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Offshore Petroleum Bill 2006

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2004-2005

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

OFFSHORE PETROLEUM BILL 2005

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the

Minister for Industry, Tourism and Resources,

the Hon Ian Macfarlane, MP)

 

 



OFFSHORE PETROLEUM BILL 2005

 

GENERAL OUTLINE

 

This Bill is a rewritten and renamed version of the Petroleum (Submerged Lands) Act 1967 . This Bill proposes conspicuous changes to the structure and style of the legislation but seeks to implement only a modest number of minor policy changes from the framework set out in the Petroleum (Submerged Lands) Act.

 

The purpose of this Bill is to provide a more user-friendly enactment that will reduce compliance costs for the upstream petroleum industry and for the governments that are charged with administering it. However, the management regime for offshore petroleum exploration, production, processing and conveyance that is proposed by this Bill is unchanged in all its essential features from what is set out in the Petroleum (Submerged Lands) Act.

 

To this end, this Bill provides for the grant of exploration permits, retention leases, production licences, infrastructure licences, pipeline licences, special prospecting authorities and access authorities. These titles are to have effect in offshore areas. An offshore area starts 3 nautical miles from the baseline from which the breadth of the territorial sea is measured and extends seaward to the outer limits of the continental shelf. 

 

Generally, the administration of this legislation in relation to an offshore area of a State or the Northern Territory is to be divided between the Joint Authority for the State or Territory (the Joint Authority is constituted by the responsible State/Territory Minister and the responsible Commonwealth Minister) and the Designated Authority of the State or Territory (the Designated Authority is the responsible State/Territory Minister).

 

This Bill also includes occupational health and safety provisions and maintains the operation of the National Offshore Petroleum Safety Authority for their administration.

 

This Bill proposes a number of incidental minor policy changes. These are intended to deal with anomalies and past drafting errors that have been detected in rewriting the text of the Petroleum (Submerged Lands) Act or to bring provisions that, on account of their age, are out of line with current Australian Government legislative drafting principles into compliance with these principles. However, the fact that the rewriting process has been an editorially focused exercise rather than a policy-focused one has meant that a number of other policy issues have been reserved for later consideration.

 

In the notes on individual clauses, each note about an individual clause is followed by an endnote titled “Equivalent provision in the PSL Act”, indicating the section of the Petroleum (Submerged Lands) Act that corresponds to the provision of the Bill that is being discussed. If the clause in question contains one or more technical changes from the text of the Petroleum (Submerged Lands) Act, that fact is noted and the nature of the change(s) is summarised under the abovementioned endnote. If the clause contains one or more policy changes from the provisions of the Petroleum (Submerged Lands) Act, that fact is likewise noted and the nature of the change(s) is likewise summarised.

 

 

Section 15AC of the Acts Interpretation Act 1901 provides that, where an Act has expressed an idea in a particular form of words and a later Act appears to have expressed the same idea in a different form of words for the purpose of using a clearer style, the ideas shall not be taken to be different merely because different forms of words were used. Thus, for example, the expression “in relation to” has, in some places in the Bill, replaced the expression “in respect of” that occurs in the Act, but there is no change in meaning.

 

This means that, unless a note in this explanatory memorandum indicates that a policy change is intended in relation to a particular clause, any difference in language between the clause and the provision of the Act that it replaces should not be seen as reflecting an intention to change the policy set out in the original provision.

 

FINANCIAL IMPACT STATEMENT

 

There will be no effect on the Australian Government Budget from the purely editorial aspects of rewriting of the Petroleum (Submerged Lands) Act. In the long term, the net effect is expected to take the form of reduced compliance and administrative costs for industry and governments.

 

One proposed incidental policy change could represent a gain to the Budget, namely the proposal that amounts paid as cash bids for exploration permits covered by section 23 of the Petroleum (Submerged Lands) Act (now proposed to be called “special exploration permits”), and for cash-bid production licences, be retained in full by the Commonwealth instead of being remitted to the relevant State or the Northern Territory. However, it would be inappropriate to attempt to quantify what the financial gain from this change could be, among other reasons because cash bidding is contrary to current government policy and has not been used in the awarding of any title under the Act for over a decade.

 

NOTES ON INDIVIDUAL CLAUSES

 

Chapter 1 Introduction

Part 1.1 Legislative formalities and background

 

Clause 1 - Short title

 

This clause is a standard provision setting out the title by which the proposed Act is to be cited if it becomes law.

