Chapter 3
Other aspects of the bill
Part 2 of the bill – functions of the safety authority
3.1
The National Offshore Petroleum Safety Authority (NOPSA) was established
following a review into Australia's offshore safety in 1999. At the time of the
review, the states and Northern Territory were responsible for the day to day
regulation of safety in the offshore petroleum sector. The review recommended
the establishment of a national petroleum safety regulation authority that
would regulate federal, state and Northern Territory waters.[1]
3.2
Since 1 January 2005, NOPSA has been responsible for regulating occupational
health and safety matters that arise from petroleum and greenhouse gas
operations in Commonwealth waters.[2]
3.3
NOPSA was given responsibility for the health and safety regulation of
offshore greenhouse gas storage operations. NOPSA's functions have extended to
the structural integrity of these facilities, to the extent this affects the
safety of workers.[3]
In order to strengthen the Authority's role, Part 2 of the bill sets out
amendments that will clarify that its regulatory function extends explicitly to
non‑occupational health and safety aspects of the structural integrity of
offshore facilities as a whole.[4]
3.4
The explanatory memorandum further explains that the proposed
amendments:
...have the intent of strengthening the ability of NOPSA to
carry out its existing regulatory responsibilities and [augment] its
responsibilities by expressly including oversight of the whole of structural
integrity facilities (including pipelines), wells and well-related equipment.
For achieving completeness of this oversight role, the amendments include
non-OHS structural integrity aspects to ensure complete coverage of this
particular function.[5]
3.5
In their submission, the Department of Resources, Energy and Tourism
referred to a need for further discussion as to NOPSA's role in the regulation
of wells and structural integrity given the concerns of the state and Northern
Territory departments that the changes will decrease their resource management
rights.[6]
3.6
The development of regulations that relate to structural integrity and
which set out a 'detailed delineation of...structural integrity functions between
NOPSA and the Designated Authorities...relating to resource security and resource
management which may also have a structural integrity aspect'[7]
may go some way to addressing these concerns.
3.7
Submitters welcomed this part of the bill:
...welcoming the augmentation of NOPSA's functions which will
assist in more effective regulation...[8]
By increasing the functions and powers of NOPSA to include
well integrity and well related equipment, safety of petroleum activities will
be increased. Therefore, changes to NOPSA’s functions will contribute to
improved safety of workers on offshore petroleum facilities.[9]
3.8
Assistant Professor Hunter thought this process could go further:
These legislative changes proposed will still split the
responsibilities for Well Operations Management Plans between NOPSA and the
responsible Delegated Authority (who assesses the well design and construction
and drilling applications)....Furthermore, the regulatory amendments do not
consider the environmental regulation of well operations and integrity, which
also remains with the relevant Commonwealth or State Authority. Therefore,
whilst in principle these proposed legislative amendments will provide benefits
for the regulation of well integrity, it will still split the regulatory
responsibility of well integrity between multiple regulators.[10]
Part 3 of the bill – multiple titleholders
3.9
The amendments set out in Part 3 of the bill introduce provisions to
clarify the application of the provisions where a title is owned by two or more
titleholders.[11]
3.10
Division 1 will enable multiple titleholders to nominate one titleholder
to act on their behalf in instances where an 'eligible voluntary action' is
involved.[12]
This will extend to both multiple holders of petroleum titles and multiple
holders of greenhouse gas titles.[13]
3.11
Division 2 will provide that where an obligation is imposed on a
titleholder, and that title is held by multiple parties, the obligation is
imposed on them all but that it can be discharged by any one of the registered
titleholders.[14]
Division 2 also contains a clause which will enable regulations to be made
exempting specific obligations from being imposed on multiple titleholders.[15]
3.12
AMPLA regards the expression 'registered titleholders' as unduly
restrictive, and argue that an obligation should also be capable of being
discharged by an operator authorised by the titleholders.[16]
3.13
The Western Australian Government expressed concern that this provision:
...could be viewed as taking away the property rights of an
individual member of a joint venture.[17]
3.14
At the hearing, the WA Government commented:
while the proposed amendments would make title administration
easier we are concerned that this could be viewed as taking away some of the
property rights of an individual member of a joint venture.[18]
3.15
The Department of Energy, Resources and Tourism replied that there had
already been consultation and agreement on this issue:
APPEA, which is the peak industry association in this industry,
supports the multiple titleholder amendments in this bill.[19]
3.16
The Scrutiny of Bills Committee noted the explanation of the explanatory
memorandum that including these provisions ensures that the legislation is
'future‑proofed' and the proposed provisions will have a limited impact.[20]
Part 4 of the bill – strict liability
3.17
Part 4 of the bill will amend various offence provisions within the Act
to make those offences ones of strict liability, ie fault does not need to be
proved.
