Introductory Info
Date introduced: 28 March 2018
House: House of Representatives
Portfolio: Industry, Innovation and Science
Commencement: Various dates as set out in this Digest.
The Bills Digest at a glance
Miscellaneous Amendments Bill
The Offshore
Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Amendments) Bill
2018 (the Miscellaneous Amendments Bill) amends the Offshore Petroleum
and Greenhouse Gas Storage Act 2006 (the OPGGS Act) to:
- transfer various regulatory functions and powers relating to
offshore greenhouse gas storage activities from the responsible Commonwealth
Minister to the National Offshore Petroleum Safety and Environmental Management
Authority (NOPSEMA)
- strengthen and clarify the monitoring and enforcement powers of
NOPSEMA inspectors
- retrospectively designate four areas, released as part of the
2005 offshore petroleum acreage release, as ‘frontier areas’ for the purposes
of the Designated Frontier Area tax incentive and
- make other minor and technical amendments.
NOPSEMA’s expanded role
NOPSEMA currently regulates certain aspects of the
management of offshore petroleum facilities, including occupational health and
safety (OHS), structural integrity of facilities, wells and well‑related
equipment and environmental management. It also has statutory functions
relating to OHS management of greenhouse gas storage operations under the OPGGS
Act.
Statutory powers and functions under the OPGGS Act in
relation to other aspects of offshore greenhouse gas storage activities,
including environmental management, currently sit with the responsible
Commonwealth Minister. However, the Minister’s power and functions in this
regard have been delegated to NOPSEMA through an administrative delegation.
This Bill proposes to formally transfer the relevant statutory powers and
functions under the OPGGS Act to NOPSEMA and, at the same time,
strengthen and clarify NOPSEMA’s monitoring and compliance powers.
The Government advises that one of the
reasons behind the current Bills is because ‘there is a renewed focus on the
adequacy of regulatory arrangements’ as a result of the ‘potential for an
increase in greenhouse gas storage activities in future’.[1]
Commentary on the Miscellaneous Amendments Bill
Unions have concerns about Schedule 16 of the Bill, which introduces
enforceable undertakings as an additional compliance and enforcement tool under
the OPGGS Act. In particular, the Australian Council of Trade Unions (ACTU)
considers that the use of enforceable undertakings is not appropriate in
certain circumstances, including where workplace fatalities have occurred.
Purpose of
the Bills
The purpose of the Offshore
Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Amendments) Bill
2018 (the Miscellaneous Amendments Bill) is to amend the Offshore Petroleum
and Greenhouse Gas Storage Act 2006 (the OPGGS Act) to:
- transfer
various regulatory functions and powers relating to offshore greenhouse gas
storage activities from the responsible Commonwealth Minister to the National
Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA)
- strengthen
and clarify the monitoring and enforcement powers of NOPSEMA inspectors
- retrospectively
designate four areas, released as part of the 2005 offshore petroleum acreage
release, as ‘frontier areas’ for the purposes of the Designated Frontier Area
tax incentive and
- make
other minor and technical amendments.
The purpose of the Offshore
Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Bill 2018
(Regulatory Levies Bill) is to amend the Offshore Petroleum
and Greenhouse Gas Storage (Regulatory Levies) Act 2003 (Offshore
Levies Act) to extend the application of various levies to greenhouse gas
wells and make other minor and consequential amendments.
The Regulatory Levies Bill is separate due to the constitutional
requirement for taxation, duties of excise and duties of customs to be dealt
with in Bills that only include that individual, respective type of charge.[2]
Structure
of the Bills
The Miscellaneous Amendments Bill contains 17 schedules as
follows:
- Schedule
1 contains amendments to transfer regulatory functions and powers relating
to certain aspects of offshore greenhouse gas storage activities to NOPSEMA
- Schedule
2 makes minor amendments relating to the protection of technical
information
- Schedule
3 amends the Commonwealth Minister’s power to give directions to petroleum titleholders
to make the power subject to additional regulations
- Schedule
4 amends provisions relating to the monitoring and enforcement powers of
NOPSEMA inspectors, including to enable inspectors to retain documents in
certain circumstances and to limit self-incrimination protections to individuals
- Schedule
5 contains amendments to enable petroleum access authority holders to apply
for a variation of the authority, in turn allowing the National Offshore Petroleum
Titles Administrator (NOPTA) to introduce fees for applications to vary petroleum
access authorities
- Schedule
8 provides for a range of fees that were previously payable to the
Commonwealth to be instead payable to NOPTA
- Schedule
11 contains amendments relating to recovery of certain costs and expenses
by NOPSEMA
- Schedule
12 amends provisions relating to appeals of decisions made by NOPSEMA
inspectors
- Schedule
13 contains provisions to clarify that certain greenhouse gas titles can be
renewed in the event of a boundary change affecting those titles
- Schedule
15 provides NOPSEMA with additional monitoring powers relating to well
integrity regulation
- Schedule
16 introduces enforceable undertakings as an additional compliance and
enforcement tool under the OPGGS Act
- Schedule
17 retrospectively designates four areas, released as part of the 2005
offshore petroleum acreage release, as ‘frontier areas’ for the purposes of the
Designated Frontier Area tax incentive and
- Schedules
6, 7, 9, 10 and 14 contain minor technical corrections and
clarifications to the OPGGS Act.
The Regulatory Levies Bill has five schedules:
Commencement
Schedule 1 and Part 2 of Schedule 16 of the Miscellaneous
Amendments Bill will commence on proclamation or six months after Royal Assent,
whichever occurs first.
Schedule 15 and Part 3 of Schedule 16 of the Miscellaneous
Amendments Bill will commence immediately after the commencement of Schedule 1
of the Miscellaneous Amendments Bill.
Schedules 2–14, Part 1 of Schedule 16 and Schedule 17 of
the Miscellaneous Amendments Bill will commence the day after Royal Assent.
Part 1 of Schedule 1, and Schedules 4 and 5 of the
Regulatory Levies Bill will commence the day after Royal Assent. Part 2 of
Schedule 1 and Schedule 3 of the Regulatory Levies Bill will commence on
proclamation or six months after Royal Assent, whichever occurs first. Schedule
2 of the Regulatory Levies Bill will commence at the same time Schedule 1 of
the Miscellaneous Amendments Bill commences.
Background
What is
greenhouse gas storage?
Greenhouse gas storage, also known as carbon capture and
storage (CCS), is the process of capturing carbon dioxide (CO2) from
industrial processes and then transporting and injecting that CO2
into a secure geological formation for long-term underground storage. The key
aim of CCS is to prevent large amounts of CO2 from being released
into the atmosphere and hence to reduce greenhouse gas emissions which
contribute to climate change.[3]
The potential role of CCS in reducing greenhouse emissions
and meeting international climate commitments has been acknowledged by both the
International Energy Agency (IEA)[4]
and the Intergovernmental Panel on Climate Change (IPCC).[5]
Regulating
offshore petroleum and greenhouse gas activities in Australia
Responsibility for the regulation of offshore petroleum and
greenhouse gas storage activities in Australian waters is divided between the Commonwealth
Government and state and territory governments. Under the Offshore
Constitutional Settlement (OCS), the states generally have jurisdiction over
activities in their own internal waters, and in the zone of ‘coastal waters’,
which extends three nautical miles seaward of the territorial sea baseline.[6]
The Commonwealth Government has jurisdiction for the regulation of petroleum
and greenhouse gas activities for offshore areas beyond coastal waters (generally
those areas more than three nautical miles from the Territorial sea baseline).[7]
This area is referred to as ‘Commonwealth waters’.