 

Equivalent provision in the PSL Act: section 1

 



Clause 2 - Commencement

 

This clause provides that the vast bulk of the provisions of the proposed Act are to commence on a date fixed by Proclamation rather than on the date of Royal Assent.

 

Many Bills that are proposed to come into effect on a date fixed by proclamation nevertheless set a date (such as 6 months after Royal Assent) when the enactment will come into effect if a date is not proclaimed before then. This Bill does not do so. The reason is that, before this proposed Act comes into effect, it is essential that the States and the Northern Territory make pre-emptive amendments to their mirror State and Territory Petroleum (Submerged Lands) Acts, or at any rate verify that they have appropriate enabling legislation in place. This is to ensure that the change in title of the Commonwealth Act from “Petroleum (Submerged Lands) Act 1967” to “Offshore Petroleum Act 2005” does not create a legal vacuum when it comes to determining the identity of the Designated Authority under this Bill (the issue involves the definitions in clause 6 of “responsible State Minister” and “responsible Northern Territory Minister” and the provisions of clause 50).

 

If the timing of the coming into effect of Commonwealth legislation is tied to another jurisdiction enacting matching legislation and the Commonwealth has no control over what is done in that other jurisdiction, there is a precedent for leaving the date of effect of the Commonwealth legislation open. This precedent is relevant to the commencement of the proposed Act.

 

Clause 39 of Schedule 6 is to come into effect on Royal Assent. The reason for this is explained in the note on that item.

 

Equivalent provision in the PSL Act:   section 2

 

Clause 3 - Simplified outline

 

This clause sets out a simplified outline of the whole Bill. This outline does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

Clause 4 - Commonwealth-State agreement (the Offshore Constitutional Settlement)

 

This clause refers to the fact that, on 29 June 1979, the Commonwealth and the States completed an agreement for the settlement of various contentious and complex offshore constitutional issues, including issues related to offshore petroleum resources.

 

At that time, the Petroleum (Submerged Lands) Act 1967 had already been in existence for over a decade as the outcome to Commonwealth-State negotiations in the 1960s in relation to the legislative basis for offshore petroleum exploration and production. However, the 1967 agreement had avoided raising questions about the respective constitutional powers of the Commonwealth and the States. This had been followed by the enactment of the Seas and Submerged Lands Act 1973 and the upholding by the High Court in 1975 of that Act’s assertion of sovereign rights on the part of the Crown in the right of the Commonwealth, as against the States, over the continental shelf and, in fact, landward as far as the low-water mark in waters outside State limits.

 

This clause sets out the principles that the 29 June 1979 agreement established for cooperative Commonwealth-State arrangements in offshore petroleum exploration and production. It also sets out information about the Seas and Submerged Lands Act and about some other Acts passed pursuant to the Offshore Constitutional Settlement.

 

Equivalent provision in the PSL Act: nil.

 

Clause 5 - Simplified maps

 

This clause sets out 3 map diagrams to enable the reader to understand the meaning of certain terms used in the Bill, the most commonly occurring one being “offshore area”. Maps 2 and 3 zoom in on waters off South Australia because these waters are the best suited to illustrate coastal waters, coastal waters within the baseline and waters within the limits of the State. The maps are simplified and their scale interpretation cannot serve as an accurate guide to the precise location of the boundaries within which the proposed Act would be operative.

 

Equivalent provision in the PSL Act: nil.

 

Part 1.2 Interpretation

Division 1 General

Clause 6 - Definitions

 

This clause sets out definitions applying to the whole Bill. This clause generally replicates, with additions, amendments and deletions, the content of subsection 5(1) of the Petroleum (Submerged Lands) Act.

 

This clause contains some definitions that are new in the sense that they are not included under subsection 5(1) of the Act, for example “Annual Fees Act” and “pipeline provisions”. Some other definitions that occur in subsection 5(1) of the Act have been renamed, for example “adjacent area” has become “offshore area” and “inspector” has become “project inspector”. Certain other definitions, for example those for “Gas Pipelines Access Law” and “document”, that appear in subsection 5(1) of the Act, do not appear under this clause because the terms are defined elsewhere in the Bill or in other legislation such as the Acts Interpretation Act 1901 . The definition of “explore”, with application to the whole Act, is a change of policy which is explained under clause 15.

