has one of the following purposes:
  • exploring for one or more renewable energy resources[2]
  • assessing the feasibility of exploiting a renewable energy resource
  • exploiting a renewable energy resource
  • storing, transmitting or conveying a renewable energy product or
• offshore electricity transmission infrastructure, which is defined in section 11 of the OEI Act as fixed or tethered offshore infrastructure (such as an undersea cable and other infrastructure associated with the cable) for storing, transmitting, or conveying electricity (including electricity not generated from renewable resources).

There are two types of offshore electricity installation in the Bill:

• an Australian offshore electricity installation, which is defined by item 1 of Schedule 1 as an offshore electricity installation that is deemed to be part of Australia because of the operation of section 5C (discussed below) and
• an overseas offshore electricity installation, which is defined by item 5 of Schedule 1 as an offshore electricity installation that:
  • is in the Commonwealth offshore area and
  • has been brought into that area from a place outside the outer limits of the area
  but does not include an Australian offshore electricity installation.

Section 5C of the Customs Act provides for certain installations to be deemed to be part of Australia (and thus subject to customs control). Currently these installations are resources installations that are attached to the Australian seabed or sea installations that are installed in an adjacent area or a coastal area. Item 8 will amend section 5C so that it also covers an offshore electricity installation that is installed in the Commonwealth offshore area.[3] As provided in item 1, such an installation that is deemed to be part of Australia under section 5C is an Australian offshore electricity installation.

Item 10 inserts proposed subsection 5C(4) to set out when an offshore electricity installation that is deemed to be part of Australia ceases to be part of Australia for the purposes of the Customs Act. This will occur when the installation is uninstalled for the purpose of being taken to a place outside the outer limits of the Commonwealth offshore area, or is uninstalled for a different purpose and then moved for the purpose of being taken to a place outside the outer limits of the Commonwealth offshore area.

Once an overseas offshore electricity installation is installed in the Commonwealth offshore area it becomes an Australian offshore electricity installation. The installation of overseas offshore electricity installations is dealt with by proposed section 5BA of the Customs Act, inserted by item 7 of Schedule 1.

Proposed section 5BA provides for the Comptroller-General of Customs to grant revocable permission for installation of an overseas offshore electricity installation in the Commonwealth offshore area with any number of conditions attached to that permission.

It also sets down the penalties applicable if the conditions attached are not complied with, or if a person installs an overseas offshore electricity installation in the Commonwealth offshore area without permission.

Item 11 adds proposed section 33BA which provides for a strict liability offence if a person uses an Australian offshore electricity installation without permission.

This section also provides for the Comptroller-General of Customs to issue revocable permission (subject to any conditions) for a person to engage in specific activities in relation to the use of an Australian offshore electricity installation, with violations of those conditions also constituting an offence.

Section 49A of the Customs Act sets out when ships or aircraft are deemed to be imported into Australia. A ship or aircraft that is imported into Australia may be forfeited to the Commonwealth if it remains in Australia for more than 30 days after a Customs notice is served. Current subsection 49A(9) provides that a reference to a ‘ship’ in section 49A does not include a reference to an overseas resources installation or an overseas sea installation. Item 12 will repeal and replace subsection 49A(9) to also provide that an overseas offshore electricity installation is not a ship for the purposes of section 49A and therefore is not subject to forfeiture under that provision. Instead, an overseas offshore electricity installation will be deemed to have been imported into Australia when it becomes installed in the Commonwealth offshore area (item 13) or when it is brought to a place in Australia and is to be taken from that place into the Commonwealth offshore area for the purposes of being installed (item 14). This will mean that an overseas offshore electricity installation will be deemed to have been imported into Australia in equivalent circumstances as apply to overseas resources installations or overseas sea installations.

Section 61 of the Customs Act requires certain individuals, including the master of a resources installation or the owner of a sea installation, to facilitate boarding of the installation by Customs officers. Failure to do so is a strict liability offence with a maximum penalty of 60 penalty units ($13,320).[4] Item 17 repeals and replaces subsection 61(1), adding offshore electricity installations to the list of facilities for which responsible persons are required to facilitate boarding by authorised officers.

Item 26 adds proposed paragraphs 187(ea) and (eb), adding Australian offshore electricity installations and overseas offshore electricity installations (for which permission to install in the Commonwealth offshore area has been granted under proposed section 5BA (discussed above)) to the list of those installations which authorised officers are permitted to board.

