New annual rental fees, administrative levies and provisions for security deposits and environmental and reporting conditions
The State Revenue and Other Legislation Amendment (Budget Measures) Act 2012 (NSW) was recently enacted to, among other things, amend mining and onshore petroleum legislation in New South Wales to:
introduce new fees for both mining and petroleum titles payable from 1 July 2012 including;
- an annual rental fee; and
- an administrative levy;
- make further provisions for the imposition of conditions in relation to security deposits for both mining and petroleum titles; and
- provide for the imposition of conditions for petroleum titles relating to the environment, rehabilitation and reporting.
To implement the changes, the following legislation has been amended:
- the Mine Safety (Cost Recovery) Act 2005 (NSW)
- the Mining Act 1992 (NSW)(Mining Act)
Onshore petroleum legislation
- the Petroleum (Onshore) Act 1991 (NSW)(Petroleum Act)
- the Petroleum (Onshore) Regulation 2007 (NSW)
Annual rental fee and administrative levy
The annual rental fee and administrative levy will be payable by a person who is, or will be, a holder of a mining or petroleum title at the time liability for the fee arises. Where there is more than one title holder, each title holder is jointly and severally liable.
Liability for the annual rental fee and the administrative levy arises on the grant of the title and on each anniversary of the date on which the title is granted (defined under the Mining Act and the Petroleum Act following the changes as the grant anniversary date). For titles granted before 1 July 2012, liability for the annual rental fee and the administrative levy will arise on each grant anniversary date that occurs on or after 1 July 2012.
The amount of the annual rental fee is calculated on the basis of the “annual rental fee area” which is the sum of the prescribed amount per block or unit multiplied by the aggregate number of blocks or units covered by the relevant title.
The amount of the administrative levy is 1% of the security deposit amount for the title. The minimum amount for an administrative levy is $100 and the minimum security deposit amount is $10,000. Where a group security deposit is required, the amount of the group security will be based on at least the sum of the minimum deposits required for all titles within the group.
The annual rental fee and the administrative levy are payable in advance for the period from the grant date or grant anniversary date, as the case may be, to the next grant anniversary date. Late payment fees at the rate of 15% of the overdue amount per annum compounded quarterly or, at such other rate prescribed by the regulations, may be charged for late payment of the annual rental fee or the administrative levy.
A failure to pay either the annual rental fee or the administrative levy within the required time is a contravention of the Act. A fee payable under the Act is a debt due by the title holder to the Crown and can be recovered by the government through the courts. It should also be remembered that contravention of the Act is a ground for cancellation of a title.
Cancellation or suspension of a title does not affect any liability for either the annual rental fee or the administrative levy that arose on a date before the cancellation – that is any existing liability in respect of the annual rental fee or the administrative levy arising before cancellation will still exist.
Security deposit provisions
While before 1 July 2012 each of the Mining Act and the Petroleum Act included some provisions in relation to security deposits, the changes bring these Acts closer into line with each other so that under each of them:
- the applicant for a title may be required to provide the security deposit before the grant of the title;
- security deposit conditions may be imposed for the purposes of requiring the title holder to provide and maintain a security deposit to secure funding for the fulfilment of obligations under the title including future obligations;
- security deposit conditions may be imposed at any time during the term of a title, including on grant, renewal or transfer; and
- a title holder holding more than one title may be required to provide a group security deposit, that is a single security deposit covering the group of titles held by the title holder.
Petroleum titles - conditions relating to the environment, rehabilitation and reporting
The changes also introduce new provisions for petroleum titles that enable the imposition of conditions concerning the environment, rehabilitation and reporting.
These include conditions that may be imposed at any time during the term of a petroleum title including on grant, renewal or transfer requiring a petroleum title holder to:
- carry out specific activities for the purposes of the conservation and protection of the environment, rehabilitation of land or water, and, if the title applicant or title holder requests it, for afforestation and carbon sequestration, and
- provide the Director General on request with a report on the extent of the title holder’s compliance with licence conditions and particulars of and reasons for any non-compliance or mitigation actions taken or proposed to be taken (each of which defined under the Petroleum Act following the changes as a reporting condition).
Importantly, a person who provides information or a document in response to a reporting condition knowing that is false or misleading in a material particular is guilty of an offence.
The changes increase the fees payable by mining and petroleum title holders and the resulting increases may be significant particularly for those title holders who own multiple titles with large area sizes.
Petroleum title holders should be aware of the scope of possible environmental, rehabilitation and reporting conditions and the consequences of non-compliance with them.