The OPGGS Act regulates offshore petroleum
exploration and production, and greenhouse gas injection and storage activities
in Commonwealth waters. The OPGGS Act is supported by a range of regulations
covering matters such as safety and environmental performance.[8]
The offshore petroleum legislation, regulations and guidelines are intended to
provide for the ‘orderly’ exploration and production of petroleum and
greenhouse gas resources, setting out a framework of rights, entitlements and
responsibilities of government and industry.[9]
Under this framework, the Australian Government administers
the offshore regulatory regime together with relevant adjacent state and
Northern Territory government involvement through ‘Joint Authority’
arrangements.[10]
In short, the Joint
Authorities make certain major decisions under the OPGGS Act including
releasing offshore petroleum exploration areas, granting and cancelling
offshore petroleum titles, imposing or varying title conditions, as well as
decisions about resource management.[11]
The OPGGS Act also establishes two Commonwealth
statutory authorities which perform regulatory functions under the OPGGS Act
and regulations:
Offshore
greenhouse gas storage legal framework
The OPGGS Act regulates the exploration, assessment
and testing of geological formations and the transportation to, and storage of,
greenhouse gases in suitable geological formations in the seabed under
Commonwealth waters.[15]
The OPGGS Act provides for the responsible
Commonwealth Minister to grant a range of offshore greenhouse gas titles that allow
the titleholder to explore for and develop greenhouse gas storage sites in
offshore areas.[16]
NOPTA is then responsible for the day-to-day administration of these titles.[17]
Offshore greenhouse gas titles that may be granted under the OPGGS Act
include:
- greenhouse
gas assessment permits—which authorise exploration in the permit area for
potential greenhouse gas storage formations and injection sites
- greenhouse
gas holding leases—which authorise exploration in the lease area for potential
greenhouse gas storage formations and injection sites. Holding leases are
generally designed to allow certain existing titleholders exclusive rights in
relation to an identified greenhouse gas storage formation, where they are not currently
in a position to inject and permanently store a greenhouse gas substance, but are
likely to be in such a position within 15 years[18]
- greenhouse
gas injection licences—which authorise the licensee to carry out greenhouse gas
injection and storage operations in the licence area
- greenhouse
gas search authorities—which authorise operations relating to the exploration
for potential greenhouse gas storage formations or potential greenhouse gas
injection sites (but not to make a well) and
- greenhouse
gas special authorities—which authorise the holder to carry on certain
greenhouse gas-related operations in the authority area (but not to make a
well).[19]
As noted earlier, NOPSEMA is the regulator of safety
management of greenhouse gas storage operations under the OPGGS Act.[20]
In addition, the Minister’s powers and functions in relation to greenhouse gas
storage and management under the Offshore Petroleum and
Greenhouse Gas Storage (Environment) Regulations 2009 (Offshore Environment
Regulations) have been delegated to NOPSEMA through an administrative
delegation. This includes, for example, the power to assess and accept
environment plans relating to offshore greenhouse gas titles.[21]
The Miscellaneous Amendments Bill proposes to formally transfer these powers
and functions to NOPSEMA as statutory powers and functions under the OPGGS
Act and, at the same time, strengthen and clarify NOPSEMA’s monitoring and
compliance powers.
In February 2014, NOPSEMA also became the sole Commonwealth
environmental management regulator for offshore petroleum and greenhouse gas
activities when the then Commonwealth Minister for the Environment, Greg Hunt,
endorsed NOPSEMA’s environmental management authorisation process under Part 10
of the Environment
Protection and Biodiversity Conservation Act 1999 (EPBC Act).[22]
An approval was issued under section 146B of the EPBC Act for all
petroleum and greenhouse gas activities in Commonwealth waters taken in
accordance with NOPSEMA’s environmental authorisation processes.[23]
This means that entities seeking to undertake offshore petroleum or greenhouse
gas activities in Commonwealth waters in accordance with NOPSEMA’s processes no
longer need to refer those actions for assessment and approval under the EPBC Act.[24]
Instead, the environmental aspects of those activities now only require
approval by NOPSEMA, after assessment under the Offshore Environment
Regulations.
Status of
offshore greenhouse gas storage in Australia
NOPTA advises that there have been two greenhouse
gas acreage release rounds by the Australian Government for offshore greenhouse
gas storage exploration, one in 2009 and the other in 2014.[25]
Currently, there are four active greenhouse gas assessment permits in
Commonwealth offshore waters. All four permits are located in offshore Victorian
waters, and were awarded to the ‘Crown in right of Victoria’ as the sole
titleholder.[26]
These permits are related to the CarbonNet Project, which is investigating the
potential for establishing a commercial scale CCS network in the Latrobe
Valley. The network would involve multiple CCS projects transporting CO2
via a shared pipeline and injecting it into deep offshore underground storage
sites in the offshore Gippsland Basin.[27]
NOPSEMA has accepted a related environmental plan for a marine seismic survey (known
as the Pelican 3D Marine Seismic Survey) which was carried
out in early 2018 to obtain additional geological information. An appraisal
well is planned to be drilled in 2019 to retrieve rock samples.[28]
The CarbonNet Project has the potential to provide
CCS to support the Government’s recently announced Hydrogen Energy Supply Chain Pilot Project,
which proposes to convert the Latrobe Valley's brown coal to liquid hydrogen
for export to Japan.[29]
The Government advises that one of the
reasons behind the current Bills is that ‘there is a renewed focus on the
adequacy of regulatory arrangements’ as a result of the ‘potential for an
increase in greenhouse gas storage activities in the future’.[30]
Committee
consideration
Selection
of Bills Committee
The Bills were referred to the Senate Economics
Legislation Committee, which reported on 13 August 2018. Details of the
inquiry are at the
inquiry’s home page.[31]
The majority report recommended that the Bill be passed.[32]
However, it also recommended that the Bill be amended to insert a review of enforceable
undertakings after a two year period to ascertain if they are the ‘most
suitable way of ensuring compliance with the relevant legislation’.[33]
Labor Senators made additional comments (discussed further later in this
Digest).
Senate
Standing Committee for the Scrutiny of Bills
The Senate Scrutiny of Bills Committee had no comment on
the Regulatory Levies Bill.[34]
However, it did raise concerns with the reversal of the legal burden of proof
in two provisions of the Miscellaneous Amendments Bill.
The first provision related to section 584 of the OPGGS
Act, which provides that, in a prosecution for an offence in relation to a
breach of certain directions given by the responsible Commonwealth Minister, it
is a defence if the defendant can prove that they took all reasonable steps to
comply with the direction. Item 40 of Schedule 1 to the Miscellaneous
Amendments Bill amends section 584 to extend this defence to directions given
by NOPSEMA and NOPTA.[35]
The Committee also raised concerns about clause 23
in proposed Schedule 2B,[36]
which will provide a defence to a prosecution for refusing or failing to do
anything required by a well integrity law if the defendant proves that it was
not practicable to do that thing because of an emergency prevailing at the
relevant time. The defendant bears a legal burden of proof in relation to that
matter.
The Scrutiny of Bills Committee raised concerns that that
the defendant bears the legal burden under these sections, effectively
reversing the burden of proof. The Committee explained that an important aspect
of the common law right to be presumed innocent until proven guilty is that the
prosecution is normally required to prove all elements of an offence.
Provisions that require a defendant to disprove one or more elements of an
offence reverse the burden of proof and interfere with this common law right.
As such, the Committee expects a ‘full justification each time the burden is
reversed’.[37]
The Committee noted that the Explanatory Memorandum states that the burden has
been reversed ‘because the matter is likely to be exclusively within the
knowledge of the defendant’, particularly ‘given the remote nature of offshore
greenhouse gas storage operations’.[38]
However, the Committee considered that this explanation did not adequately
address the issue, and requested the Minister’s advice on this matter.[39]
The Minister’s response to the Committee indicated that that
the relevant defences are likely to be used by companies with significant
resources, which are ‘capable of shouldering the legal burden if they wish to
claim a defence’.[40]
The Minister also advised the Committee that the relevant defences should be
available ‘only to those who have genuinely done everything in their power to
avert the occurrence of an adverse event and can demonstrate that this is the
case.’[41]
The Minister also indicated that, due to the remote nature of the regulated
activities, the facts relevant to the defences are entirely within the
defendant's knowledge and not at all within the regulator's knowledge.[42]
In light of this information provided by the Minister, the Committee made no
further comment on this matter.[43]
Policy
position of non-government parties/independents
As noted earlier in this Digest, Labor Senators made
additional comments in the Senate Committee report on the Bills.[44]
They indicated that they were ‘broadly supportive of the intent’ of the Bill,
but highlighted that ‘offshore petroleum should be held to the highest levels
of workplace health and safety standards’.[45]
In this context, they noted that the use of enforceable undertakings has been
considered not to be best practice in the case of workplace fatalities and
other related circumstances.[46]
As such, they recommended that ‘the Government continue to work with the
Opposition to find amendments’ that would ‘limit the use of enforceable
undertakings to where it is appropriate’.[47]
At the time of writing, other non-government parties and independents
do not appear to have commented on the Bills.
Position of
major interest groups
The Australian Council of Trade Unions (ACTU), in its
submission to the Senate Committee inquiry into the Bills, had ‘significant’ concerns
in relation to the provisions for enforceable undertakings in Schedule 16 of
the Bill.[48]
These are discussed further in the ‘Key issues and provisions’ section of this
Digest.