 

The definition of “good processing and transport practice” is proposed to be extended from the one appearing in subsection 5(1) of the Petroleum (Submerged Lands) Act by specifying that it can relate to the conveyance and transport of petroleum as well as to the processing and storage of petroleum and the preparation of petroleum for transport.

 

For “petroleum”, a more lucid definition is proposed than the one appearing in subsection 5(1) of the Petroleum (Submerged Lands) Act, so that it is quite clear that when “sales” gas, ie processed gas, is to be conveyed via a pipeline, it is classed as petroleum for all purposes under the proposed Act. The purpose of paragraph (f) of the definition is to cover the situation where gas has been reinjected into a petroleum pool and is later recovered. Without this paragraph, questions might arise as to whether the mixture of hydrocarbons and gases then produced from the well is “naturally occurring”.

 

The definition of a “pipeline licence” includes, in effect, the Barracouta and Marlin Fields Pipeline Licences about which discrete provisions figure in section 147 of the Petroleum (Submerged Lands) Act. This is because these pipeline licences were, in 1988, renewed under Division 4 of Part III of the Petroleum (Submerged Lands) Act. Accordingly, these pipeline licences fall within the normal definition of “pipeline licence” given here. The Bill therefore contains no special provision about Barracouta and Marlin Fields Pipeline Licences.

 

The definition of a “production licence” includes the Barracouta and Marlin Fields Petroleum Production Licences about which discrete provisions figure in section 146 and Schedule 3 of the Petroleum (Submerged Lands) Act. This is because these production licences were, in 1988, renewed under Division 3 of Part III of the Petroleum (Submerged Lands) Act. Accordingly, these production licences fall within the definition of “production licence” in this clause.  The Bill therefore contains no special provision about Barracouta and Marlin Fields Production Licences.

 

The reference in the definition of a “production licence” to section 148 of the Petroleum (Submerged Lands) Act is a reference to the fact that, for the reason explained below, the Barrow Island production licence has been granted under that section rather than under any provision of Division 3 of Part III of that Act.

 

When the Petroleum (Submerged Lands) Act came into effect, this tenement was under a Western Australian State retention lease. For later converting this lease into a production licence, the normal pre-requisites under the Petroleum (Submerged Lands) Act could not have been met, as the retention lease would not have been a lease under the Commonwealth Act. Therefore, section 148 was created to enable a production licence to be granted in respect of this area. However, there will be no need to enact any equivalent of section 148 as the current Barrow Island production licence can be renewed in accordance with the same provisions as any other licence.

 

Equivalent provisions in the PSL Act: subsections 5(1), 5AAA(5), 19(2) and 81(15)

Technical changes : no re-enactment of an equivalent of section 146 and 147 and Schedule 3 of the Petroleum (Submerged Lands) Act; that “territorial sea” has the same meaning as in the Seas and Submerged Lands Act 1973

Policy changes: application of “explore” definition to the whole proposed Act; that “good processing and transport practice” can relate to the conveyance and transport of petroleum as well as to the processing and storage of petroleum and the preparation of petroleum for transport; clarification of the definition of “petroleum”, ie that, for pipeline conveyance, substances can have been added to it or removed from it; that the “responsible State Minister” or the “responsible Northern Territory Minister”, even acting in any role beyond the role of Designated Authority, could be an acting Minister

 

Clause 7 - Offshore areas

 

This clause sets out definitions of “offshore areas” by referring to a number of other defined areas, the main ones being “scheduled areas”, “coastal waters” and “the continental shelf”.

 

The scheduled areas are the ones described by coordinates in Schedule 1 of the Bill and illustrated on Map 1 in clause 5. The main purpose of the scheduled areas is to define, for the purposes of the proposed Act (and, incidentally, various other items of Commonwealth legislation), the offshore area boundaries between the individual States and the Northern Territory. This geographic division of Australia’s marine jurisdiction is a necessary consequence of the agreement under the Offshore Constitutional Settlement (subclause 4 refers) that the States and the Northern Territory should share in the administration of the Commonwealth offshore petroleum legislation. It is because no “interstate boundary” issues arise further away from the Australian continent that there is no scheduled area around Norfolk Island, the Territory of Heard Island and McDonald Islands, the Territory of Christmas Island or the Territory of Cocos (Keeling) Islands.

 

The seaward limits of the scheduled areas mark the limits to which the legal effect of the proposed Act could extend if Australia’s continental shelf claim extended that far. In fact, in some places, for example to the west and south of Western Australia, Australia’s claimed continental shelf falls short of the scheduled area outer boundary.

