Introduction

The environmental approvals process for offshore petroleum activities in Commonwealth waters is currently the subject of significant reform.  Environmental impacts of offshore petroleum activities are regulated under both the Environment Protection and Biodiversity Conservation Act 1999 (Cth)(EPBC Act) and the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGS Act).  Following criticism of duplication and inefficiency in the current system, the Commonwealth Government is seeking to streamline the environmental approvals process by agreeing to deliver a ‘one stop shop’ for offshore petroleum environmental assessments.  On 19 November 2013, a Program Report and a draft Strategic Assessment Report were released by the Offshore Streamlining Taskforce and will form the basis for the Federal Minister for Environment to consider endorsing changes to the environmental approvals process.  Before legislative reform can occur, the Minister must be satisfied that the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) is capable of delivering an approval process that will satisfy the relevant objectives and criteria of the EPBC Act.

Norton Rose Fulbright has a market leading environmental practice and we would be happy to discuss the implications of the proposed reform for your business with you.

Background to reform

Offshore petroleum activities that have or are likely to have a significant impact on matters of national environmental significance are regulated under the EPBC Act.  Also, under the EPBC Act, the Commonwealth has responsibility for regulating activities in its waters, which are classified as those areas more than three nautical miles from the territorial sea baseline and within the Commonwealth Petroleum Jurisdiction Boundary.  The EPBC Act operates in conjunction with the OPGGS Act, which seeks to ensure any petroleum activity in Commonwealth waters is carried out in accordance with an environment plan and the principles of ecologically sustainable development.  Compliance with these standards is assessed by NOPSEMA.

NOPSEMA was initially the National Offshore Petroleum Safety Authority, which regulated occupational health and safety in Commonwealth waters, as well as State and Northern Territory coastal waters.  However, the authority’s powers were expanded largely due to the Final Government Response to the Report of the Montara Commission of Inquiry 2011.  Following the uncontrolled oil and gas release at the Montara oil field, the Report recommended the establishment of a national offshore petroleum regulator for Commonwealth waters.  As a result, from 1 January 2012 NOPSEMA was given responsibility to investigate and report on offshore environmental management practices.

The current method of dual assessment by NOPSEMA and the Commonwealth Department of the Environment under the EPBC Act has prompted a number of governmental reviews.  These reviews have recommended further expansion of NOPSEMA’s powers so that it is the sole environmental regulator of offshore petroleum activities.  The 2009 Report of the Independent Review of the EPBC Act stated that “it is appropriate that the EPBC Act continue to apply to petroleum activities.  However, the approvals processes under the OPGGSA and the EPBC Act should be streamlined.”  This was reiterated in the 2013 draft Productivity Commission Report on Mineral and Energy Resource Exploration, which concluded that since NOPSEMA currently undertakes assessments and approvals of environment plans associated with petroleum activities in Commonwealth waters, NOPSEMA already has the capacity and expertise to undertake assessments and approvals under the EPBC Act.

The strategic assessment process

On 25 October 2013, the Federal Minister for the Environment, the Federal Minister for Industry and the Chief Executive Officer of NOPSEMA entered into an agreement for a strategic assessment of the regulation of petroleum activities in Commonwealth waters as part of the Government’s commitment to ‘one stop shop’ approvals.  The Minister’s ability to conduct the strategic assessment is provided for in the EPBC Act and consists of two main steps:

  1. assessment and endorsement of a ‘policy, plan or program’; and
  2. approval of actions (or classes of actions) that are associated with the policy, plan or program.

The Offshore Streamlining Taskforce was established to prepare the strategic assessment and is comprised of officers from the Department of Industry, the Department of the Environment, NOPSEMA and representatives of the offshore petroleum industry.  The draft Strategic Assessment Report and Program Report have been released for public consultation and provide a comprehensive description of the OPGGS environmental assessment processes to be administered by NOPSEMA.  The reports are available at the Department of Industry website.

If the assessment processes under the Program meet the EPBC Act requirements, offshore petroleum activities will be subject to approval by NOPSEMA without additional referral to or approval from the Commonwealth Department of the Environment.

Implications for the offshore petroleum industry

The response to the announcement of the strategic assessment has been largely positive.  The Federal Minister for Environment, Greg Hunt, stated in a media release that “the outcome of the strategic assessment will deliver faster environmental approvals, reduce duplication in environmental assessments and regulation and promote Australian industry and protect employment while maintaining integrity of the environmental approvals process.”  The Minister emphasised the transparency of the process moving forward and declared that NOPSEMA’s assessment procedures will provide the same robust environmental protection outcomes as those of the EPBC Act.

This view was supported by the Australian Petroleum Production & Exploration Association, with Acting Chief Executive Noel Mullen stating that “this is exactly the sort of policy assessment needed if the petroleum industry is to be in a position to secure further investment amid growing competition from North America and East Africa.”  He noted that the development of a ‘one stop shop’ had the potential to lighten the weight of unnecessary regulation and allow for greater focus on improving performance and competitiveness.

However, there remain a number of issues that will need to be addressed.  First, the extent to which the Federal Minister for Environment may seek to retain a veto power in respect of NOPSEMA’s approvals is unclear.  Also, it will be interesting to see whether the Commonwealth Government retains any enforcement powers.  If the expansion of NOPSEMA’s powers is limited to the approval process, it may be that both Commonwealth agencies will continue to play an enforcement role.

Second, in the event legislative reform takes place, it will be necessary for proponents to consider how NOPSEMA’s approval process will affect the timelines of their projects and whether applicable State or Territory environment legislation conflicts with the new approval process.  Until the new process is introduced, proponents must continue to refer offshore petroleum activities to the Department of the Environment if the activities trigger the EPBC Act assessment process.

Conclusion

The draft Strategic Assessment Report and the Program Report are available for public comment until
20 December 2013.  Please contact Charmian Barton if you require assistance in drafting a submission to the Offshore Streamlining Taskforce or would like to discuss the implications of the proposed reform for your business.