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Australia – Strategic Assessment Of Offshore Petroleum Environmental Approvals.

2 December, 2013

 

WHAT YOU NEED TO KNOW

 

  • The Australian Ministers for Industry and Environment and NOPSEMA have agreed to develop a ‘one stop shop’ for offshore petroleum environmental assessments.
  • The Australian Government has released a proposed Program to be implemented by NOPSEMA and a draft Strategic Assessment Report for public comment until 20 December 2013.
  • Following strategic assessment, the Environment Minister could endorse the Program and approve classes of actions undertaken in accordance with the endorsed Program for the purposes of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). This would mean that petroleum activities that obtain NOPSEMA’s acceptance of an “offshore project proposal” (for development projects) and an environment plan under the Environment Regulations would not need a separate approval under the EPBC Act.
  • Despite the objective of streamlining environmental approvals, the proposed Program has the potential to increase the regulatory burden on proponents of offshore petroleum projects.

WHAT YOU NEED TO DO

 

  • Review the proposed Program and draft Strategic Assessment Report and consider the potential implications for future offshore projects and projects that are currently undergoing environmental assessment.
  • Submissions should be lodged by 20 December 2013.

Overview


Regulators have proceeded with the strategic assessment process under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).


On 22 November 2013 the Australian Government released the proposed “Program” to be implemented by NOPSEMA, together with a draft Strategic Assessment Report (Report). The Program describes the environmental management authorisation process to be implemented by NOPSEMA for petroleum activities under the Offshore Petroleum Act. Draft amendments to the Environment Regulations to support the Program are due to be released on 6 December 2013.


There is a limited opportunity to make submissions on the proposed Program. After the public consultation period closes on 20 December 2013, the Commonwealth will prepare a supplementary Strategic Assessment Report summarising and addressing public comments for the Environment Minister. Following the strategic assessment, the Environment Minister may decide to endorse the Program and approve classes of actions undertaken in accordance with the endorsed Program for the purposes of the EPBC Act. The Australian Government is aiming to complete the strategic assessment and for the Environment Minister to endorse the Program and approve the classes of actions by the end of February 2014.


Two Stage Assessment Of Development Projects By NOPSEMA


The Program provides for two environmental assessment pathways to be administered by NOPSEMA: the Offshore Project Proposal (OPP) and the environment plan.


Titleholders will already be familiar with the requirements under the Environment Regulations to have an environment plan accepted by NOPSEMA before any petroleum activity can commence. Those requirements will remain under the Program.


In addition, the Program will make it mandatory for titleholders of a development project to submit an OPP to NOPSEMA for assessment, public consultation and acceptance at the outset of the development – before any environment plan for activities related to the development can be submitted.


This initial OPP assessment pathway effectively replaces the referral and assessment of a proposal under the EPBC Act. However, it is more onerous than the EPBC Act process because there is a mandatory requirement for public consultation for a minimum of 4 weeks, regardless of the nature and scale of the project and potential environmental impacts. By contrast, under the EPBC Act it is possible for the Environment Minister to determine that a project


either does not need to be assessed, or can be assessed based on the referral documentation without the need for public consultation. There is no avenue under the Program for a lower level assessment of OPPs that do not involve large scale development projects and potentially significant impacts. This is a key concern that has the potential to increase, rather than reduce, the regulatory burden on the petroleum sector.


The draft Report states that the purpose of the OPP is for NOPSEMA to determine whether all the environmental impacts of the development (not just impacts on protected matters under the EPBC Act) on a “whole of lifecycle” basis will be managed to an acceptable level. The OPP is intended to be a broader document than an environment plan, encompassing multiple petroleum activities as part of a development project.


Once an OPP is accepted, the titleholder will be required to submit one or more environment plans for acceptance by NOPSEMA. An environment plan is required to demonstrate, in detail, that the environmental impacts and risks identified in the OPP for discrete petroleum activities are of an acceptable level and reduced to as low as reasonably practicable (ALARP).


In effect, the assessment of environment plans by NOPSEMA will be a “doubling up” on the assessment of environmental impacts already undertaken by NOPSEMA under the OPP assessment process. The duplicative OPP and environment plan assessment processes have the potential to cause increased and unnecessary regulatory burden and costs to industry – the very issues that the Commonwealth’s “one stop shop” is intended to remove.


The Program will impose a significant burden on NOPSEMA resources and take away responsibility from the regulator that has been responsible for assessing the management of environmental impacts under the EPBC Act since it commenced in 2000.


