The New South Wales (NSW) coal seam gas (CSG) industry has effectively been at a standstill since March 2014 when the Government implemented a moratorium on the grant of new exploration licences. The freeze was part of a larger plan to ‘pause, re-set and recommence’1 the industry in NSW following a comprehensive review of CSG activities undertaken by the Chief Scientist and Engineer Professor Mary O’Kane (O’Kane). It now seems the process has entered the recommencement phase, with five pieces of significant legislation passing through parliament on 21 October 2015.

Certain pieces of the legislation have now commenced, while others are still awaiting proclamation. Commencement information in relation to each Bill is given below.

Background

The current regulatory regime for the exploration and production of CSG has been recognised by the NSW Government as being ‘an outdated and inefficient approach to allocating resources’.2 The independent review of CSG activities in NSW was commissioned in response to a worsening climate of unease about the industry and in recognition of the State’s undeniable need for a viable gas industry.3

O’Kane’s final report was issued on 30 September 2014 and concluded that the technical challenges and risks posed by the CSG industry can, in general, be managed with effective regulation and monitoring.4

O’Kane specifically noted in her report that:

‘All of this needs to take place within a clear, revised, legislative framework which is supported by an effective and transparent reporting and compliance regime and by drawing on appropriate expert advice.’5

All of the recommendations set out in the final report were supported by the NSW Government with the release of the NSW Gas Plan. The associated ‘action plan’6 also included the following commitments from the NSW Government:

  • Extinguish pending licence applications (which cover 43% of the state);
  • Freeze all new licence applications;
  • Confirm that all national parks and urban residential zones are protected;
  • Offer a limited ‘buy-back’ of existing petroleum exploration licences;
  • Secure NSW gas supply needs; and
  • Appoint the Environmental Protection Authority (EPA) as the lead regulator.

A number of these actions have already been taken under the Gas Plan. The legislation now released addresses the balance of the recommendations made by O’Kane. Details of each Bill are provided below.

Mining and Petroleum Legislation Amendment (Grant of Coal and Petroleum Prospecting Titles) Bill 2015

The Mining and Petroleum Legislation Amendment (Grant of Coal and Petroleum Prospecting Tiles) Bill 2015 commenced on 18 December 2015 and overhauls the process for obtaining an exploration licence, introducing a tender process for release of new titles. The release of new areas for exploration will be controlled by the State and applicants selected by way of a competitive process, leaving behind the old ‘first come first served’ model. The process may be different in relation to each different release and the invitation for competitive selection will outline the process in each instance.

In addition, the Mining and Petroleum Legislation Amendment (Grant of Coal and Petroleum Prospecting Tiles) Bill 2015provides that:

  • The entire State is deemed a controlled release area for coal, which means the grant of new coal mining leases will be strictly managed by a rigorous assessment process;
  • A more streamlined, non-competitive tender process will apply in relation to limited ‘operational allocations’ where an exploration licence may be required over adjacent land to support the operation of an existing mine; and
  • Proponents who had an application expunged in 2014 must be given the opportunity to apply for a relevant title before one can be granted in the same area.

Mining and Petroleum Legislation Amendment (Land Access Arbitration) Bill 2015

The Mining and Petroleum Legislation Amendment (Land Access Arbitration) Bill 2015 implements the recommendations made by Bret Walker SC in an examination of the land access arbitration framework.

It introduces a number of significant changes to the current land access regime, including:

  • Imposing a good faith obligation on proponents;
  • The concept of an ‘access code’ and mandatory provisions for inclusion in access arrangements;
  • A revised arbitration process including requiring mediation before arbitration, allowing legal representation at mediation and arbitration, requiring the holder to cover reasonable legal costs of the landholder’s participation in these processes and introducing a register of all arbitrated access agreements to be publicly available via the department’s website;
  • Clear definitions of ‘compensable loss’, clarifying entitlements to compensation; and
  • Cancellation of all titles within national parks, noting no compensation is payable by the State in relation to such cancellation.

The Mining and Petroleum Legislation Amendment (Land Access Arbitration) Bill 2015 is yet to commence.

Mining and Petroleum Legislation Amendment (Harmonisation) Bill 2015

One of O’Kane’s recommendations was that all onshore subsurface resources be dealt with under a single piece of legislation. The Mining and Petroleum Legislation Amendment (Harmonisation) Bill 2015 is the first step in that process and seeks to:

  • Provide clarity around the criteria to be applied in decisions regarding tenure, including whether to grant, renew, transfer or cancel a title;
  • Require further approval of prospecting activities that are not exempt development under planning legislation;
  • Impose reporting requirements on proponents;
  • Broaden the enforcement powers of the Minister;
  • Enable mandatory codes of practice to be developed; and
  • Allow beneficial use of gas.

The Mining and Petroleum Legislation Amendment (Harmonisation) Bill 2015 is yet to commence.

Protection of the Environment Operations Amendment (Enforcement of Gas and Other Petroleum Legislation) Bill 2015

The Protection of the Environment Operations Amendment (Enforcement of Gas and Other Petroleum Legislation) Bill 2015commenced on 1 December 2015 and gives the EPA responsibility for investigating offences under the petroleum, planning and water legislation and instituting proceedings.

Work Health and Safety (Mines and Petroleum) Legislation Amendment (Harmonisation) Bill 2015

The Work Health and Safety (Mines and Petroleum) Legislation Amendment (Harmonisation) Bill 2015 commenced operation on 1 February 2016 and introduces significant changes to the safety regime for the petroleum industry in NSW. Work health and safety (WHS) at petroleum sites will now be regulated under the harmonised Work Health and Safety (Mines) Act 2013 (NSW) rather than under the Petroleum (Onshore) Act 1991 (NSW). This will make the WHS regime for petroleum operators consistent with the WHS regime at mines.