The ACTU submission was supported by the Electrical Trades
Union of Australia and the Australian Manufacturing Workers’ Union.[49]
These three unions also raised broader concerns relating to work health and
safety of workers in the offshore petroleum industry, which the ACTU noted is
‘one of Australia’s most dangerous industries’.[50]
This issue was recently the subject of a separate inquiry and report by the
Senate Education and Employment References Committee.[51]
Note also that environmental groups have in the past
expressed concerns that NOPSEMA’s environmental assessment and approval
processes for offshore activities are less rigorous and transparent compared to
those required under the EPBC Act.[52]
Recent
media reports have also indicated that community members are concerned
about the proposed CarbonNet greenhouse gas storage project offshore from Victoria
(the CarbonNet project was discussed earlier in this Digest).[53]
Similar concerns were expressed about ‘ineffective consultation’ in relation to
this project. [54]
Financial
implications
The Explanatory Memorandum states that the Bills will have
no financial impact, although the amendments in the Regulatory Levies Bill ‘will
ensure that NOPSEMA is fully cost-recovered for its regulatory operations’.[55]
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
Bills’ 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 Bills are compatible.[56]
Parliamentary
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights (Human
Rights Committee) had no comment on the Regulatory Levies Bill.[57] However, the Human Rights Committee
did raise the same concerns as the Senate Scrutiny of Bills Committee in
relation to the reversal of the legal burden of proof in two provisions of the
Miscellaneous Amendments Bill.[58]
These provisions are outlined in further detail in the ‘Senate Standing
Committee for the Scrutiny of Bills’ section earlier in this Digest.
In particular, the Human Rights Committee raised concerns
about the compatibility of these provisions with the right to be presumed
innocent until proven guilty, which usually requires that the prosecution prove
each element of the offence. The Human Rights Committee further considered that
the statement of compatibility with human rights ‘does not expressly explain
how the reverse burden offences pursue a legitimate objective or are rationally
connected to this objective’.[59]
The Human Rights Committee requested the Minister’s advice as to whether the
measure is aimed at achieving a legitimate objective for the purposes of human
rights law, how the measure is effective to achieve that objective, whether the
limitation is a reasonable and proportionate measure to achieve that objective and
whether consideration could be given to amending the measures to provide for a
reverse evidential burden rather than a reverse legal burden.[60]
The Minister’s response to this request clarified that the
offences will largely apply to corporations with significant resources, rather
than individuals.[61]
The Minister also explained that the objectives of the regulatory regime were
to ensure safety in the offshore petroleum industry as well as to protect the
environment, and the robustness of the regime was ‘critical’ to achieving these
objectives.[62]
The Minister also noted, in relation to the defence for the offence of
breaching directions given by NOPSEMA, that such directions ‘are not used
frequently—they are used in extraordinary circumstances...’.[63]
The Minister also pointed out that this defence ‘allows an optional exception;
it is an opportunity for the defendant to prove that they took all reasonable
steps to comply with the direction’.[64]
In relation to the defence for breaching a 'well integrity law', the Minister similarly
noted that it ‘provides for an exception to strict compliance in emergency
circumstances’.[65]
The Human Rights Committee considered that the information
provided in the Minister’s response indicated that the reverse burden offences are
likely to be a proportionate means of achieving legitimate objectives as well
as compatible with the right to be presumed innocent. The Committee thanked the
Minister for the response and noted that this concluded its examination of this
issue.[66]
Key issues
and provisions
Miscellaneous
Amendments Bill
Transfer of
regulatory responsibility for offshore greenhouse gas storage activities
Schedule 1 of the Miscellaneous Amendments Bill
contains a range of amendments which transfer responsibility for regulatory
functions and powers relating to environmental management of offshore
greenhouse gas storage activities from the responsible Commonwealth Minister to
NOPSEMA.
Currently, NOPSEMA primarily regulates offshore oil and
gas exploration and production activities. However, NOPSEMA does deal with
other aspects of offshore greenhouse gas storage activities under an
administrative delegation:
NOPSEMA currently holds a delegation to undertake the Minister’s
functions and powers in relation to greenhouse gas storage environmental
management under the Offshore Petroleum and Greenhouse Gas Storage
(Environment) Regulations 2009 (Environment Regulations). However, there are a
number of shortcomings in the arrangements for greenhouse gas storage
environmental management and well operations. Further, the delegation does not
provide a viable long-term regulatory solution...[67]
For example, the Explanatory Memorandum notes that NOPSEMA
will accept or refuse to accept an environment plan as the ‘delegate of the
Minister’ and as such ‘may therefore be perceived to be unable to act
independently of government when making its decision as delegate, since the
Minister remains the responsible regulator and retains the power to give
directions to the delegate’.[68]
In addition, NOPSEMA inspectors do not currently have compliance monitoring and
enforcement powers relating to greenhouse gas storage operations, or powers to
issue administrative notices such as improvement notices and prohibition
notices.[69]
The Government considers that ‘NOPSEMA has developed
expertise in the regulation of offshore environmental management and well
operations through its responsibility for regulation of offshore petroleum
activities’.[70]
As such, transferring regulatory oversight for similar aspects of offshore
greenhouse gas activities from the relevant Minister to NOPSEMA will, in the
Government’s view, ‘ensure we have an experienced and independent regulator for
offshore greenhouse gas operations’.[71]
The Explanatory Memorandum emphasises that the Minister will still retain
responsibility for ‘major decisions concerning the granting of greenhouse
titles, the imposition of title conditions and the cancellation of titles, as
well as core decisions about resource management and resource security’.[72]
Some of the key provisions in Schedule 1 which transfer
certain regulatory responsibilities under the OPGGS Act in relation to
greenhouse gas titles are discussed below.[73]
Directions
to greenhouse gas title holders
Proposed section 579A, inserted by item 27
of Schedule 1, provides a new general power to NOPSEMA to give
directions to greenhouse gas titleholders[74]
on any matter ‘in relation to which regulations may be made’.[75]
Under section 782 of the OPGGS Act, regulations may be made in relation
to all aspects of exploration for greenhouse gas storage formations and
injection sites, and in relation to the actual injection and storage of
greenhouse gas.[76]
As such, this will allow NOPSEMA to give directions in relation to health and
safety, well integrity and environmental management aspects of offshore
greenhouse gas activities.[77]
This proposed section mirrors a similar, existing NOPSEMA
power to give directions to petroleum titleholders contained in section 574 of
the OPGGS Act.
The Minister will also retain an existing general power to
give directions to greenhouse gas titleholders under the existing section 580
of the OPGGS Act. However, item 30 of Schedule 1 amends
section 580 to deal with the ‘unlikely event’ of inconsistent directions being given
to greenhouse gas title holders by NOPSEMA under proposed section 579A
and the Minister under section 580.[78]
Under proposed subsection 580(8A), in this situation, the Minister’s
direction will have no effect to the extent of the inconsistency.
In addition, under paragraph 580(5)(b) of the OPGGS Act,
as amended by item 29 of Schedule 1, the Minister’s power to give
directions will be subject to the requirements of specific relevant
regulations.[79]
The Explanatory Memorandum advises that, in practice:
... the Minister would only give directions in relation to the
Minister’s functions under the OPGGS Act and the Offshore Petroleum and
Greenhouse Gas Storage (Greenhouse Gas Injection and Storage) Regulations 2011,
under which the Minister assesses and determines the storage parameters of
storage formations and exercises regulatory oversight over operational aspects
of injection and storage operations. This includes all aspects of managing
storage capacity of the storage formation, monitoring of the movement of the
greenhouse gas plume through the storage formation and operations required, if
the Minister considers it necessary, to remediate any failure of the plume to
behave in the manner predicted by the titleholder. These matters will also
include remediation of the title area and end-of-project site closing. It is
not desirable to include specific limitations in the direction-giving power in
case any aspect of the Minister’s functions is inadvertently excluded.[80]
Item 31 of Schedule 1 inserts proposed section
580A to make it clear that directions to a greenhouse gas titleholder given
by NOPSEMA (including directions under proposed section 579A) or the
Minister under section 580 may require the titleholder to do something (or not
do something) anywhere in an offshore area, including outside the title
area. If the direction would require action in, or in relation to, another
title area, then NOPSEMA or the Minister (as appropriate) must give the other
titleholder a copy of the direction as soon as practicable.
