Contact: Carter Newell (Queensland, Australia)
The Queensland Parliament has passed the Mines Legislation (Streamlining) Amendment Act 2012, which will make substantial changes to the way resource companies do business
in Queensland. Carter Newell's Resources team reports on the key amendments to the resources regulatory regime and what it means for the mining, oil and gas industries.
Introduction
The Mines Legislation (Streamlining) Amendment Act 2012 (Streamlining Act) promises to deliver a more efficient regulatory framework for resource tenure management in Queensland. The Streamlining Act amends the following resource related legislation (collectively theResource Acts):
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Mineral Resources Act 1989 (MRA);
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Petroleum Act 1923;
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Petroleum and Gas (Production and Safety) Act 2004 (P&G Act);
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Greenhouse Gas Storage Act 2009; and
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Geothermal Energy Act 2010.
The amendments will simplify the way resource companies interact with regulators and clarify the rights of authority holders.
Amendments to the P&G Act
Water pipelines
A key achievement of the Streamlining Act from the perspective of the petroleum industry is the clarification of the rights of authority holders to process CSG water and associated water produced in the area of one lease at a water treatment facility located within the area of another lease.
The definition of "pipeline" will be amended to enable proponents to construct and operate water pipelines within the area of a lease. The streamlining amendments will enable proponents to process CSG water at a central processing facility located on a tenement outside the area of the petroleum lease. However, in order to transport water off-tenement, proponents will need to hold an environmental authority for the water pipeline, obtain a water licence under the Water Act 2000 and comply with any applicable Water Resource Plan.
For existing water pipelines or pipelines currently being constructed under the authority of the P&G Act, section 110 will continue to apply as if it were not amended until one year after the commencement of the streamlining provisions. Beyond that, proponents will need to obtain a water licence to operate water pipelines that span beyond the area of the tenement.
One of the shortcomings of the streamlining amendments is that there remains an overlap in the safety regimes that apply to water pipelines. The Agriculture, Resources and Environment Committee recommended that when the Streamlining Act was at Bill stage, it be amended to clarify that safety issues in respect of produced water pipelines would be regulated by the P&G Act, rather than the Work Health and Safety Act 2011. However, the government has deferred any further amendments at this point to consider the issue further.
Accordingly, for the time being, water pipeline operators will be required to comply with the safety management plan provisions of the P&G Act and also the Work Health and Safety Act 2011, as well as meeting the standard set out in the Code of Practice for Upstream Polyethylene Gathering Networks.
Production leases
The amendments to the P&G Act will also enable producers to apply to the Minister to amend the production commencement date for a new petroleum lease. These new provisions will allow CSG-LNG producers to stagger production between projects to underpin long-term gas supply contracts.
Relevantly, the new provisions will only apply if a petroleum lease is initially granted with a delayed production commencement date to support a 'relevant arrangement', such as a supply contract or coordination agreement.
The Streamlining Act establishes the process for proponents seeking to delay production and provides guidance on what the Minister will consider when deciding whether to change the production commencement date. Proponents seeking to delay the production commencement date will need to apply for the change at least one year before production is supposed to commence, and provide evidence of the relevant supply arrangements and particulars of the reserve.
Pipeline land
The P&G Act has also been amended to provide greater certainty for proponents seeking to secure pipeline land to construct and operate a pipeline. The Streamlining Act achieves this in two ways:
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by providing that written permissions are binding on future landholders; and
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by removing the requirement that proponents be registered public utility providers in order to hold easements in gross.
Pipeliners commonly enter into options for easements with landholders to facilitate access to private land during the construction phase, and will only register an easement once the pipeline has been completed and surveyed. However, contractual options are not binding on successors in title.
The Streamlining Act will give pipeliners some security of tenure by providing that written permission of landholders to enter land to construct and operate a pipeline will be binding on successors and assigns, provided an easement is registered within nine months after the pipeline is completed. Options for easements and other written permissions will not be binding on successive landholders if they acquire the land after the nine month period has expired and an easement has not been registered.
In relation to the pipeline corridor, proponents will no longer be required to seek public utility provider status in order to register easements in gross. Previously, only registered public utility providers could hold easements in gross. In order to obtain public utility provider status, proponents had to satisfy the Minister that they were suitable to provide a public utility service, which was narrowly defined and, in some cases, limited to domestic supply (which was problematic for LNG exporters). The Streamlining Act removes this requirement, which will improve the process for securing tenure for lineal infrastructure such as pipelines and powerlines.
Reporting requirements
Going forward, resource proponents will be required to lodge annual infrastructure reports containing details about the activities carried out in lease areas in the previous financial year and the location of any new infrastructure constructed.