 

In the Seas and Submerged Lands Act 1973 , the “continental shelf” is defined as in paragraph 1 of Article 76 to the United Nations Convention on the Law of the Sea. This reads:

 

“The continental shelf of a coastal State comprises the seabed and subsoil of the submarine areas that extend beyond its territorial sea throughout the natural prolongation of its land territory to the outer edge of the continental margin, or to a distance of 200 nautical miles from the baselines from which the breadth of the territorial sea is measured where the outer edge of the continental margin does not extend up to that distance.”

 

On Maps 1 and 2 in clause 5, the seaward limit of the continental shelf is illustrated by the outer edge of the grey or “brickwork” shading. However, the inner limit of the continental shelf (as distinct from the inner limit of the offshore area) is not shown on the maps as it is of only minor relevance to offshore petroleum management. This limit is in fact the outer limit of the territorial sea of Australia, ie it follows a line 12 nautical miles from the territorial sea baseline.

 

The outer limit of coastal waters is the landward limit of an offshore area. This is the line parallel to the territorial sea baseline which marks the first 3 nautical miles of Australia’s territorial sea. This 3 nautical mile wide zone is illustrated by the black strip on Map 3 in clause 5. All islands that form part of a State or the Northern Territory also generate a territorial sea, the first 3 nautical miles of which are illustrated by the blots of black shading on Map 3. Thus the segment of offshore area that is shown on Map 3 consists only of the area shaded in grey.

 

The Coral Sea area, which forms part of the offshore area of Queensland, is an area of Australia’s continental shelf that surrounds the islands comprising the Coral Sea Islands Territory, which is, for other purposes, under Commonwealth jurisdiction.

 

The Joint Petroleum Development Area (JPDA) is the area in which Australia and Timor-Leste jointly manage exploration and development of petroleum resources under the Timor Sea Treaty. The boundaries of the offshore areas of Western Australia, the Northern Territory and the Territory of Ashmore and Cartier Islands follow, for a part of their length, the agreed boundary of the JPDA. This accounts for the mention of the JPDA in items 3, 4 and 5 of the table in subclause (1).

 

Replicating the provisions of the Petroleum (Submerged Lands) Act, subclause (3) recognises the possibility that petroleum exploration might occur onshore on the Ashmore or Cartier Islands. So that no separate legislation would be required to manage such a project, this subclause extends the provisions of the proposed Act to cover that prospect.

 

Subclause (4) recognises the fact that international seabed agreements have been made between Australia and a number of other countries in the region to resolve overlapping continental shelf claims. In these cases, the outer limit of the offshore area in that particular area extends less far from Australian land territory than it would if there were no interaction with the other country.

 

Subsections 5A(10) and (11) of the Petroleum (Submerged Lands) Act have not been replicated in this Bill. These subsections provide that if, for purposes of some other Commonwealth Act, it were considered desirable to ignore the existence of the Joint Petroleum Development Area, this could be provided for in regulations under the Petroleum (Submerged Lands) Act deeming the offshore areas in respect of Western Australia, the Northern Territory and the Territory of Ashmore and Cartier Islands for purposes of that other Act to be as they were before 1991. However, under current legislative principles, it is considered more appropriate to provide for overriding provisions of this kind to be placed in the other Act.

 

Equivalent provisions in the PSL Act: subsections 5A(1), (1A), (2), (3), (4), (5), (6), (6A), (6B), (7), (8) and (9)

Technical change : change of label from “adjacent area” to “offshore area”

Policy changes: the fact that all seabed agreements with other countries are to be recognised in determining offshore area boundaries; omission of provision for regulations to ignore, where desired, the existence of the Joint Petroleum Development Area

 

Clause 8 - Spaces above and below offshore areas

 

This clause provides that the conduct of activities beneath the seabed, on the seabed, within the water column, on the surface of the water and in the air above will be equally controlled by the proposed Act to the extent to which they are relevant to exploration for and exploitation of offshore petroleum resources. This means, for example, that if a company is granted an exploration permit over a certain block, the rights conferred by the permit allow the holder to conduct aeromagnetic surveying in the air above that block in addition to seismic surveys using vessels, gravity surveys, “sniffer” surveys ( testing the water column for gas seepage through the seabed ) and drilling into the seabed. All these activities may be engaged in subject to operational approval by the Designated Authority.