Section 582 of the OPGGS Act provides a strict
liability offence for breaching a direction given by the Minister to a
greenhouse gas title holder under section 580, with a maximum penalty of 100 penalty
units (currently $21,000) for an individual or 500 penalty units (currently
$105,000) for a body corporate.[81]
Items 35 and 36 of Schedule 1 amend section 582 to extend this
offence to breaches of directions given by NOPSEMA under proposed section
579A.
Defence of
taking reasonable steps to comply with a direction
Section 584 of the OPGGS Act provides that, in a
prosecution for an offence in relation to a breach of a direction given by the
responsible Commonwealth Minister (under various provisions of the OPGGS Act),
it is a defence if the defendant can prove that they took all reasonable steps
to comply with the direction. Item 40 amends section 584 to extend this
defence to directions given by NOPSEMA and NOPTA, in turn extending this
defence to the offences of breaching a direction given under proposed
section 579A (as well as proposed sections 591B or 594A, inserted
by items 45 and 50 of Schedule 1 respectively, which
are discussed later in this Digest). However, the Senate Scrutiny of Bills
Committee has raised concerns that the defendant bears the legal burden under
section 584, effectively reversing the burden of proof. This issue is discussed
in more detail in the ‘Senate Standing Committee for Scrutiny of Bills’ section
earlier in this Digest.
NOPSEMA may
take action if there is a breach of a direction
Item 38 of Schedule 1 inserts proposed section
582A to enable NOPSEMA to take action to ensure things under a greenhouse
gas direction are done, even if a person bound by a NOPSEMA direction does not
comply with the direction.[82]
Proposed subsection 582A(2) enables NOPSEMA to recover in court any
costs or expenses incurred in taking those actions. A person (other than the
titleholder) will not be liable for recovery of costs unless NOPSEMA proves
that the person knew, or could reasonably be expected to have known, of the
existence of the direction given by NOPSEMA under proposed section 579A.[83]
It is also a defence if the defendant took all reasonable steps to comply with
the direction.[84]
This proposed section mirrors existing section 583, which
enables the responsible Commonwealth Minister to take action if there is a
breach of a greenhouse gas direction given by the Minister and to recover the
associated costs.
Greenhouse
gas title holders - notification obligations
Item 17 of Schedule 1 inserts proposed
section 452A which imposes notification requirements on registered holders
of greenhouse gas titles. Proposed subsections 452A(1)–(5) require
persons who hold, acquire or cease to hold a greenhouse gas title,[85]
or titleholders whose contact details have changed, to notify NOPTA and NOPSEMA
within 30 days.[86]
Proposed subsection 452A(7) contains a strict
liability offence for failure to comply with the notification requirements, with
a maximum penalty of 50 penalty units (currently $10,500) for an individual or
250 penalty units (currently $52,500) for a body corporate.[87]
A civil penalty provision is set out in proposed subsection 452A(9),
with a maximum penalty of 90 penalty units (currently $18,900) for an
individual or 450 penalty units (currently $94,500) for a body corporate.[88]
Proposed subsections 452A(10) and (11) provide for a penalty for
each day that the offence or contravention continues (of 10% of the maximum
penalty).
This proposed section mirrors similar notification
requirements that are imposed on petroleum title holders by section 286A of the
OPGGS Act.
Remedial
directions to greenhouse gas titleholders
Section 592 of the OPGGS Act currently enables the responsible
Commonwealth Minister to give remedial directions to certain greenhouse gas
titleholders in relation to:
- removing
property from the title area
- plugging
or closing off wells in the title area
- conserving
and protecting natural resources in the title area or
- ‘making
good’ damage to the seabed or subsoil.
Item 45 of Schedule 1 inserts proposed
section 591B to provide NOPSEMA with a similar power to give remedial
directions to current greenhouse gas titleholders. Item 50 inserts proposed
section 594A to also enable NOPSEMA to give remedial directions to former
greenhouse gas title holders.
NOPSEMA already has powers to give remedial directions to current
and former offshore petroleum titleholders in sections 586 and 587 of the OPGGS
Act.
Failure to comply with a direction given by NOPSEMA under proposed
section 591B or proposed section 594A will be a strict liability
offence, with a maximum penalty of 100 penalty units (currently $21,000) for an
individual or 500 penalty units (currently $105,000) for a body corporate.[89]
The Minister will also retain existing powers in sections
592 and 595 to issue remedial directions to current and former greenhouse gas
titleholders. However, item 48 proposes to amend section 592 to limit
the purposes for which such directions may be given to purposes relating to
resource management, resource security or decommissioning. In addition, proposed
subsection 592(8), inserted by item 49, deals with the ‘unlikely’
event that inconsistent remedial directions are given by NOPSEMA and the
Minister.[90]
In this situation, the Minister’s direction will have no effect to the extent
of the inconsistency. Items 51–54 contain equivalent amendments to
adjust the Minister’s existing power (in section 595) to give remedial
directions to former greenhouse gas title holders.
Note that the power in section 593 of the OPGGS Act
to give a site closing direction to a greenhouse gas injection licensee (where
relevant operations have ceased), will remain solely with the Minister. The
Explanatory Memorandum states that this reflects the fact that the OPGGS Act
‘provides that the Commonwealth will eventually take over long-term civil
liability’.[91]
Items 55 and 56 insert proposed sections
595A and 596A which will enable NOPSEMA, in the event of the breach
of direction given to a former greenhouse gas titleholder under proposed
section 594A, to take action to ensure things directed to be done under a remedial
direction are done. NOPSEMA may also direct that property in a vacated
greenhouse gas title area be removed or disposed of, and if that is not done,
NOPSEMA may remove or dispose of the relevant property itself. If NOPSEMA
incurs costs or expenses in doing so, those costs become a debt due to NOPSEMA
under proposed subsections 596A(6) and (7). The responsible
Commonwealth Minister also has similar existing powers under sections 596 and
597 of the OPGGS Act for a breach of a remedial direction given to a
former greenhouse gas titleholder.
Safety
zones
Part 6.6 of the OPGGS Act enables safety zones to
be gazetted in areas surrounding wells, structures or equipment in offshore
areas. Certain vessels are then prohibited from entering that safety zone
without authorisation.[92]
Currently, under section 616, NOPSEMA gazettes petroleum safety zones, while
the Minister gazettes greenhouse gas safety zones under section 617. Item
110 of Schedule 1 of the Miscellaneous Amendments Bill proposes to
amend section 617 to allow NOPSEMA, rather than the Minister, to gazette
greenhouse gas safety zones prohibiting certain vessels entering that zone without
NOPSEMA’s written consent. The Explanatory Memorandum suggests that since
NOPSEMA will become the regulator for offshore greenhouse gas safety and well
operations, ‘NOPSEMA will be best placed to determine whether a safety zone is
required’ in order to protect an offshore greenhouse gas well, structure or
equipment.[93]
Information
sharing
Part 6.11 of the OPGGS Act contains provisions
relating to the use and sharing of certain information, documents (referred to
as ‘offshore information’[94])
and other things obtained under the OPGGS Act. The offshore information
may be used within NOPSEMA for the purpose of exercising its powers or
performing its functions, and can also be shared between certain entities, including
the responsible Commonwealth Minister, the Secretary, NOPSEMA, NOPTA and other
agencies, including law enforcement agencies and state and territory government
agencies.
In particular, subsection 695U(1) provides that Part 6.11
applies in relation to offshore information or things obtained in the course of
the exercise of a power, or the performance of a function, under the OPGGS
Act, or administration of the OPGGS Act. However, NOPSEMA inspectors
may also obtain information, documents or things using powers provided in the Regulatory Powers (Standard
Provisions) Act 2014 (Regulatory Powers Act) for the purpose of
monitoring and investigating compliance by persons with their obligations under
the OPGGS Act and regulations.[95]
Item 114 therefore proposes to amend subsection
695U(1) to clarify that Part 6.11 also applies in relation to offshore information
or other things obtained in the course of:
-
exercising a power or performing a function under the Regulatory
Powers Act or
-
administering the Regulatory Powers Act
so far as these apply in relation to a provision of the OPGGS
Act.
