On 14 November 2018, the Queensland Parliament passed the Mineral and Energy Resources (Financial Provisioning) Bill 2018 (Bill).
The Bill introduces two major reforms for the resources industry in Queensland. It will:
- replace the current financial assurance regime with a new financial provisioning scheme for all resource authorities; and
- introduce new progressive rehabilitation requirements for mining leases, through progressive rehabilitation and closure plans (PRC plans).
Amendments to Bill
The Mineral and Energy (Financial Provisioning) Bill 2018 was introduced into Queensland Parliament on 15 February 2018, with only minimal changes to the 2017 Bill that lapsed with last year’s election. Our previous articles on the Bill are available here.
The Bill was passed with amendments to the PRC plan requirements, to include a new public interest test for “non-use management areas” and to provide clarity around the rehabilitation outcomes for these non-use management areas (such as final voids) under existing environmental authorities (EAs).
The financial assurance reforms remain largely unchanged, although the Bill has been amended to allow documents created by the scheme manager to be subject to the Right to Information Act 2009, although exemptions apply for confidential information.
The Act will commence on a day to be fixed by proclamation. There is still some uncertainty as to when this will occur, as the estimated rehabilitation cost (ERC) calculator (to replace the financial assurance calculators) is still being finalised.
Financial assurance: What happens now the Bill has been passed?
Transition period
- From commencement, any financial assurance currently held for an EA will be treated as surety under the new Act.
- This period will continue for three years after commencement, during which EA holders will be assessed and receive an initial risk allocation decision. This puts your resource activity into a category under the Act for level of environmental risk.
Allocation decision
- Guidelines: The Department of Environment and Science (DES) has developed guidelines to assist in determining what risk allocation the resource activity will receive. Whilst the guidelines establish basic rules for decisions of the scheme manager, they do not give any indications or thresholds for the particular risk categories.
- Annual decisions: the allocation decision will be reviewed annually on the anniversary of the EA grant. An assessment fee is payable each time there is an allocation decision for the EA.
- Fees: Regulations still need to be prescribed, but fees will be based on a sliding scale, with the fee for the allocation decision ranging from $250 if the ERC is between $100,000 and $1,000,000, to a maximum of $45,000 where the ERC is at least $100,000,000.
Payments to Financial Provisioning Fund
- Payments must be made within 30 business days after the allocation decision.
- The payment is calculated as the prescribed percentage (dependent on risk allocation decision) of the ERC (the cost estimated by DES of rehabilitating the land on which the resource activity is carried out, identified using the ERC calculator).
- The prescribed percentages for each category are:
- Very low: 0.5%
- Low: 1.0%
- Moderate: 2.75%
- The Fund has a threshold of $450,000,000. When the ERC exceeds this threshold, the resource authority holder is required to pay the percentage amount attributed to their risk category up to the threshold, plus an additional surety to ensure that rehabilitation and management costs can be met.
Sureties
- EA holders in the high risk category and holders of small scale mining tenures will be required to provide the state with surety. This can be in the form of a bank guarantee, insurance bond or cash.
- The scheme manager also has discretion to require an EA holder in the other categories to give a surety, rather than pay a fund contribution if this is required to preserve the financial viability of the fund.
Progressive rehabilitation: What happens now the Bill has passed?
The Bill introduces amendments to the Environmental Protection Act, that require all holders of site specific EAs for a mining lease to submit a PRC plan.
Under the transitional provisions, DES has three years from the “PRCP start date” (to be prescribed by regulation but no later than 1 November 2019) to give notice to these holders, requiring them to submit a proposed PRC plan to comply with the new requirements. DES must give the holder at least six months to comply with the notice.
Amendments made to “Non-use management areas” and the public interest test
PRC plans must include a “PRCP schedule”, which identifies the post-mining use for the land, and the rehabilitation milestones required to achieve a stable condition for the land.
The PRCP schedule may also identify “non-use management areas” which cannot be rehabilitated to a stable condition after all relevant activities for the PRC plan carried out on the land have ended. Land can only be identified as a non-use management area if:
- carrying out rehabilitation of the land would cause a greater risk of environmental harm than not carrying out the rehabilitation; or
- the risk of environmental harm as a result of not carrying out rehabilitation of the land is confined to the area of the relevant resource tenure and the applicant considers, having regard to each public interest consideration, that it is in the public interest for the land not to be rehabilitated to a stable condition. The consideration in the original Bill of a justifiable failure to rehabilitate the land to stable condition, having regard to the costs of rehabilitation, has been removed.
Where a proponent relies on the public interest, DES must ask a qualified entity to carry out a public interest evaluation and provide a report, containing a recommendation to the chief executive about whether they approve the non-use management area. The costs incurred in obtaining this report are a debt payable by the proponent to DES. The proponent may only seek review if they have justifiable doubts about impartiality or independence of qualified entity, or reasonably believe there is a substantive error in carrying out public interest evaluation.
The public interest considerations are:
- the benefit to the community resulting from the mining activity;
- any impacts, including long term impacts for the environment or the community that may reduce the benefit, or have a negative impact on the environment or community;
- whether there are alternative options to approving the area as a non-use management area, having regard to the costs or consequences of alternative options and the impact on the financial viability of the mining activity;
- whether the benefit to the community, weighed against the impacts are likely to justify the approval of the non-use management area, having regard to any alternative options; and
- any other matter prescribed by regulation.
No retrospective operation for non-use management areas
An existing EA holder does not have to comply with the requirements for non-use management areas where an outcome for the land has already been identified under a “land outcome document” (including the existing EA) and this outcome is the same as, or substantially similar to the outcome for the land as if it were a non-use management area under a PRCP schedule.
This amendment to the Bill is designed to address concerns about residual voids or pits authorised under existing EAs, with the effect that existing approvals for an EA holder to leave a void will continue to apply.
For more information regarding the financial provisioning scheme and progressive rehabilitation requirements, please contact HopgoodGanim Lawyers’ Resources and Energy team.