Introduction

Modernising the regulation of water is an important element of the Queensland Department of Natural Resources and Mines’ (Department) water business transformation project.  The Department has undertaken a strategic review of the Water Act 2000 (Qld) (Water Act) to identify opportunities to improve all aspects of its water business with the object of providing for ‘responsible development of water resources’1.  To that end, in early July, the Department released a Consultation Regulatory Impact Statement (Consultation RIS) to detail the proposed State wide reforms.

According to the Consultation RIS, the objective of the reforms is to ‘responsibly accelerate the economic productivity of water related development in Queensland by reducing regulatory burden and red tape’.  Key priorities of the reforms are certainty, security and reliability of the State’s water supply. 

The Department intends to implement the reforms through amending legislation to be passed by Parliament by late 2014. 

In this article, we provide a high level overview of the following key areas of reform proposed by the Department:

  • Converting water licences to water allocations
  • Facilitating water-related development opportunities
  • Providing a pathway for transition of water rights in special agreement legislation
  • Establishing a more consistent underground water management framework for the resource sector

Converting water licences to water allocations

 

The Department intends to fast track the conversion of water licences (which attach to land and cannot be traded) to tradeable water allocations in a shorter and more streamlined process.  Conversion currently requires the development of water resource plans (WRP) and resource operations plans (ROP), which is a time consuming statutory process and depends upon comprehensive and data-intensive hydrological models.2

It is proposed instead to allow ‘principle- and rule- based approaches’ to be applied to the creation of water allocations and trading rules in areas where insufficient data exists to develop such comprehensive models.  New transitional planning provisions will also provide for a rapid amendment process for existing WRPs and ROPs, with such amendments to be carried out at the same time as the conversion to water allocations.  The proposed amendments will allow conversions to occur even where there are no applicable ROPs in place.  

The Department hopes that up to 9,500 water licences will be converted to water allocations by the end of 2017.  

Facilitating water-related development opportunities

This proposed reform is aimed at addressing the significant delays experienced by some large water related projects, which are subject to assessment as coordinated projects under the State Development and Public Works Organisation Act 1971 (State Development Act).  In such cases, any amendments to the WRP and ROP and any required water licence application cannot be considered until after the environmental impact assessment (EIA) process has been completed.  Further, there is a lack of certainty relating to access to water until very late in the assessment and approval process and this can sometimes jeopardise the feasibility of projects and financial investment decisions.

The Department intends to implement the following reforms to address these concerns:

  • Enabling the Government to grant a ‘water development option’ before the EIS process commences to provide the proponent with Government assurance and exclusivity over access to water resources.  A water development option will only be granted after DNRM has assessed whether the proposed development will be consistent with the reserved water allocation. The Department must also determine whether the project will have relevant impacts on the environment and other water users that are inconsistent with the WRP.
  • Allowing for the EIA process to inform Ministerial decisions to amend WRP’s to reserve unallocated water.  Any such amendment will be subject to a short form amendment process but only where the EIA has demonstrated that:
    • there is sufficient water to support the project;
    • the volume of water required has taken into account the most efficient use of the resource;
    • any adverse impacts on existing water users or the environment are adequately mitigated; and
    • there has been sufficient opportunity for community consultation.
  • Allowing for the EIA process to inform chief executive decisions to grant a water entitlement to the holder of a water development option.

It is expected that this process will be triggered rarely with only one project every two years benefitting from these proposed amendments. 

Establishing a more consistent underground water management framework for the resource sector

Mining

Under the Petroleum and Gas (Production and Safety) Act 2004 (Qld) (P&G Act) and the Petroleum Act 1923(Qld) (Petroleum Act), holders of conventional and unconventional petroleum and gas tenures have a right to take water during the extraction process (called ‘associated water’) subject to complying with specified underground water obligations set out in Chapter 3 of the Water Act.  These underground water obligations include requirements to undertake baseline assessments, monitor groundwater, and enter into ‘make good agreements’ with users of potentially affected bores. 

There is no similar statutory framework for mining tenures under the Mineral Resources Act 1989 (MRA).  Groundwater impacts of mining activities are dealt with in an ad hoc way through conditions imposed on water licences or permits, tenures and environmental authorities.  It is also increasingly common for ‘make good agreements’ to be negotiated with affected landholders as part of or ancillary to compensation agreements under the MRA. 

The Department intends to bring mining activities within the ambit of Chapter 3 of the Water Act by conferring a statutory right on mining lease holder or mineral development licence holder to take associated water subject to a requirement to comply with the underground water obligations set out in Chapter 3. 

Petroleum and Gas

The Department is also considering revising underground water rights for the petroleum and gas sector with a view to mitigating the impacts arising out of the taking of non-associated (sometimes called consumptive water).  Non-associated water is water taken specifically for use in a resource activity (e.g. water used in accommodation camps or for use in hydraulic fracturing).

Currently, under the P&G Act and the Petroleum Act, the right to take water applies not only to associated water but also to non-associated water.  Conventional oil and gas and coal seam gas projects do not require large amounts of non-associated water.  Therefore, the driver for legislative reform in this area has not been strong in Queensland. 

In contrast, shale gas projects require large volumes of non-associated water.  As a result of the projected growth in the production of shale gas in Queensland, the Department is considering the following options for managing the impacts of these larger volumes of non-associated water extraction:

  • Require proponents to obtain an entitlement under the Water Act for non-associated water, which is consistent with the manner in which the mining sector is regulated; or
  • Retain the current statutory right to take non-associated water but impose further statutory obligations on proponents, for example, by requiring proponents to undertake an assessment of the options for sourcing non-associated water and to minimise the impacts on aquifers and springs used by other water users.

The Department is seeking feedback from industry and the community in relation to which is the preferred option.

Providing a pathway for transition of water rights in special agreement legislation

Prior to the 1990’s it was not uncommon for large mining developments to be approved and regulated under Special Agreement Acts (SAA). The Water Act recognises the SAAs and the water rights contained in them.  The Department seeks to transition those water rights into the Water Act framework.  It has commenced this process and has transitioned three of the eleven SAAs recognised by the Water Act. It hopes to complete the transition through voluntary negotiations with the relevant mining companies over the next five years.

Other Reforms

The Department is proposing a range of other reforms, which form part of the Consultation RIS, including:

  • Changing the purpose of the Water Act;
  • Streamlining the water resource planning process;
  • Facilitating increased access to unallocated water by streamlining the release process; and
  • Reducing the regulatory burden associated with licensing take and/or interference with water where this is a low risk to the water resource.

Next Steps

The Department is seeking feedback in relation to the Consultation RIS.  Submissions close on 29 July 2014. 

To view the Consultation RIS and supporting documents and make a submission, visit the Department’s website: http://www.dnrm.qld.gov.au/water/catchments-planning/water-reform