Currently, under subsection 695U(6), the information
sharing provisions in Part 6.11 do not apply to offshore information or a thing
relating to offshore greenhouse gas storage operations, unless obtained in relation
to a listed OHS law. Given that regulatory responsibility for greenhouse gas
wells and environmental management will be transferred to NOPSEMA, item 117
amends subsection 695U(6) so that the application of the information sharing
provisions in Part 6.11 is extended to information relating to greenhouse gas
storage operations.[96]
Subsection 695U(4) also currently provides that Part 6.11
does not apply to offshore information, or a thing, covered by Part 7.3 of the OPGGS
Act. Part 7.3 is designed to ‘safeguard commercially sensitive or technical
offshore information’ about petroleum activities, such as petroleum mining
samples.[97]
Part 8.3 of the OPGGS Act contains similar protections for technical
information relating to greenhouse gas storage. Item 116 inserts proposed
subsection 695U(4A), which provides that Part 6.11 does not apply to
offshore information, or a thing, covered by Part 8.3. As the Explanatory
Memorandum states, this is needed ‘given that the application of the
information sharing provisions in Part 6.11 is to be extended to information
relating to greenhouse gas storage operations’ under item 117.[98]
Other related
amendments
Schedule 1 also contains a range of other technical
and consequential amendments to reflect the transfer of relevant
responsibilities to NOPSEMA. These are not discussed in detail in this Digest
as they do not appear to raise any issues in relation to their operation and
are adequately covered by the Explanatory Memorandum.
For example, section 446 of the OPGGS Act lists the
grounds for cancelling a greenhouse gas assessment permit, holding lease or
injection licence. Under paragraph 446(b), this currently includes where the registered
holder has not complied with a direction given to the holder by the responsible
Commonwealth Minister. Item 15 of Schedule 1 amends this
paragraph to include non-compliance with directions given by NOPSEMA or NOPTA.
Monitoring
and enforcement powers
Extending
existing powers of NOPSEMA inspectors
Schedule 1 of the Miscellaneous Amendments Bill also
extends existing monitoring and investigation powers of NOPSEMA inspectors to all
aspects of offshore greenhouse gas storage operations under the OPGGS Act
and regulations. Currently the powers of NOPSEMA inspectors can generally only
be used in connection with provisions related to petroleum titles and
activities, and only OHS provisions relating to greenhouse gas storage
activities.
In particular, section 601 of the OPGGS Act
contains a table of ‘listed NOPSEMA laws’ for the purposes of the OPGGS Act.
NOPSEMA inspectors, appointed by the Chief Executive Officer (CEO) of NOPSEMA,[99]
can exercise a range of monitoring and investigation powers under Parts 2 and 3
of the Regulatory Powers Act in relation to these listed NOPSEMA laws.[100]
Currently, only provisions related to petroleum titles and
activities are listed NOPSEMA laws in section 601, along with OHS provisions
relating to greenhouse gas activities. Items 63–75 of Schedule 1
amend section 601 to include various other greenhouse-gas related provisions as
listed NOPSEMA laws. This includes, for example, Part 6.3 of the OPGGS Act
which relates to directions given to greenhouse gas title holders (see item
66) and Part 6.4 of the OPGGS Act which relates to remedial
directions given to greenhouse gas title holders (item 67). This
means that NOPSEMA inspectors can exercise monitoring and investigation powers
under Parts 2 and 3 of the Regulatory Powers Act in relation to these
greenhouse gas provisions.
Similarly, Schedule 2A of the OPGGS Act confers a
range of monitoring powers on NOPSEMA inspectors for the purpose of monitoring
compliance with ‘petroleum environmental laws’. A range of amendments in Schedule
1 extend the relevant powers to offshore greenhouse gas activities. For
example, many items replace references to ‘petroleum environmental laws’ with ‘environmental
management laws’, and ‘petroleum environmental inspection’ with ‘environmental
inspection’.[101]
Consequential amendments are made by items 94 and 95
to repeal sections 605-608 of the OPGGS Act which currently provide for
the separate appointment of greenhouse gas project inspectors and enable those inspectors
to exercise monitoring powers for the purposes of the OPGGS Act and
regulations.[102]
However, section 609 of the OPGGS Act, which contains an offence for
interfering with greenhouse gas installations or operations, will be retained.
Expanded definition of regulated business premises
Schedule 1 also contains amendments to expand the
categories of places that NOPSEMA inspectors may enter, without a warrant, for
the purposes of conducting a monitoring inspection under Schedule 2A (which
covers environmental inspections) or Schedule 3 to the OPGGS Act (which
relates to OHS inspections).
For example, a NOPSEMA inspector may enter ‘regulated
business premises’ (without a warrant) if satisfied, on reasonable grounds, that
documents or things are likely to be at those premises that are relevant to
compliance with an environmental management law.[103]
‘Regulated business premises’ are currently defined in clause 2 of Schedule 2A
as premises, other than offshore petroleum premises, that are:
- occupied
by the registered holder of a petroleum title and
- used,
or proposed to be used, wholly or principally in connection with operations in
relation to one or more petroleum titles, including that petroleum title.[104]
The Explanatory
Memorandum notes that ‘the scope of (onshore) regulated business premises
is proving to be inadequate in practice’:
One reason is that a company that is a titleholder may not be
the entity that makes decisions about the operations being carried out under
the authority of the title. For example, these decisions may be made by a
parent company with a subsidiary established for the purposes of holding the
title. Relevant documents or things may therefore be at the premises of the
latter company. Another reason is that operations (for example drilling a well)
may be carried out entirely by a contractor, so any documents or things
relating to the operations will be located at the premises of the contractor,
rather than at the premises of the titleholder.[105]
Item 155 of Schedule 1 of the Miscellaneous
Amendments Bill therefore proposes to amend the definition of ‘regulated
business premises’. First, the definition will be extended to relate to all
titles, including both petroleum titles and greenhouse gas titles.[106]
This amendment will also clarify that regulated business premises means eligible
premises[107]
on land and extend the definition of ‘regulated business premises’ to onshore
premises of:
- a
related body corporate[108]
of a titleholder and
- a
person who has carried out, is carrying out, or is to carry out operations
under a contract, arrangement or understanding with a titleholder, or a related
body corporate of a titleholder.
The Explanatory Memorandum states that this amendment will
ensure the full scope of relevant premises can be accessed by a NOPSEMA
inspector:
For example, the titleholder may have set up access to spill
response materials and equipment, in the event of an oil spill, through an
arrangement with an entity, such as the Australian Marine Oil Spill Centre. It
is important that NOPSEMA inspectors can access premises of a spill response
entity with which the titleholder has made such arrangements to ensure adequate
and appropriate materials will be available in the event of an oil spill, in
accordance with risk management arrangements in a titleholder’s environment
plan.[109]
The Explanatory Memorandum also notes that ‘NOPSEMA
inspectors will in all cases be required to obtain a warrant or consent ...
before entering premises to exercise powers to search for and gather evidential
material’.[110]
Other amendments are related to this extended definition.
This includes for example, item 178 of Schedule 1 of the Miscellaneous
Amendments Bill. Under paragraph 5(1)(b) of Schedule 2A of the OPGGS
Act, when NOPSEMA inspectors enter regulated business premises to conduct
an environmental inspection (in the circumstances set out in subclause 5(1)),
they have powers to ‘search for, inspect, take extracts from, or make copies
of, any such documents at those premises’. However, the Explanatory Memorandum
suggests that, since the extended definition of regulatory business premises is
likely to capture, for example, premises of spill response entities, and of
drilling contractors, ‘it is likely that there will be things other than
documents (e.g. substances) at those premises that NOPSEMA inspectors may wish
to examine as part of a monitoring inspection’:
For example, dispersants for use in the event of an oil spill
may be stored at onshore premises of a spill response entity. Inspectors may
also wish to examine structural parts of the premises that are relevant to the
titleholder’s spill preparedness compliance - e.g. built-in tanks for storage
of contaminated water, soil or other substances following clean-up operations.[111]
Item 178 therefore proposes to replace paragraph 5(1)(b)
to provide NOPSEMA inspectors with additional powers at regulated business
premises to search the premises for relevant plant, substances, documents and
things, to inspect the premises, and to inspect, take extracts from, examine or
measure or conduct tests on the plant, substances or things found at those
premises. The Explanatory Memorandum states:
This will ensure NOPSEMA inspectors have a full set of powers
to determine whether a titleholder is compliant with its environmental
obligations under the OPGGS Act and regulations. This is particularly
important, for example, in the case of oil spill response preparedness, to
ensure adequate and appropriate spill response equipment will be available in the
event of an oil spill.[112]
Items 262–266 of Schedule 1 of the Miscellaneous
Amendments Bill make equivalent amendments to the definition of regulated
business premises in Schedule 3 of the OPGGS Act.