Uncertainty About Activities Requiring An OPP


An OPP will need to be submitted by proponents of an “offshore project”, which is described generally under the Program to capture all activities related to a development project (construction and operation of facilities or pipelines and recovery of petroleum). There is some suggestion in the draft Report that activities involved in modifications and decommissioning will be considered part of a development project requiring an OPP, but it is not clear. This very broad and general description could lead to some uncertainty about whether certain activities, such as early stage seismic surveys, will trigger the requirement for an OPP. This issue may be addressed in the draft amendments to the Environment Regulations.


If “offshore projects” is not clearly defined, a titleholder who has any doubt about whether an activity is an “offshore project” will need to consider preparing an OPP for acceptance by NOPSEMA to ensure they avoid breaching the Program. Based on the current general trigger for an OPP, in practice there are likely to be only limited circumstances where an OPP will not be required. Consequently, a majority of activities will be subject to “double assessment” by NOPSEMA under the OPP and environment plan processes.


Broader Public Consultation Required For Development Projects At Project Outset
The Program will require OPPs to be subject to public consultation for a minimum of 4 weeks, regardless of the nature and scope of the project and potential activities. This means there will be an opportunity for public comment on all potential broader environmental impacts of a development project, not just impacts on protected matters under the EPBC Act.


This is more onerous than the equivalent public consultation process under the EPBC Act because proponents will be required to address all public comments relevant to the broader environmental impacts and not just those related to protected matters under the EPBC Act. As a result, the OPP assessment process may involve greater delays and costs to proponents than the assessment process under the EPBC Act, which confines public consultation to the impacts on protected matters.


Further Guidance On NOPSEMA’s Assessment Criteria Is Required


Under the Program, NOPSEMA will assess OPPs and environment plans against the acceptance criteria in the Environment Regulations. Amendments to the Environment Regulations will need to expressly provide for assessment of OPPs.


The draft Report states that specifically, NOPSEMA would accept:

 

  • an OPP if the proponent demonstrates the impacts and risks arising from the project will be managed to “an acceptable level”; and
  • an environment plan if the proponent demonstrates that the environmental impacts and risks of the activity will be of an acceptable level and reduced to ALARP.

Although, this acceptance criteria seems to be conceptually consistent with the principles under the EPBC Act, in our experience, proponents are often uncertain about what is required to satisfy the requirements of “acceptable” and “ALARP” for an environment plan. This uncertainty often results in delays for proponents who are required by NOPSEMA to re-submit an environment plan before it is accepted. In the absence of clear guidance under the Program, this uncertainty and delay is likely to continue and also extend to NOPSEMA’s assessment of OPPs.


The draft Report indicates that NOPSEMA will have regard to relevant policy documents, guidelines, plans of management and information databases on the Department of Environment’s (DoE) website in assessing OPPs and EPs. However, it is not clear how NOPSEMA intends to apply those DoE policies, and how they will interact with NOPSEMA’s own policies. In the absence of clear guidance from NOPSEMA, there is potential for considerable uncertainty and confusion about how NOPSEMA will apply the acceptance criteria in practice. This is likely to translate into protracted assessment processes for OPPs and environment plans.


Uncertain Timeframes For Decision-Making


Under the Environment Regulations NOPSEMA has 30 days to make a decision whether to accept an environment plan, but NOPSEMA can extend that timeframe. If NOPSEMA requests additional information the 30 day timeframe re-commences. The draft Report suggests NOPSEMA’s ability to extend decision making timeframes, without limitation, will also apply to assessment of OPPs.


The absence of clear timeframes for NOPSEMA decision-making is likely to create uncertainty for proponents and result in protracted OPP and environment plan approval processes, which we are aware some proponents have already been experiencing under the current regime in relation to acceptance of environment plans.


No Merits Right Of Appeal


If NOPSEMA does not accept an OPP or an environment plan, NOPSEMA will be required to publish a statement of reasons. However, there is no merits right of appeal available to the proponent. If NOPSEMA’s decision involved an error of law, the proponent will be able to initiate judicial review proceedings. Otherwise, the only option for the proponent will be to prepare a new OPP or environment plan that is acceptable to NOPSEMA.


There are no requirements regarding the level of detail that is to be included in a statement of reasons published by NOPSEMA. Consequently, it is unclear whether such statements will be of any material value in terms of providing practical guidance to the petroleum sector on NOPSEMA’s requirements and expectations.