Item 30 adds proposed section 228C to the Customs Act providing for the forfeiture of offshore electricity installations which were overseas offshore electricity installations immediately prior to being installed in a Commonwealth offshore area, and were installed without the permission of the Comptroller-General of Customs, as required under proposed section 5BA.

Item 32 adds to the definition of importer in subsection 269T(1) to include those persons who are the beneficial owners of goods brought from beyond the seas to an Australian offshore electricity installation or goods on board an overseas offshore electricity installation when it is installed in the Commonwealth offshore area. The beneficial owner of an overseas offshore electricity installation when it is installed in the Commonwealth offshore area is also considered to be the importer of that installation.

Offshore Electricity Infrastructure Act

Schedule 2 to the Bill amends the OEI Act.

Item 1 amends section 8, which sets out definitions for the OEI Act, to define the Registrar’s Department as the ‘Department of State that the Registrar is an SES employee in.’ The Registrar’s functions and responsibilities are set out at Part 1 of Chapter 5 to the OEI Act and include keeping the Register of Offshore Infrastructure Licences.

Originally, it was envisaged that the Registrar for Offshore Electricity Infrastructure (appointed under section 153 of the OEI Act) would be the National Offshore Petroleum Titles Administrator (NOPTA, established by Part 6.10 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006—see subsection 153(3) of the OEI Act). The NOPTA is an SES employee of the Department of Industry, Science and Resources (DISR) (see the Explanatory Memorandum to the Bill, pp. 5–6). The OEI Act currently refers at various places to the Regulator being an ‘employee in the Department’. In accordance with section 19A of the Acts Interpretation Act 1901, the Department in this context is the department specified in the AAOs as administrating the relevant provision. In this case, the current AAOs specify that the OEI Act is administered by the Department of Climate Change, Energy, the Environment and Water (DCCEEW). This means that the NOPTA is not an employee of ‘the Department’ referred to in the OEI Act. The Bill makes various amendments to ensure that the NOPTA is still able to be appointed as the Registrar, despite the machinery of government changes.

These legislative changes allow the Secretary of the relevant Commonwealth Department (DCCEEW) to appoint an SES employee within any Commonwealth Department as the Registrar (items 8 and 9), for the Registrar’s powers or functions to be delegated to officers of any Department (item 10), and for any Secretary to make certain employees from their Department available to assist the Registrar (items 11 and 12).

Item 2 of Schedule 1 supplements the meaning of offshore renewable energy infrastructure and offshore electricity transmission infrastructure with proposed paragraphs 10(3)(e) and 11(3)(e) to allow for the exclusion of ‘any infrastructure, structure or installations’ as prescribed by the regulations from those meanings.

Item 5 adds proposed section 115A to the OEI Act, allowing the Regulator (the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA)) to publish on the Regulator’s website summaries of overall plans and management plans submitted for approval under the licensing scheme.

Item 6 inserts proposed section 116A, providing for regulations to be made to prescribe requirements for licence holders to notify the Regulator of the commencement and completion of any offshore infrastructure activity within the licence area.

Item 7 inserts ‘the Minister’ in place of ‘the Regulator’ as the decision maker in terms of the form of financial security any licence holder must provide (paragraph 117(3)(a)), when the financial security is no longer required (paragraph 117(3)(c)) and the circumstances under which a reduced financial security can be accepted (paragraph 117(4)(d)). As set out in the Explanatory Memorandum to the Bill:

Given that financial security must be provided to and is held by the Commonwealth, and can only be recovered by the Commonwealth [section 119 of the OEI Act] it is more appropriate that the Commonwealth (rather than the Regulator [NOPSEMA], which as a corporate Commonwealth entity is not formally part of the Commonwealth) has the power to make decisions in relation to financial security… The Minister still retains the discretion to delegate any of their powers under item 7 to the CEO of the Regulator under paragraph 303(1)(a) of the OEI Act.

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[1].      The Statement of Compatibility with Human Rights can be found at page 8 of the Explanatory Memorandum to the Bill.

[2].      Renewable energy resource is defined at section 13 of the OEI Act as any of the following from which energy may be obtained:

1. wind and air flow;
2. wind‑generated waves;
3. tides;
4. ocean currents;
5. light or heat from the sun;
6. rain;
7. geothermal heat;
8. a resource, event or circumstance prescribed by the regulations.

[3].      Item 6 of Schedule 1 sets out when an offshore electricity installation is taken to be installed in the Commonwealth offshore area.

[4].      Crimes Act 1914, section 4AA and the Notice of Indexation of the Penalty Unit Amount made under that section set the current value of a penalty unit at $222.

 

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