Additional powers relating to well integrity
Currently, NOPSEMA has powers to conduct inspections
without a warrant to monitor compliance with environmental management or OHS
obligations under the OPGGS Act and regulations. These powers are set
out in Schedules 2A and 3 respectively of the OPGGS Act. However, NOPSEMA
does not have the same sorts of powers to undertake inspections without a
warrant to monitor compliance by titleholders with well integrity-related
obligations under the OPGGS Act and regulations. These obligations
include, in particular, the provisions in Part 5 of the Offshore Petroleum and
Greenhouse Gas Storage (Resource Management and Administration) Regulations
2011 (known as the Wells Regulations) which require titleholders operating
wells in their title area to have Well Operations Management Plans (WOMPs) in
place.[113]
The Explanatory Memorandum advises:
To date, NOPSEMA has generally used warrant-free access to
offshore facilities under Schedule 3 to the OPGGS Act (OHS inspections) to
conduct well-related inspections; however, this access is only permitted to the
extent the inspection relates to compliance with OHS obligations. There is no
stand-alone provision for warrant-free access to a facility to monitor
compliance with well-integrity related obligations.[114]
However:
Given the difficulty in accessing offshore facilities, the
risks associated with offshore activities, and the frequent changes to
operational decisions by titleholders about the timing of well activities, the
requirement to obtain a warrant may impede NOPSEMA’s ability to conduct
monitoring inspections of well activities at the time they are being
undertaken.[115]
The Explanatory Memorandum expresses further concern that ‘a requirement to obtain a warrant before
conducting a monitoring inspection would impede NOPSEMA’s ability to respond
quickly in an emergency’.[116]
As such, item 13 of Schedule 15 of the
Miscellaneous Amendments Bill inserts proposed Schedule 2B into the
OPGGS Act, to provide NOPSEMA inspectors with new powers to monitor
compliance with well integrity laws. ‘Well integrity laws’ will be defined as
including provisions of the OPGGS Act that relate to the integrity of
wells, and Part 5 of the Wells Regulations.[117]
The new powers conferred by proposed Schedule 2B to monitor compliance
with well integrity laws will be in addition to the monitoring powers in Part 2
of the Regulatory Powers Act as applied by the OPGGS Act.[118]
The Explanatory Memorandum also notes that ‘NOPSEMA inspectors will still in
all cases be required to obtain a warrant or consent before exercising powers
to search for and gather evidential material’.[119]
The well integrity monitoring powers conferred on NOPSEMA
inspectors under proposed Schedule 2B generally mirror the equivalent
environmental management and OHS monitoring powers in existing Schedule 2A and
Schedule 3 of the OPGGS Act (as amended by the Bill).[120]
Proposed subclause 3(1) provides that a well
integrity inspection includes an investigation or inquiry under Part 2 of proposed
Schedule 2B and that the inspection need not include physical inspection of
any premises or thing. Proposed subclause 3(2) enables NOPSEMA
inspectors to conduct a well integrity inspection at any time to determine
whether a well integrity law has been or is being complied with, or whether information
given in compliance with a well integrity law is correct. The inspection powers
under proposed Schedule 2B include, for example:
- powers
of entry and search without warrant, at any reasonable time of the day or
night, in order to:
- inspect,
examine, measure or conduct tests
- take
photographs, make video recordings, or make sketches of the facility and
- inspect,
take extracts from or make copies of any documents the inspector is satisfied
on reasonable grounds relate or are likely to relate to the subject matter of
the inspection[121]
power
to require the answering of questions reasonably connected with the conduct of
a well integrity inspections[122]
power
to request the production of documents or things in connection with the conduct
of a well integrity inspection and power to retain those documents or things
for as long as is reasonably necessary[123]
power
to take possession of plant, substances and samples from a facility or premises[124]
and
power
to direct that a facility not be disturbed, if an inspector is satisfied on
reasonable grounds that it is reasonably necessary to issue the notice in order
to allow the inspection, examination or measurement of, or the conducting of
tests concerning the facility, or a particular plant, substance or thing, at
the facility.[125]
Proposed clause 6 makes it an offence to obstruct
or hinder a NOPSEMA inspector.
Proposed clause 7 provides that a NOPSEMA inspector
may, to the extent that it is reasonably necessary, require a titleholder (or
their nominated representative) to provide the inspector with reasonable
assistance and facilities. Reasonable assistance includes appropriate transport
to or from the facility and reasonable accommodation and means of subsistence
while the inspector is at the facility (proposed subclause 7(2)). Failure
to provide such assistance, without a reasonable excuse, is an offence under proposed
subclause 7(3)). The maximum penalty is a term of six months imprisonment
or 60 penalty units (currently equivalent to $12,600) or both.
Proposed Schedule 2B also provides for NOPSEMA
inspectors to issue various notices related to well integrity inspections and creates
offences for failure to comply with such notices.[126]
Proposed clause 16 makes it an offence to tamper with or remove such notices.
Under proposed clause 18, a NOPSEMA inspector must
prepare a report about any well integrity inspection and give the report to
NOPSEMA. NOPSEMA must give a copy of the report to the titleholders as soon as
practicable after receiving the report (proposed subclause 18(4)) and
may request the titleholder to provide NOPSEMSA details of any remedial action
proposed to be taken as a result of the report (proposed subclause 18(5)).
Under proposed clause 23 in proposed Schedule 2B,
it will be a defence to a prosecution for refusing or failing to do anything
required by a well integrity law if the defendant proves that it was not
practicable to do that thing because of an emergency prevailing at the relevant
time. The defendant bears a legal burden of proof in relation to that matter. Similar
defences are provided in existing clauses in other parts of the OPGGS Act:
in clause 18 of Schedule 2A (for offences against environmental management
laws) and clause 92 of Schedule 3 (for offences against OHS laws). However, the
Senate Scrutiny of Bills Committee raised concerns that this clause reverses
the legal burden of proof. This issue is discussed in more detail in the
‘Senate Standing Committee for Scrutiny of Bills’ section of this Digest.
Enforceable
undertakings
Schedule 16 of the Miscellaneous Amendments Bill contains
amendments to enable the Minister, NOPTA and the CEO of NOPSEMA to accept
enforceable undertakings in relation to compliance with provisions of the OPGGS
Act and regulations. These amendments apply the framework for enforceable
undertakings in Part 6 of the Regulatory Powers Act. An enforceable
undertaking is a written undertaking given by a person that the person will
take, or refrain from taking, certain actions. Authorised persons may then apply
to a relevant court to enforce the undertaking, including for an order
directing a person to comply with that undertaking.[127]
Item 7 of Schedule 16 inserts proposed
Division 8 into the compliance and enforcement provisions in Part 6.5 of
the OPGGS Act. Proposed section 611N triggers the application of
the standard provisions in Part 6 of the Regulatory Powers Act, which
create a framework for accepting and enforcing undertakings. Proposed
subsection 611N(2) contains a table setting out the provisions of the OPGGS
Act that are enforceable by enforceable undertakings, as well as the
‘authorised persons’ who may accept those undertakings (either the Minister,
CEO of NOPSEMA or NOPTA). According to the Explanatory Memorandum, an
enforceable undertaking may be accepted ‘in relation to all of the criminal and
civil penalty provisions in the OPGGS Act, with the exception of indictable
offences’.[128]
Enforceable undertakings may be enforced by a relevant
court—that is, the Federal Court of Australia, the Federal Circuit Court of Australia
or the Supreme Court of a state or territory that has jurisdiction in relation
to matters under the OPGGS Act.[129]
The court may make any order that it considers appropriate, including an order
directing compliance, an order requiring any financial benefit from the failure
to comply to be surrendered, and an order for damages.[130]
Under proposed section 611P, the regulator who
accepts an undertaking must publish the undertaking on its website, and must
take reasonable steps to de‑identify any personal information contained
in an undertaking before it is published.