 

Equivalent provision in the PSL Act: section 6

Technical change: deletion of a reference to the regulations

 

Clause 9 - Term of titles

 

This clause clarifies that the term of a title is not necessarily a fixed period that is always accurately predictable when the title is granted. While, for example, an exploration permit is set down as having a duration of 6 years if it is the initial grant of a permit and 5 years if it is a renewal, in either case the term could be extended or shortened by the impact of various provisions of the proposed Act.

 

This clause also clarifies that the date on which a year of the term of a title is completed is determined by when the title comes into force, which could be a date later than the one on which the Joint Authority grants the title.

 

This clause further clarifies that the expiry date of a title, like the term, and for the same reason, is not always accurately predictable when the title is granted.

 

Equivalent provisions in the PSL Act: subsections 5(2) and (3)

 

Clause 10 - Renewal of titles

 

This clause makes clear that the renewal of a title is a new title. However, there is continuity from the expiring title in the sense that the identity of the party who can obtain the renewal, which blocks and how many blocks it can cover and the date when the renewal can come into force, are all determined by what is set down in the expiring title.

 

Equivalent provisions in the PSL Act: subsections 5(4), (4A) and (5)

Technical change: relocation of the phrase “blocks specified in the licence” to a later point in the sentence than in subsection 5(5)

 

Clause 11 - Variation of titles

 

This clause provides that, under the proposed Act, the rights and responsibilities of a titleholder whose title is varied will immediately change to match the variation.

 

Equivalent provision in the PSL Act: subsection 5(8).

Technical change : insertion of reference to special prospecting authority

 

Clause 12 - Vacated area

 

This clause defines “vacated area” under various scenarios through which a title under the proposed Act can come to an end. This definition is relevant because certain obligations fall on the holder or ex-holder of the title to carry out remedial actions in the vacated area either before or after the title has come to an end.

 

In relation to a pipeline licence, the vacated area under item 7 or 8 is to be understood as including whatever area on either side of the pipeline contains scatterings of construction debris or discarded parts or equipment resulting from the construction or maintenance of the pipeline.

 

Equivalent provision in the PSL Act: subsection 5(1)

Technical changes: use of the term “vacated area” in lieu of “relinquished area”; addition of the  reference to a production licence being terminated; deletion of the superfluous reference to the surrender of an infrastructure licence that appears in the equivalent definition in subsection 5(1)

 

Clause 13 - Infrastructure facilities

 

This clause defines infrastructure facilities in a way that makes it clear that these are not drilling or production platforms being used for that purpose by petroleum explorers or producers. They could, however, be former drilling or production platforms that have been retrofitted for a new use.

 

The reference to the remote control of facilities, structures or installations used to recover petroleum in the licence area of a production licence could be a reference to a “monopod” positioned outside the licence area which serves as the control centre for a number of submerged production plants in the licence area. Such a facility might accommodate personnel or might merely house computer and other hardware to control pumping activity at the production facilities.

 

Where this clause refers to “a facility”, “the facility” and “facilities”, it refers to the term in its common usage, not to the specialised meaning “facility” has in clause 68 and Schedule 3.

 

Equivalent provision in the PSL Act: section 5AAB

 

Clause 14 - Terminal station

 

This clause provides for the declaration terminal stations, which serve a purpose in defining where a secondary line ends and a pipeline begins. The purposes of secondary lines are explained in the definition in clause 6, but secondary lines are not pipelines within the meaning of the proposed Act.

 

Equivalent provision in the PSL Act: section 63

 



Clause 15 - Extended meaning of explore

 

This clause extends the common, dictionary meaning of the word “explore” in order to regulate all seismic surveying, seabed sampling surveys and various airborne remote sensing techniques such as gravity, magnetic and laser fluorimetry surveys that are designed to assist in locating petroleum reserves. Such surveys can be carried out by various titleholders under the Act or by parties who are not themselves petroleum explorers. In the latter case, the surveys are performed by speculative survey companies (normally working under a special prospecting authority) who aim to sell the survey results to titleholders. Without this clause, there is doubt whether such speculative activities could be regulated under the proposed Act.

 

The inclusion of this definition, with application to the entire Bill, means that any provision in the Bill that prohibits exploration also prohibits surveys by commercial interests which are not directly involved in exploration. Conversely, any title under the Bill that confers a right to explore confers a right to carry out a survey, subject to the title conditions and operational approval.

