Wednesday, 11 September 2019
Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Bill 2019, Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Amendments) Bill 2019; Second Reading
That these bills be now read a second time.
I seek leave to have the second reading speeches incorporated in Hansard.
The speeches read as follows—
This Bill amends the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 as a consequence of related amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006. The amendments to the OPGGS Act will transfer regulatory oversight for offshore greenhouse gas storage well operations from the responsible Commonwealth Minister to the National Offshore Petroleum Safety and Environmental Management Authority, or NOPSEMA.
NOPSEMA operates on a fully cost-recovered basis through levies and fees payable by the offshore petroleum and greenhouse gas storage industries. This includes well-related levies imposed in relation to petroleum titles. To ensure NOPSEMA can also recover the cost of its oversight of well operations under greenhouse gas titles, this Bill will amend the Levies Act to extend the application of the well-related levies to greenhouse gas wells.
This Bill also amends the Levies Act as a consequence of amendments which commenced on 1 January 2016 made to well-related regulations under the OPGGS Act, or the Wells Regulations.
Prior to the amendments to the Wells Regulations, a new 'well operations management plan' was required to be submitted every five years. The amendments instead provided for a single plan to cover all stages of the life of a well, and required revision of the plan every five years. Currently, under the Levies Act, well activity levies are only imposed on applications for acceptance of a new plan. To ensure NOPSEMA continues to be fully cost-recovered, this Bill will amend the Levies Act to impose a well activity levy on submission of five-yearly revisions of plans.
The amendments to the Wells Regulations also removed the requirement for a titleholder to apply to NOPSEMA for approval to commence well activities. This Bill removes well activity levies that relate to those applications.
The Bill also makes technical amendments to the Levies Act, to future-proof specific references in provisions of the Levies Act to regulations made under the OPGGS Act. The amendments are equivalent in purpose and effect to the amendments made to the OPGGS Act by the Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Amendments) Bill 2019.
Effective references to regulations are critical to the operation of a number of provisions of the Levies Act, including provisions which impose levies to fund the operations of NOPSEMA on a cost recovery basis.
I commend this Bill to the Chamber.
ON THE INTRODUCTION OF THE OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE AMENDMENT (MISCELLANEOUS AMENDMENTS) BILL 2019
This Bill contains important measures making amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006.
The Bill will transfer regulatory oversight for offshore greenhouse gas storage environmental management and well operations from the responsible Commonwealth Minister to the National Offshore Petroleum Safety and Environmental Management Authority, or NOPSEMA. Currently, NOPSEMA is the regulator for offshore petroleum environmental management and well operations.
The reason for the division of petroleum and greenhouse gas responsibilities is largely historical. NOPSEMA did not have any environmental management functions in 2008 when the greenhouse gas regulatory provisions were introduced into the Act. With the potential for an increase in greenhouse gas storage activities in future, there is a renewed focus on the adequacy of regulatory arrangements.
NOPSEMA has developed expertise in the regulation of offshore environmental management and well operations through its responsibility for regulation of offshore petroleum activities. The Australian Government proposes to transfer regulatory oversight for offshore greenhouse gas storage environmental management and well operations from the Minister to NOPSEMA. This will ensure we have an experienced and independent regulator for offshore greenhouse gas operations. The proposal will be effected through a suite of amendments.
The Minister will retain responsibility for major resource related decisions concerning the granting of greenhouse gas titles, the imposition of title conditions and the cancellation of titles, as well as core decisions about resource management and resource security.
The amendments in this Bill will strengthen and clarify the powers of NOPSEMA inspectors to determine whether regulated entities are compliant with their obligations under the Act and associated regulations.
The amendments will expand and clarify the categories of premises that inspectors may enter, without a warrant, to monitor compliance with environmental and occupational health and safety obligations. This will include premises of a body corporate that is related to a titleholder, such as a parent company which may make decisions about operations carried out under the title. It will also include the premises of titleholders' contractors, including entities who have agreed to provide response equipment in the event of an oil spill.
The amendments in this Bill will also enable inspectors to undertake inspections without a warrant to monitor compliance by titleholders with well integrity-related obligations under the Act and regulations. These powers will be equivalent to existing powers that inspectors may exercise to conduct environmental or OHS inspections.
In the context of a high-hazard industry, it is particularly important that the regulator has sufficient powers to ensure regulatory obligations are being complied with. Non-compliance may increase risks to health or safety or to the environment, with potentially serious consequences. The requirement to obtain a warrant may impede NOPSEMA's ability to conduct inspections. This is due to the difficulty in accessing offshore facilities and changes to titleholders' operational decisions on the timing of well activities. The requirement to obtain a warrant may also impede NOPSEMA's ability to respond quickly in an emergency.