Proposed section 611Q creates an offence for
failure to comply with an enforceable undertaking, with a maximum penalty of
250 penalty units (currently $52,500) for an individual or 1250 penalty units
(currently $262,500) for a body corporate. According to the Explanatory
Memorandum, an equivalent provision in section 219 of the Work Health and
Safety Act 2011 has been used as a precedent.[131]
The Explanatory Memorandum states that introducing
enforceable undertakings into the OPGGS Act will provide ‘an appropriate
and proportionate response to incidents of non‑compliance with the OPGGS
Act and regulations, in order to encourage improved compliance outcomes’.[132]
The Explanatory Memorandum suggests that enforceable undertakings offer unique
benefits, including enabling a more tailored enforcement response and ‘more
timely and cost‑effective outcomes that would not be achievable by a
prosecution’.[133]
However, as noted earlier in this Digest, the ACTU raised
concerns about this Schedule of the Bill, suggesting that enforceable
undertakings are not an appropriate regulatory tool in certain circumstances.[134]
The ACTU noted that enforceable undertakings ‘when properly utilised, can
achieve long-term, sustainable improvements to WHS culture and practice in
workplaces and across sectors’.[135]
However, the ACTU expressed concern that enforceable undertakings have the
‘potential to undermine compliance’ when overused or misused and should be ‘subject
to appropriate safeguards and strict guidelines’.[136]
The ACTU therefore recommended that the Bill be amended to prohibit enforceable
undertakings in particular circumstances, such as where the contravention is
connected to a fatality or involves reckless conduct.[137]
As noted earlier in this Digest, the Senate Economics
Legislation Committee majority report noted these concerns and recommended that
the Bill be amended to insert a review of enforceable undertakings after a two
year period.[138]
Other
amendments to monitoring and enforcement provisions
Schedule 4 of the Miscellaneous Amendments Bill
contains provisions relating to the monitoring and enforcement powers of
NOPSEMA inspectors, including amendments to:
- enable
NOPSEMA inspectors to retain documents in certain circumstances[139]
- provide
that self-incrimination protections are limited to individuals, rather than corporations.[140]
In addition, items 1-2 and 4-6 of Schedule
16 of the Miscellaneous Amendments Bill amend various sections in the OPGGS
Act which apply the Regulatory Powers Act. These amendments extend
the application of the relevant monitoring and enforcement powers to all
external Territories covered by the OPGGS Act.[141]
Retrospectively
designating ‘frontier areas’ for the Designated Frontier Area tax incentive
The Designated Frontier Area tax incentive (DFA) was in
place between 2004 and 2009 and was designed to encourage petroleum exploration
in Australia’s remote offshore areas.
The DFA operated under the Petroleum Resource
Rent Tax Assessment Act 1987 (PRRTA Act). Under the scheme, the Resources
Minister could allocate up to 20 per cent of the annual offshore petroleum acreage
release areas as 'designated frontier areas'.[142]
Persons conducting exploration under exploration permits in these designated
areas were able to claim up to 150 per cent of the costs associated with their
exploration expenditure for the purposes of determining the amount of Petroleum
Resources Rent Tax (PRRT) payable (rather than the 100 per cent of expenditure
that could ordinarily be claimed).[143]
Subsection 36B(3) of the PRRTA Act required the Minister’s designation
to be published in the Commonwealth Gazette.[144]
However, the Explanatory Memorandum advises that an
‘administrative oversight’ was recently discovered in relation to the 2005
acreage release, in that the Resources Minister did not publish the designated
areas in the Gazette as required under the PRRTA Act. As a
result, four areas that had been promoted as frontier areas in 2005 were not
actually validly designated as ‘frontier areas’.[145]
As such, the Miscellaneous Amendments Bill proposes to retrospectively
designate the areas as Designated Frontier Areas, ‘to avoid potential for doubt
regarding validity of claims under the tax incentive scheme’.[146]
To achieve this, item 1 of Schedule 17 of
the Miscellaneous Amendments Bill inserts proposed clause 43 to Schedule
6 of the OPGGS Act. Schedule 6 of the OPGGS Act currently
contains a range of transitional provisions (mainly relating to the repeal of the
previous offshore petroleum legislation, the Petroleum (Submerged
Lands) Act 1967. Proposed clause 43 provides that the PRRTA Act
has effect, and is taken always to have had effect, as if four areas had been
specified in an instrument made under subsection 36B(1) of that PRRTA Act
on 17 April 2005. Proposed paragraph 43(b) further provides that the
requirement to publish that instrument in the Commonwealth Gazette under
subsection 36B(3) of the PRRTA Act did not apply to that instrument. Of
the four areas listed in proposed clause 43, one is in the Otway Basin
offshore from South Australia (Area S05-2) while three others are offshore from
Western Australia (W05-5, W05-23 and W05-24).[147]
Other
amendments
Protection
of technical information
Schedule 2 of the Miscellaneous Amendments Bill contains
amendments to clarify the circumstances in which a Commonwealth Minister (other
than the responsible Commonwealth Minister), a State Minister or a Northern
Territory Minister may disclose documentary information or a petroleum mining
sample.
Sections 712 to 714 of Part 7.3 of the OPGGS Act deal
with the disclosure of certain documentary information or petroleum mining
samples obtained by NOPTA. Subsection 714(1) enables NOPTA to disclose certain documentary
information or samples to a Commonwealth Minister, a State Minister or a
Northern Territory Minister. Sections 715 and 716 then control the
circumstances in which a Minister may further disclose information or a sample
which has been disclosed under section 714. As currently drafted, these
sections only cover disclosure of information or samples by the responsible
Commonwealth Minister, whereas section 714 also permits NOPTA to disclose
information or samples to Ministers other than the responsible Commonwealth
Minister. As the Explanatory Memorandum states:
This anomaly leads to uncertainty about the circumstances in
which a Commonwealth Minister (other than the responsible Commonwealth
Minister), a State Minister or a Northern Territory Minister may disclose
documentary information or a petroleum mining sample.[148]
Items 4–14 of Schedule 2 amend sections 715
and 716 to clarify that any ‘recipient Minister’ (to whom information or
samples have been disclosed under section 714)[149]
is subject to restrictions on the disclosure of information and samples,
including a Commonwealth, state or Northern Territory Minister. Items 9
and 14 ensure these restrictions also extend to Ministers who have
received such information from the initial recipient Minister.
Items 17–23 of Schedule 2 make equivalent
amendments to similar provisions in Part 8.3 of the OPGGS Act which aim
to protect technical information provided in relation to greenhouse gas titles,
as well as amending technical errors in the legislation.
Under sections 745–747A of the OPGGS
Act, certain decisions relating to the release of technical information may
be reviewed by the Administrative Appeals Tribunal (AAT). Item 21 of Schedule
2 is a consequential amendment to the definition of ‘reviewable Ministerial
decision’ in section 745 to ensure that AAT review is available for relevant decisions
made by the responsible Commonwealth Minister to disclose information,
including under the amended provisions.
Appeals
relating to safety inspections
Clause 80A of Schedule 3 of the OPGGS Act provides
that certain decisions made by NOPSEMA inspectors, as set out in the table in
that section, may be appealed to the Fair Work Commission.[150]
Clause 81 sets out some of the rules and procedures associated with such
appeals.
According to the Explanatory Memorandum, decisions made by
the Fair Work Commission in 2015 and 2016[151]
have created ambiguity as to whether an appeal against a decision of a NOPSEMA
inspector should be considered based on the circumstances that exist at the
time an appeal is heard, or the circumstances that existed at the time the
inspector decided to issue the relevant notice.[152]
This ambiguity apparently extends to an appeal against any of the
decisions of a NOPSEMA inspector referred to in the table in subclause 80A(1)
of Schedule 3.[153]
The Explanatory Memorandum gives the following example of
the problem caused by this uncertainty:
... this issue has potential consequences in cases where,
despite lodging an appeal against a decision of a NOPSEMA inspector to issue an
improvement notice, the person to whom the notice was issued has since carried
out the improvements that the notice requires.
If, in these cases, an appeal is determined solely or
primarily on the basis of circumstances existing at the time the appeal is
heard, it must inevitably succeed. This risks the appeals process becoming a
mechanism (with a predetermined outcome) for expunging notices, rather than
serving as a proper administrative check on the powers of NOPSEMA inspectors.[154]
As such, item 1 of Schedule 12 inserts proposed
subclause 81(7A) into Schedule 3 of the OPGGS Act which
provides that an appeal against a decision ‘is to be determined on the basis of
the circumstances which prevailed at the time the decision was made’. Item 2
provides that proposed subclause 81(7A) will apply only to appeals
instituted after the commencement of the amendment, ‘so as not to interfere
with any existing appeals’.[155]
Boundary
changes
Schedule 13 of the Miscellaneous Amendments Bill contains
amendments to clarify that greenhouse gas assessment permits and holding leases
can be renewed in the event of a boundary change affecting those greenhouse gas
titles.