 

Equivalent provision in the PSL Act: subsection 19(2)

Policy changes : that the extended definition is precisely targeted at surveys instead of saying, as does the Petroleum (Submerged Lands) Act, that exploration for petroleum includes doing anything preparatory to, or knowingly connected with, exploration for petroleum; that the definition applies to all occurrences of the term “explore” in the proposed Act, not just to the offence of exploring without authorisation

 

Clause 16 - Graticulation of Earth’s surface and constitution of blocks

 

This clause sets out the basic provisions about defining a “block” for the purposes of the Act. In some unusual cases, set out in clause 245, what constitutes a block under this definition can be further broken down into more than one block.

 

The normal 5 minute by 5 minute dimensions of a block mean that, for example, a block in the offshore area of Victoria occupies a smaller area (something over 60 square kilometres) than does one in the Timor Sea (something over 80 square kilometres), as the kilometre distance between meridians of longitude decreases as one moves from the Equator towards the pole.

 

Paragraph (3)(b) refers to the situation where a boundary of an offshore area cuts through a 5 minute by 5 minute graticular section. This could be a boundary between that offshore area and the coastal waters, or a boundary between that offshore area and the offshore area of another State or the Northern Territory. It could also be an agreed seabed boundary between Australia and another country or the boundary between Australia’s continental shelf and the International Seabed Area. Since these boundaries are not everywhere straight and include some twists and bends, the transection of a graticular section by a boundary line could mean that more than one portion of the graticular section falls on one side of the boundary line. Then this paragraph provides that those portions within the one offshore area together constitute one block.

 

When it comes to provisions such as subclause 82(8), which defines the attributes of blocks in respect of which an exploration permit may be sought, subclause (4) clarifies how the Bill provides for dealing with a block consisting of two or more portions of a graticular section.

 

When it comes to nominating a block for declaration as a location under clause 107, subclause (5) clarifies how the Bill provides for dealing with a block which does not cover a whole graticular section.

 

Equivalent provision in the PSL Act: section 17

 

Clause 17 - External Territories

 

This clause sets out the external territories of the Commonwealth to which the proposed Act would apply. The proposed Act would apply also around two other islands that are distant from the Australian continent but which are not external territories, namely Lord Howe Island, which is part of the New South Wales offshore area and Macquarie Island, which is part of the Tasmanian offshore area. In keeping with the ambit of the Petroleum (Submerged Lands) Act, the proposed Act would have no application offshore of the Australian Antarctic Territory.

 

Equivalent provision in the PSL Act: section 7

 

Clause 18 - Application of Act

 

This clause sets out a provision which is standard in Commonwealth legislation. It has particular relevance to the proposed Act because many petroleum companies which operate in Australia’s marine jurisdiction are foreign companies.

 

Equivalent provision in the PSL Act: section 8

 

Clause 19 - Certain pipelines provisions to apply subject to international obligations

 

This clause provides that if, for example, a pipeline is constructed to convey gas to Australia from another country, then any provisions of an agreement with that other country that governs the administration of the project would override the provisions of the proposed Act if there were some inconsistency between them. It would not be appropriate, for instance, to require the foreign-based operator of the pipeline to obtain a Joint Authority’s consent under clause 193 before ceasing to operate the pipeline. The intergovernmental agreement would have to address issues of this kind differently to what the Act provides in the domestic context.

 

Equivalent provision in the PSL Act: section 8AA

 

Division 2 Datum provisions

 

Subdivision A Datum for ascertaining the position of points etc.

 

Clause 20 - Objects

 

This clause deals with the objects of this Subdivision. The term “datum” is defined in clause 6, but, to fully grasp its meaning, one needs to understand that, if the latitude and longitude of a point are given, that information does not in itself provide the means of identifying the position of that point on the surface of the Earth with any accuracy. A datum, the reference surface for the latitude and longitude, also needs to be specified. If the coordinate and datum of a point are specified and one then keeps the same coordinate and specifies a different datum, that will send anyone trying to find the point to a different location. The issue is similar to quoting a volume with appropriate units, for example 100 imperial gallons is different from 100 US gallons.

 

In onshore surveying, the traditional technique for accurately locating a specified point on the ground has been to measure to existing trig points with known positions on surrounding elevated land features. The coordinates of these trig points are not in themselves the datum but they are derived from the datum and can be said to represent it. The coordinate of each trig point was originally obtained by a process of working outwards from a primary reference point. For some decades from the 1960s, that primary reference point in Australia was the Johnston Geodetic Station in the Northern Territory. The latitude and longitude of that Station had been determined very accurately, and also its elevation above the spheroid representing the Earth (the Earth not being a perfect sphere). All this information, together with measurements indicating the size and shape of the spheroid, constitutes a datum, namely the Australian Geodetic Datum (AGD) (see Annex A).