3.18
The explanatory memorandum explains that these changes are being made to
improve the effectiveness of enforcement as the 'remote and complex nature of
offshore operations and the prevalence of multiple titleholder arrangements
[make] it...extremely difficult to prove intent.'[21]
It also explains that the proposed changes are in line with Commonwealth strict
liability guidelines.[22]
3.19
The Department of Resources, Energy and Tourism noted in their
submission that the Attorney General was consulted and his approval given when
these amendments were being considered.[23]
3.20
AMPLA argue that more justification should be given for imposing 'strict
liability' offences, and suggest it may be better to await the conclusions of
the inquiry into the Montara oil spill.[24]
3.21
The Scrutiny of Bills Committee also drew attention to these proposed
amendments stating that 'the committee considers that the reasons for the
imposition of strict and absolute liability should be set out in the relevant
explanatory memorandum' yet making no further comment given that the bill 'is
not seeking to increase any penalties on titleholders, and in some instances
the bill removes imprisonment as a penalty and replaces [the] sanction with
penalty units.'[25]
3.22
In their joint submission the Australian Workers Union and Maritime
Union of Australia questioned whether the reduction in penalties from
imprisonment to monetary fines would act as a deterrent given that it
'represents a significant downgrading of the penalty'.[26]
A similar concern was expressed in a confidential submission.[27]
Along similar lines, Assistant Professor Hunter argues:
Whilst the element of intention may pose difficulties for the
regulators to prove, where it can be proved the harsh penalties should remain.
Without this provision, it is possible that industry will view the fines as
‘soft’, and the penalty will no longer act as a deterrent where the fault
element is a failure to do or not to do an act as required.[28]
Part 6 of the bill – duties of titleholders in relation to wells
3.23
Schedule 3 of the Offshore Petroleum and Greenhouse Gas Storage Act
2006 establishes a framework to regulate occupational health and safety
matters at or near facilities located in Commonwealth waters. Part 6 of the
current bill proposes amendments to schedule 3 that will ensure:
...a titleholder's duty of care in relation to wells extends
not only to wells in respect of which activities have been carried out, or are
being carried out, during the term of the current title but also to wells in
respect of which activities have been carried out under the authority of any
previous titles in a series of titles...regardless of the identity of the
titleholder.[29]
3.24
These changes will make certain that although a titleholder's
responsibilities will be broad reaching,[30]
they will not extend to matters over which a titleholder could not reasonably
be expected to have control.[31]
3.25
AMPLA are concerned that this provision may impose obligations
retrospectively.[32]
3.26
The Scrutiny of Bills Committee referred to the changes proposed in Part
6 and noted that advice from the Minister's office was being sought to provide
the 'rationale for imposing retrospective liability in relation to a
titleholder's duty of care and whether the retrospective application is
appropriate' particularly as 'clauses 13A and 13B...are being expanded.'[33]
3.27
The Scrutiny of Bills Committee also identified the clauses within
proposed sections 13A and 13B that seek to impose absolute liability for
whether or not a duty of care was owed by the defendant but did not make
further comment as 'absolute liability applies to the existing versions of
sections 13A and 13B in identical terms to those proposed in the bill.'[34]
Parts 5, 7 and 8 – other matters
3.28
The remaining parts of the bill, Parts 5, 7 and 8 contain minor
amendments to ensure the Act can be administered.
3.29
Part 5 of the bill will amend state and territory legislation that
replicates the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to
ensure that State and Northern Territory Ministers can perform functions and
powers under Commonwealth regulations.[35]
At present although the state and territory legislation authorises State and
Northern Territory Ministers to perform functions and exercise powers under the
Act it does not identify that they can also perform functions and powers
conferred under Commonwealth regulations.[36]
The amendments of Part 5 of the bill will address this situation.
3.30
Part 7 sets out a minor technical correction.[37]
3.31
Part 8 of the bill contains amendments that update the Act to ensure
that it reflects recent amendment to regulations. A number of regulations[38]
were consolidated and replaced.[39]
Recommendation 1
3.32
The Committee recommends that the Senate pass the bill.
Senator Annette Hurley
Chair
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