CHANGES TO ENVIRONMENTAL AUTHORITIES FOR PETROLEUM ACTIVITIES IN QUEENSLAND *

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Harvey Wood
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1 16 Recent Developments (2005) 24 ARELJ reasonable. However, the Deputy President rejected the claim for valuation fees because it did not arise as a consequence of the grant of the lease. 13 Decision Compensation was determined at $89,466. CHANGES TO ENVIRONMENTAL AUTHORITIES FOR PETROLEUM ACTIVITIES IN QUEENSLAND * Recent changes to Chapter 4A of the Environmental Protection Act 1994 (Qld) ( EP Act ) aim to provide for ongoing environmental regulation of petroleum activities upon commencement of the Petroleum and Gas (Production and Safety) Act 2004 (Qld) ( P & G Act ) on 31 December However, specific amendments to petroleum Environmentally Relevant Activities ( ERAs ) in the Environmental Protection Regulation 1998 (Qld) (EP Reg) extend the reach of the changes perhaps beyond what was expected. This article examines the new petroleum ERAs and implications for industry, and in particular pipeline operators, in relation to environmental authority requirements. The changes The Environmental Protection and Other Legislation Amendment Act 2004 (Qld) (EPOLA) recently amended Chapter 4A (Environmental authorities for petroleum activities) of the EP Act. The Environmental Protection and Other Legislation Amendment Regulation (No 1) 2004 (EPOLA Reg) introduced related amendments to the EP Reg. Both these amendments commenced on 1 January Of particular interest are the changes to petroleum ERAs introduced by the EPOLA Reg, which replaced existing petroleum ERAs in Schedule 1 of the EP Reg with the following: Environmentally Relevant Activity Level Amount for annual fees 21C 21D The construction of a new transmission pipeline under a pipeline licence issued under any of the petroleum legislation A petroleum activity otherwise prescribed under this schedule as a level 1 environmentally relevant activity The amount provided under schedule 6, part 1A, item 9A 13 * Minister for the Army v Pacific Hotel Pty Ltd [1944] St R Qd 112 (HC), 122, 123, 129; Sullivan v Oil Company of Australia Ltd (No 2) [2004] 2 QdR 105, 116 (CA). Caroline Sullivan, Lawyer, Blake Dawson Waldron.

2 (2005) 22 ARELJ Queensland 17 21E A petroleum activity not otherwise prescribed under this schedule as a level 1 environmentally relevant activity The position prior to 1 January 2005 From the commencement of the EP Act The EP Act and the Environmental Protection (Interim) Regulation 1995 (Qld) (EP (Interim) Reg 1995) originally captured petroleum activities through the level 2 ERA 20: Mineral exploration or mining exploring for or mining minerals under a mining A mining authority was defined in section 235 of the EP Act as including (among other things) a prospecting petroleum permit, authority to prospect or a petroleum lease granted under the Petroleum Act Exploring and mining were not defined in the EP Act at the time. However, the terms explore and mine were defined in the Mineral Resources Act 1989 (Qld) ( MR Act ). 14 In brief, explore was defined as taking action to determine the existence, quality and quantity of minerals on, in or under land or in the waters or sea above land. To mine was defined as carrying out an operation with a view to or for the purpose of winning mineral from a place where it occurs, or extracting mineral from its natural state, or disposing of mineral in connection with the winning or extraction. Therefore, if a person was exploring for or mining minerals under: (c) a prospecting permit; an authority to prospect; or a petroleum lease granted under the Petroleum Act 1923 (Qld) ( Petroleum Act ), then the person was carrying out an ERA, namely ERA 20. Transitional provisions were incorporated into the legislation at the time, and a person carrying out ERA 20 was not required to apply for an environmental authority if the person had a mining authority. The person was deemed to have a level 2 approval through special transitional provisions in section 239 of the EP Act 15 and 62 of the EP (Interim) Reg See s 1.8(1) (Reprint 2) of the MR Act, or currently the Dictionary Schedule and s 6A of the MR Act. Section 3 of the Petroleum Act 1923 adopts the meaning of words and expressions used in the MR Act. Section 239 of the EP Act stated: If, under an existing or new mining authority, the holder of the authority is authorised to carry out a level 2 environmentally relevant activity, a regulation may provide that the authority is taken to be an approval to carry out the activity. Section 62 of the PE (Interim) Reg stated: If, under an existing or new mining authority, the holder of the authority is authorised to explore for or mine minerals or petroleum, the authority is taken to be an approval to carry out the activity.