 

When it comes to surveying offshore, the coordinate of a point can be given with reference to the AGD just as it can be onshore. Until 2001, for purposes of title management, the Petroleum (Submerged Lands) Act specified the AGD as the datum both for determining and describing the position of a point, line or area. However, in 2001, amendments were passed to the Act so that regulations could be made prescribing a new datum for describing that position.

 

This was because of the general move in Australia to adopt the Geocentric Datum of Australia (GDA), a new datum which was gazetted in 1995 and which provides benefits in terms of direct compatibility with the Global Positioning System used in satellite navigation. But simply accepting existing AGD coordinates as GDA coordinates in the Act would have meant that holders of existing titles under the Act would have found that the area in which they could operate had shifted by about 200 metres over the seabed. Following consultation with stakeholders, the Parliament agreed that adoption of the GDA in the Act must not lead to that result.

 

Instead, the amendments to the Act made in 2001 allowed the GDA to be adopted in petroleum title administration so that the gridlines that delineate the 5 minute by 5 minute blocks were relabelled with the new datum but without moving the title areas from their existing position on the seabed. To do this, the coordinates of corner points of title areas, which were expressed as whole multiples of 5 minutes, were transformed to unwhole numbers of minutes under the GDA, for example 16º40’00” South, 118º15’00” East under the AGD converted to 16º39’55.09” South, 118º15’4.63” East under the GDA.

 

Overall, then, the objects of Subdivision A are to maintain the AGD as the determinant for the position of the grid on which title areas under the proposed Act depend and, secondly, to provide the means for a new datum (other than the GDA) to be prescribed at some future time for describing that position if there are good reasons for doing so.

 

Equivalent provision in the PSL Act: section 150L

 

Clause 21 - Definitions

 

This clause sets out a number of definitions for purposes of this Subdivision.

 

As it does not appear in currently published Acts or regulations, a copy of Gazette Notice No. 84 of 6 October 1966, which established the Australian Geodetic Datum, is given at Annex A. The additional reference to the “AGD66 geodetic data set” is a reference to the fact that there was a 1984 adjustment of coordinates based on the Australian Geodetic Datum, but, since the Petroleum (Submerged Lands) Act dates from 1967, the 1984 data set does not apply to the Act. Coordinates under the Act and the proposed Act are to be understood to be determined by reference to coordinates based on the 1966 data set.

 

The definition of “title” does not include a scientific investigation consent because this would be included under the definition of an “instrument under this Act”.

 

Equivalent provision in the PSL Act: section 150W

Technical change : the reference to the “AGD66 geodetic data set”

 

Clause 22 - Australian Geodetic Datum

 

This clause is the basic provision maintaining the Australian Geodetic Datum (AGD) as the determinant for the position on the surface of the Earth of a graticular section or block, on which title areas under the proposed Act are based.

 

Subclause (1) also provides that the AGD will determine the position on the seabed of the parallel of Latitude 25º South mentioned in subclause 7(2), any scheduled area description in Schedule 1 and the area described in Schedule 2, which is used to define the “area to be avoided” in clause 326. While the lines and points making up these descriptions may be individually converted to GDA reference in future legislative amendments, it has not been deemed necessary to complete this for purposes of this Bill. 

 

Subclause (2) provides that, in an instrument under the proposed Act, there is no impediment to describing the point, line or area by reference to another datum. By virtue of the Regulations currently in place, the other datum is the Geocentric Datum of Australia.

 

Equivalent provision in the PSL Act: subsections 150M(1) and (2)

 

Clause 23 - Current datum, previous datum and changeover time

 

This clause provides that regulations may in future declare a new datum for describing the position on the surface of the Earth of a point, line or area in a title or other instrument under the Act. This new datum is here referred to as “the current datum”, as distinct from “the previous datum”.

 

Subclause (2) defines the “previous datum” for purposes of making a declaration of the kind referred to above. Because of the Regulations currently in place, if and when such a declaration is next made, the “previous datum” will be the Geocentric Datum of Australia.

 

Subclause (3) provides for the time of effect of a declaration of the kind referred to above to be called the “changeover time”.