The boundary between Commonwealth waters and state or territory
coastal waters changes automatically to reflect actual changes to the
territorial sea baseline.[156]
The territorial sea baseline is the line from which the three nautical mile
coastal waters of a state or the Northern Territory is measured.[157]
The normal territorial sea baseline generally corresponds with the low water
line along the coast.[158]
Geoscience Australia has responsibility for defining the limits of Australia’s
maritime jurisdiction and, in practice, changes to Australia’s maritime
boundaries are identified through the publication of new maps or datasets by
Geoscience Australia.[159]
A change to the territorial baseline therefore results in
a change to the boundary between Commonwealth waters and state or territory
coastal waters, which in turn may impact on existing Commonwealth petroleum and
greenhouse gas titles.
The OPGGS Act contains several provisions to
address the immediate impacts of a boundary change on existing Commonwealth
petroleum and greenhouse gas titles. In particular, sections 283 and 463
‘maintain certainty for titleholders by postponing the effect of boundary
changes until affected titles cease to be in force (for example by way of
expiry, renewal, cancellation or surrender, or if a successor title is granted
(for example the grant of a petroleum production licence to the holder of a
petroleum exploration permit))’.[160]
Section 11 of the OPGGS Act relates to the renewal of petroleum and
greenhouse gas titles. Subsections 11(1A)–(1F) provide that certain petroleum
titles may be renewed in the event of a changes to the boundary of state or territory
coastal waters impacting on the relevant area relating to that title. However, although
subsection 11(2) provides for the renewal of greenhouse gas titles, there are
no equivalent provisions for greenhouse gas titles dealing with any boundary
changes.
Item 1 in Schedule 13 of the Miscellaneous
Amendments Bill proposes to insert new subsections 11(3)–(6) which
will provide equivalent provisions clarifying that greenhouse gas assessment
permits and holding leases can be renewed in the event that a change to the
boundary of state or territory coastal waters impacts on the relevant area
relating to that title. These mirror the equivalent existing provisions in subsections
11(1A)–(1F) relating to similar petroleum titles.
Cost
recovery-related measures
Both NOPSEMA and NOPTA operate on a cost recovery basis, whereby
levies and fees are collected from titleholders.[161]
Several amendments in the Miscellaneous Amendments Bill relate to fees
associated with these cost recovery arrangements as well as the recovery of
other costs under the OPGGS Act. These are outlined briefly below.
Fees for
varying petroleum access authorities
Schedule 5 contains amendments to enable a petroleum
access authority holder to apply for a variation of the authority, in turn
allowing NOPTA to introduce a fee for applications to vary petroleum access
authorities.
Although petroleum access authorities may be varied under
section 246 of the OPGGS Act, there is no specific provision for an
access authority holder to apply for that variation. As the Explanatory
Memorandum notes, in practice, NOPTA currently considers variations of access
authorities on request of the authority holder.[162]
To clarify that NOPTA can charge a fee for an application to vary a petroleum
access authority, item 2 of Schedule 5 of the Miscellaneous
Amendments Bill amends section 246 to enable an access authority holder to
apply for such a variation.
Section 256 of the OPGGS Act enables fees to be set
in regulations for the grant, renewal or variation of a range of petroleum
titles (but not petroleum access authorities). Section 427 is the equivalent
provision enabling fees for the grant, renewal or variation of greenhouse gas
titles.
Section 695L of the OPGGS Act also enables NOPTA to
charge fees as specified in the regulations for specified services provided by NOPTA
in performing its functions, or exercising its powers, under the OPGGS Act
or regulations. Application fees for the grant of petroleum access authorities
are currently set under the Wells Regulations.[163]
The Explanatory Memorandum notes that the proposed fee for an application for
variation of an access authority would be charged under section 695L of the OPGGS
Act through amendments to the Wells Regulations.[164]
Item 4 of Schedule 5 amends section 695L to
clarify that sections 256 and 427 do not limit section 695L in any way.
Fees to be
payable to NOPTA
Section 636 of the OPGGS Act provides for a range
of fees payable under the OPGGS Act to be payable to NOPTA or the
Commonwealth. Items 2–5 of Schedule 8 amend section 636 to ensure
that the fees previously payable to the Commonwealth are instead payable to
NOPTA. The Explanatory Memorandum states that this is because the fees
currently payable to the Commonwealth (under subsection 636(2)):
... relate to functions that will be undertaken by the Titles
Administrator [NOPTA], in its role to provide information, assessments,
analysis, reports, advice and recommendations to the Minister, and to manage
the title registers and data and information management. To ensure the Titles
Administrator, which operates on a full cost-recovery basis, can be adequately
cost recovered for carrying out these functions, it is appropriate that the
fees referred to in subsection 636(2) should all be payable to the Titles
Administrator, on behalf of the Commonwealth.[165]
Recovery of
costs by NOPSEMA
Section 589 of the OPGGS Act currently enables
NOPSEMA to remove, sell or dispose of property in certain circumstances (such
as where a person has been directed to remove the property from a vacated area
of a former greenhouse gas title).[166]
Item 5 of Schedule 11 inserts proposed
subsection 589(2A), which provides that NOPSEMA may, on behalf of the
Commonwealth, deduct certain fees or amounts from the proceeds of sale of that
property. This includes fees or amounts payable to the Commonwealth under the OPGGS
Act, and any amounts payable under the Offshore Petroleum
(Royalty) Act 2006 or certain amounts under the Offshore Levies Act.
Proposed subsection 589(2B), also inserted by item 5, requires
any amounts payable to the Commonwealth that are deducted by NOPSEMA under proposed
subsection 589(2A) to be remitted to the Commonwealth.
Regulatory
Levies Bill
Levies extended
to greenhouse gas wells
The Offshore Levies Act
and associated regulations[167]
allow for various levies to be imposed on offshore petroleum and greenhouse gas
activities. Levies related to offshore petroleum and greenhouse gas storage
wells and well activities (well levies) include:
- an
annual well levy, payable on 1 January each year based on the number of
non-abandoned wells that existed in a title area in the preceding calendar year
- a
well activity levy, currently payable when a registered holder of a petroleum
title submits an application for acceptance of a well operations management
plan (WOMP) and
- a
well investigation levy to recover costs reasonably incurred in relation to a
well investigation.[168]
The Regulatory Levies Bill amends the Offshore Levies
Act to extend the application of various levies to greenhouse gas wells. In
his second reading speech, the Minister for Regional Development, Territories
and Local Government, Dr McVeigh, explained that this will ensure NOPSEMA can
recover the cost of its oversight of well operations under greenhouse gas
titles.[169]
Section 9 of the Offshore Levies Act provides for a
well investigation levy, which is imposed where a NOPSEMA inspector is
inspecting a possible contravention of a duty relating to a well associated
with a petroleum title.[170]
Items 1–8 in Schedule 2 of the Regulatory Levies Bill amend
section 9 to extend the well investigation levy to apply in relation to wells
associated with an ‘eligible title’, which will include both petroleum titles
and greenhouse gas titles.
Section 10 of the Offshore Levies Act provides for
a similar well investigation levy to be imposed for inspections related to state
or territory petroleum titles. Items 9–18 in Schedule 2 of the
Regulatory Levies Bill amend section 10 to extend the well investigation levy
to apply in relation to wells associated with state/territory petroleum titles
and state/territory greenhouse gas titles.
Parts 2 and 3 of Schedule 2 make similar
amendments to extend the annual well levy and the well activity levy
respectively to both petroleum titles and greenhouse gas titles.
Consequential
amendments
Other schedules of the Regulatory Levies Bill make
consequential amendments to the Offshore Levies Act to reflect past amendments
made to the OPGGS Act and to the Wells Regulations.[171]
For example, section 10C of the Offshore Levies Act imposes a well
activity levy on applications for acceptance of a well operations management
plan (WOMP) and on applications to seek approval to commence a well activity. Items
1 and 2 of Schedule 1 of the Regulatory Levies Bill repeal
provisions imposing the well activity levy on applications to seek approval to
commence a well activity, because there is no longer a requirement seek such
approval in the Wells Regulations. The well activity levy will still apply to
applications for acceptance of a well operations management plan. Items
11-13 subsequently amend section 10C to also impose the well activity levy
on proposed revisions of WOMPs. This also reflect amendments to the Wells
Regulations, under which NOPSEMA will now conduct five-yearly assessments of
WOMPs, rather than accept a new WOMP every five years.