3 18 Recent Developments (2005) 24 ARELJ Changes preceding 2005 The years leading up to 2005 saw various changes to the EP Act and the petroleum ERAs in the Regulation. In 1998 the definition of mining authority in the EP Act was amended to include a prospecting petroleum permit, authority to prospect, petroleum lease or a pipeline licence granted under the Petroleum Act At the same time the EP (Interim) Reg 1995 was replaced with the EP Reg. The relevant ERA capturing petroleum activities became ERA 21, which retained the description of: Mineral exploration or mining exploring for or mining minerals under a mining Therefore although the definition of mining authority was expanded to incorporate a pipeline licence granted under the Petroleum Act 1923, the ERA description still required that the activity being carried out was exploring for or mining minerals under one of the mining authority types. This was so despite the fact that a pipeline licence could not authorise these activities. ERAs 21C and 21D were inserted into in the EP Reg by the Environmental Protection and Other Legislation Amendment Regulation (No. 1) 2000 and commenced on 1 January This saw the separation of the mining ERAs from the petroleum ERAs. An environmental authority was required for petroleum activities if the activity fell within one of the two ERAs: Environmentally Relevant Activity Level Amount for annual fees 21C 21D Exploring for or mining minerals under a prospecting permit, authority to prospect, petroleum lease or pipeline licence granted under the Petroleum Act 1923 Exploring for or mining minerals under a licence, permit, pipeline licence, primary licence, secondary licence or special prospecting authority granted under the Petroleum (Submerged Lands) Act 1982 The ERA descriptions, as amended, still required that a person be exploring for or mining minerals under one of the authority types listed. Therefore petroleum activities not involving exploration or mining, such as operating a gas transport pipeline under a pipeline licence issued under the Petroleum Act, remained outside the scope of the petroleum ERAs in the EP Reg. Impact of the 2005 legislative changes From 1 January 2005, the EP Act requires a person to hold an environmental authority for the following petroleum activities:

4 (2005) 22 ARELJ Queensland 19 the construction of a new transmission pipeline under a pipeline licence issued under any of the petroleum legislation 17 (ERA 21C level 1); a petroleum activity otherwise prescribed under schedule 1 of the EP Reg as a level 1 ERA (ERA 21D level 1); 18 or (c) a petroleum activity not otherwise prescribed under schedule 1 of the EP Reg as a level 1 ERA (ERA 21E level 2). Section 77(1) of the EP Act outlines what is now a petroleum activity. The list includes an activity that, under the P&G Act is an authorised activity for a petroleum authority under that Act. An authorised activity for a petroleum authority is an activity that the holder of an authority is entitled to carry out in relation to the 19 A petroleum authority is one of the authorities listed in section 18(1) of the P&G Act 20 and includes: (c) (d) (e) (f) (g) an authority to prospect; a petroleum lease; a data acquisition authority; a water monitoring authority; a survey licence; a pipeline licence; and a petroleum facility licence. Therefore from 1 January 2005, it appears that the EP Act and EP Reg require a person to hold an environmental authority for a more comprehensive range of petroleum activities. The petroleum ERAs are no longer restricted to petroleum activities involving exploring for or mining minerals. If the activities of a person do not fall within the description of ERAs 21C or 21D, ERA 21E has the effect of capturing any remaining activities that require a petroleum authority under the P&G Act. As a result, a person will now be required to hold an environmental authority for activities such as operating a gas transport pipeline under a pipeline licence. Implications for government and industry The changes may have impacts that were neither foreseen nor intended by either the Queensland Environmental Protection Agency (EPA) or the Queensland Department of Natural Resources and Mines (DNR&M). 21 In practice, it appears that prior to 1 January 2005, the EPA and DNR&M interpreted the petroleum ERAs as not being specifically restricted to activities involving exploring for or mining minerals. On that interpretation, many petroleum activities (though not all) could have been captured through the deeming provisions on commencement of the EP Act and the EP (Interim) Reg Transitional provisions in section 639 of the current EP Act may then have brought them within the new regime Section 76(3) of the EP Act states that the petroleum legislation includes the Petroleum Act, the P&G Act, and the Petroleum (Submerged Lands) Act These include ERAs such as ERA 11 Crude oil or petroleum product storing, ERA 12 Oil refining or processing, ERA 17 Fuel burning and ERA 84 Regulated waste storage. Section 22 of the P&G Act. Section 18(2) of the P&G Act. DNR&M currently has delegated authority to process environmental authority applications for petroleum activities. This may end soon.

5 20 Recent Developments (2005) 24 ARELJ However, it is difficult to infer such an interpretation. The exploring for or mining terminology has now been removed from the ERA descriptions. The result is that a broader range of petroleum activities require an environmental authority from 1 January One clear example is that operators of gas transport pipelines under a pipeline licence now require an environmental It is important to note that no moratorium provision has been provided in the recent amendments. The 4 month moratorium provision that was previously included in section 140 of the EP Act has been removed. 22 An equivalent provision has not been included. Although the EPA and DNR&M are unlikely to pursue people for carrying out these new ERAs without environmental authorities at any point in the near future, the broader implications for industry are significant. Commercial contracts, insurance arrangements and sale agreements often contain obligations on parties to comply with all relevant laws. Transfers of petroleum authorities under the P&G Act will be hindered due to environmental authority requirements. 23 Re-insertion of a moratorium provision or a comprehensive transitional or deeming provision may go a long way to making 2005 a happier year for pipeline operators and other affected parties. VICTORIA This section provided people with 4 months to apply for an environmental authority when an activity first became an environmentally relevant activity. Offence provisions did not apply during this period. The section was removed through s 32 of EPOLA. Refer to the combined operation of ss 573 of the P&G Act and s 82 of the EP Act (as amended).

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