One benefit of the Program for proponents is that third parties seeking to challenge NOPSEMA decisions will need to establish a special interest under the ordinary standing principles under the Administrative Decisions (Judicial Review) Act 1977 (Cth), without the benefit of the extended standing provisions under the EPBC Act. That may make it more difficult for certain third parties to challenge NOPSEMA decisions than it is to challenge decisions of the Environment Minister under the EPBC Act.


Trigger For Revised EPs Not Clarified


It is an offence to continue a petroleum activity if there is a significant new or increased risk to the environment not provided for in an environment plan.

 

Titleholders are required to prepare revised environment plan for acceptance by NOSPEMA every 5 years, or whenever there are significant new or increased risks to the environment. The existing Environment Regulations do not define a “significant new or increased risk” and the Program does not propose to clarify when this requirement will be triggered. Consequently, the uncertainty arising from this requirement is set to continue under the Program.


The Program and draft Report do not indicate whether a revised OPP will also be required to be accepted by NOPSEMA where there is a new or increased risk to the environment. This should be confirmed in the draft amendments to the Environment Regulations.


Proponents wishing to undertake new activities not covered by an accepted OPP, even if the activities are related to the same project, will need to prepare a new OPP and environment plan for assessment, public consultation and acceptance by NOPSEMA. This is equivalent to the requirement to lodge a new referral under the EPBC Act for new actions not within the scope of actions already approved.


Cross-Jurisdictional Projects


The Program does not provide a streamlined solution for large scale petroleum projects that comprise offshore facilities as well as infrastructure such as subsea pipelines crossing into State or Territory waters, and onshore facilities.


If the project activities to be carried out in State or Territory waters and onshore are likely to have a significant impact on a protected matter under the EPBC Act, they will still need to be referred to the DoE under the EPBC Act. Consequently, those aspects of the project may require assessment by DoE and approval by the Environment Minister. In addition, the proponent will need to comply with the applicable State or Territory environmental impact assessment regime. This may have the undesirable result that the proponent is required to comply with three different assessment processes leading to three separate approvals and sets of approval conditions from three different regulators.


Consequently, for proponents of cross-jurisdictional petroleum projects the Program has the potential to effectively increase regulatory burden and compliance risk due to the potential for overlapping or inconsistent approval conditions across multiple environmental approvals. The draft Report suggests NOPSEMA plans to enter into administrative arrangements with DoE and State and Territory regulators, but it is unclear what those arrangements will look like and whether they will be effective in removing duplication and streamlining environmental approvals across multiple jurisdictions.


How Will Existing And Future Projects Be Affected?


At an industry information session held by the Offshore Streamlining Taskforce in Perth on 26 November 2013 it was suggested that proponents of projects already referred under the EPBC Act will be able to elect to continue through the EPBC Act process or transition their project across to NOPSEMA to be implemented in accordance with the Program. Proponents should seek confirmation of this position from the Taskforce.


If the Australian Government does intend to give such an option, proponents of offshore petroleum projects that have not already been referred under the EPBC Act should consider referring their project before the Program is endorsed by the Environment Minister. That approach may give proponents an opportunity to elect whether their project is to remain subject to the existing EPBC Act and Offshore Petroleum Act regimes, or is to be transitioned across to NOPSEMA under the new Program (once endorsed). Proponents may benefit from the additional time to assess the benefits and drawbacks of the alternative assessment pathways for the whole lifecycle of the project. 

 

For proponents of cross-jurisdictional projects, it seems that remaining under the current regime is a more attractive option at this stage.


Next Steps


After the draft amendments to the Environment Regulations are released on 6 December, the offshore petroleum sector should take the opportunity to lodge submissions with the Offshore Streamlining Taskforce before 20 December outlining the key issues of concern to the offshore petroleum industry and the deficiencies in the proposed Program to be implemented by NOPSEMA.


Proponents should reiterate the need for a streamlined approvals process under the Program that is characterised by:

 

  • a single assessment process leading to a single approval from one regulator;
  • clear timeframes for NOPSEMA decision-making; and
  • certainty as to the requirements and expectations of NOPSEMA.

 

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For further information, please contact:

 

Katie Winterbourne, Partner, Ashurst
[email protected]


Shane Bosma, Ashurst

[email protected]


Claire Woodland, Ashurst

[email protected]


Cheyne Jansen, Ashurst

[email protected]

 

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