Inspectors will still be required to obtain a warrant before exercising any powers to search for or gather evidence of contraventions of provisions.
The Bill further amends the Act to introduce enforceable undertakings. This will enable the Minister, the National Offshore Petroleum Titles Administrator and the CEO of NOPSEMA to accept and enforce undertakings in relation to compliance with provisions of the Act and regulations. The introduction of enforceable undertakings form part of a graduated enforcement framework.
Although regulators currently have access to a range of enforcement tools, enforceable undertakings offer a unique benefit. Existing tools can require a duty holder to cease an activity or reach a minimum standard of compliance. Enforceable undertakings can go beyond these enforcement tools to effect meaningful changes to overall compliance culture.
Enforceable undertakings allow the regulator to secure more timely and cost-effective outcomes than a prosecution. For example, a prosecution may take months or years to achieve a result, whereas an enforceable undertaking can require the duty holder to take steps to comply as soon as the undertaking has been accepted by the regulator. Enforceable undertakings remove the need for the regulator to pay the potentially sizeable costs associated with prosecutions. Undertakings also enable the regulator to tailor the enforcement response, taking specific titleholder and broader industry considerations into account.
In accordance with a graduated enforcement framework, regulators will determine if it is appropriate to accept an undertaking given by a person, taking into account a range of factors. These factors include the circumstances in which the undertaking is given, and the compliance history of the person giving the undertaking. The Bill includes specific circumstances in which the regulator must not accept an undertaking in response to an alleged contravention of an OHS provision of the Act or regulations. For example, the regulator must not accept an undertaking if an alleged contravention contributed to the death of another person, or if the alleged contravention involved recklessness. These express limitations are considered to be appropriate in the context of a high-hazard industry.
The Bill was previously introduced into Parliament on 28 March 2018, but lapsed when Parliament was prorogued for the 2019 Federal election. On 28 June 2018, the Senate referred the provisions of the Bill to the Senate Economics Legislation Committee for inquiry and report. In its report, the Committee recommended that a two year review period for enforceable undertakings be inserted into the Bill to ascertain if enforceable undertakings are the most suitable way of ensuring compliance with the Act.
The Bill has not been amended to provide a two year review period specifically to consider the effectiveness of enforceable undertakings. However, the Government will ensure that this matter is considered within a suitable period after the commencement of the relevant provisions of this Bill.
The Bill also amends the Act to retrospectively designate particular areas as 'frontier areas' for the purposes of the Designated Frontier Area tax incentive, to correct a recently discovered historical administrative oversight.
The DFA tax incentive was designed to encourage petroleum exploration in Australia's remote offshore areas. It was active between 2004 and 2009. Under the scheme, the Resources Minister could designate up to 20 per cent of each year's offshore petroleum acreage release areas as 'frontier areas'. Where a permit was awarded over an area designated as a frontier area, the registered holder or holders of the permit could claim up to 150 per cent of exploration expenditure as a deduction for the Petroleum Resource Rent Tax, or PRRT.
Under the Petroleum Resource Rent Tax Assessment Act 1987, the Resources Minister was required to formally designate frontier areas in writing. Due to an administrative oversight, this requirement was not met for the 2005 acreage release. As a result, four petroleum exploration permits were awarded over areas promoted in 2005 as frontier areas which were not validly designated.
This Bill will amend the Act to retrospectively designate these areas as frontier areas. This will remove any doubt that the relevant titleholders are entitled to the uplifted PRRT deductions. No persons will be disadvantaged by retrospective application.
Finally, the Bill makes technical amendments to the Act to future-proof specific references in provisions of the Act to regulations made under the Act.
There are several sets of regulations made under the Act dealing with separate matters, such as safety, environmental management, and resource management. Each of the regulations are scheduled to sunset over the next few years. There is a risk that current references in the Act to the specific titles of regulations will become ineffective when the regulations sunset and are remade with a new title. The amendments made by this Bill are necessary to ensure that the Act does not need to be amended each time regulations under the Act sunset and are remade, with associated risks to the ongoing effective operation of the Act.
Effective references to regulations are critical to the operation of a number of provisions of the Act, including provisions which set out regulations subject to monitoring and investigation under the Regulatory Powers (Standard Provisions) Act 2014, and polluter pays and financial assurance obligations.
The amendments will enable the titles of the regulations, or provisions of regulations, relevant to each affected provision of the Act to be prescribed by regulation. When the title of a set of regulations changes as a result of remaking those regulations, the reference can be updated by regulatory amendment.
Overall, this Bill underscores this Government's ongoing commitment to the maintenance and continuous improvement of a strong and effective regulatory framework for offshore petroleum and greenhouse gas storage. Further, it ensures the framework's currency and alignment with international best practice.
I commend this Bill to the Chamber.