Amendments to the MRA
Pursuant to the Streamlining Act, the relinquishment requirements under the MRA have been amended to provide that, unless the Minister decides otherwise, coal and mineral permits must be reduced by at least 40% within the first three years of the grant and by a further 50% by the end of the fifth year. Previously, the stated thresholds (which were both 50%) only applied to mineral permits. The Minister will retain his discretionary power to alter the relinquishment requirement.
The Streamlining Act does not provide guidance as to when the Minister will exercise discretion in respect of relinquishment requirements, however the Parliamentary Agriculture, Resources and Environment Committee suggests that the discretion is to be limited to "exceptional circumstances"(1). Accordingly, coal explorers seeking to reduce their relinquishment obligations should provide reasons with their application for new exploration tenure.
The power to grant mining leases will be transferred from the Governor in Council to the Minister for Mines. This move is expected to reduce application assessments by up to six weeks(2).
Amendments to the Resources Acts
Land acquisitions for lineal infrastructure
The Streamlining Act amends the Resource Acts to clarify the rights of resource tenure holders where the underlying land of an authority is compulsorily acquired.
Currently, if tenure includes land areas that are to be resumed under the Acquisition of Land Act 1967 or another resumption law(3), the tenure is taken to be extinguished upon the gazetting of the resumption notice. This inadvertent consequence of the compulsory acquisition regime is contrary to Parliament's original intention that the compulsory acquisition of land should not extinguish resource interests unless the activities being carried out on the tenure are incompatible with the purpose for which the land is resumed.
Going forward, the compulsory acquisition of land will only affect resource interests to the extent provided for in the relevant resumption notice. However, in order to cancel a resource tenement, the Minister must be satisfied that the continued development of the resource is incompatible with the purpose for the resumption. The streamlining amendments will also provide for the partial extinguishment of resource permits where the land being resumed will only affect part of the tenure
For land resumptions that are completed prior to the commencement of the amendments, transitional provisions will apply. Overlapping resource tenures which are purported to have been extinguished by the resumption will not be taken to have been cancelled unless the authority acquiring the land has taken some other positive action to extinguish the permit, such as by serving a copy of the resumption notice on the tenure holder or by entering into negotiations for compensation. Where the constructing authority has taken that next step and the resource permit has been extinguished, proponents may be able to apply for new tenure over resumed land, provided they can satisfy the Minister that the resource development does not interfere with the purpose for which the land was originally resumed. No priority is given to the previous holder of the cancelled tenure.
Resources proponents whose interests are affected by the compulsory acquisition of land are entitled to compensation, though the Streamlining Act makes it clear that proponents are not entitled to compensation based on the value of the commodities sought to be extracted.
Dealings with resource authorities
The streamlining amendments will establish a new tenure administration system for dealing with resource authorities, designed to modernise the system and reduce processing time for dealings in respect of mining and petroleum tenements.
Going forward, proponents will be able to register farm in agreements and other commercial dealings ("associated dealings") against a tenement's title, similar to the systems already in place in New South Wales and South Australia. Dealings which must be registered include transfers (including transfers of part interests), mortgages and subleases of tenements.
Under the new system, some transfers will not be required to be assessed to be registered, such as transfers to entities in the same ABN group and transfers to existing holders. Dealings which purport to transfer part of the area of a mining tenement (including strata beneath the surface) will be prohibited. Resource companies should keep this in mind when negotiating co-development agreements and coordination arrangements where there are overlapping tenures.
Resource companies will also be able to apply for indicative approval for a transfer. The key advantage of obtaining early approval is that final approval will be taken to have been given if an application for approval of an assessable transfer is made within three months after indicative approval is given and all other conditions have been complied with. For foreign entities acquiring an interest in a resource tenement, indicative approval will enable final approvals to be fast-tracked up to six months after indicative approval is given, provided certain procedures are complied with.
MyMinesOnline
The Streamlining Act amends the Resource Acts to pave the way for the introduction of the new web-based service delivery system, MyMinesOnline, to replace the current online system. Once the system is introduced, resource proponents will be able to submit applications, reports and submissions to the Department electronically. MyMinesOnline is designed to provide a more user-friendly interface between resource companies and the Department of Natural Resources and Mines by providing a customised page where companies can track the current status of applications and obtain information about environmental assessment data. The complete system is expected to go live in October 2012.
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(1) Queensland, Mines Legislation (Streamlining) Amendment Bill 2012 Report No. 7 Agriculture, Resources and Environment Committee August 2012, Parliamentary Paper No 694 (2012) 7.
(2) Queensland Resources Council,Streamlining package a win for community and the resources sector(2 August 2012) <http://www.qrc.org.au/01_cms/details.asp?ID=3154>
(3) For example, the Electricity Act 1994, South-East Queensland Water (Distribution and Retail Restructuring) Act 2009, State Development and Public Works Organisation Act 1971, and Transport Planning and Coordination Act 1994.