Equivalent provision in the PSL Act: section 150N

 

Clause 24 - Use of current datum

 

This clause refers to all the different titles and other types of instruments that may be granted or issued under the proposed Act in the context of what would need to be done if a new datum were declared.  This clause deals only with titles or other instruments granted or issued after the changeover time and provides that then any area, route (for pipelines), line or point that is referred to in any one of these titles or other instruments is to be described by reference to the “current datum”, ie, the new datum. The title or other instrument may be annotated accordingly.

 

Equivalent provision in the PSL Act: section 150P

 

Clause 25 - Use of previous datum

 

This clause refers to all the different titles and other types of instruments that may be granted or issued under the proposed Act in the context of what would need to be done if a new datum were declared. This clause deals only with titles or other instruments that are in force immediately before the changeover time. Any area, route (for pipelines), line or point that is referred to in any of these titles or other instruments is to be described by reference to the previous datum. Subclause (2) makes the point that this is the situation as long as no regulations have been made under clause 26. However, if regulations have been made only under some subclauses of clause 26, the titles or other instruments that have not been dealt with under these subclauses will still be described by reference to the previous datum.

 

If there were going to be a second changeover date, ie the declaration of another new datum, it is the intention that the variation power under clause 26 would be used in respect of any title or instrument still continuing in force from before the first changeover time. Thus, when the second changeover date became imminent, all titles and instruments would be referenced to the datum that had been declared starting from the first changeover time.

 

Equivalent provision in the PSL Act: section 150Q

 

Clause 26 - Variation of titles and instruments

 

This clause refers to what could be done (as an option) if a new datum were declared. This clause enables regulations to be made to authorise variations to be made by the Designated Authority to titles and other instruments that have been granted or issued under the Act before the changeover time. Under items 1 to 6 of the table, the purpose of the variation would be for relabelling, using coordinates based on the current datum, any area or route (for pipelines) that is referred to in the title to which the regulations relate. If a regulation were made under item 7, the purpose of the variation would be for relabelling, using coordinates based on the current datum, any point, line or area in some other instrument under the Act. Item 8 provides a regulation-making power so that the Designated Authority may insert an annotation in any title or other instrument stating what datum applies to that title or other instrument.

 

Equivalent provision in the PSL Act: section 150R

 

Clause 27 - Variation of applications for titles

 

This clause refers to what could be done (as an option) if a new datum were declared. This clause provides a regulation-making power so that the Designated Authority may vary an application for a title if the area for which the title is sought is referenced to the previous datum. The coordinates of the area in the application would then be relabelled under the current datum and the title, if granted, would refer to that relabelled area.

 

Equivalent provision in the PSL Act: section 150S

 

Clause 28 - No change to actual position of point, line or area

 

This clause is an overarching provision that makes it clear that no change in the position on the surface of the Earth of any point, line, block, pipeline route or other title area is authorised, either as a result of describing any of them under clause 24 or as a result of relabelling any of them under clause 26.

 

Equivalent provision in the PSL Act: section 150T

 

Clause 29 - Transitional regulations

 

This clause provides a power to make regulations to cover matters of a transitional nature arising from any future datum change. This is to cover contingencies not identified or foreseen in drafting this Subdivision.

 

Equivalent provision in the PSL Act: section 150U

 



Clause 30 - International Seabed Agreements

 

This clause makes it clear that none of the above provisions about datums apply to the position on the surface of the Earth of a point or line specified in an International Seabed Agreement, as set out in clause 31. The datum that applies to the position of any such point or line shall continue to be whatever datum is specified in the International Seabed Agreement in question.

 

Equivalent provision in the PSL Act: section 150V

 

Subdivision B Certain points etc. specified in an International Seabed Agreement to be ascertained by other means

 

Clause 31 - Certain points etc. specified in an International Seabed Agreement to be ascertained by other means

 

This clause provides that if a boundary line is defined by coordinates in an international seabed agreement which Australia has acceded to and is listed in this clause, then the provisions about the applicable datum that appear in the agreement override anything in Subdivision A. In other words, regulations made under the clauses in Subdivision A would not impact on any of the agreements listed in this clause.

 

Equivalent provision in the PSL Act: section 150X

 

Division 3 Apportionment of petroleum recovered from adjoining title areas

 

Clause 32 - Title

 

This clause provides that this Division applies only to exploration permits, retention leases and production licences. This is because the proposed Act does not allow commercial petroleum recovery under any other title. If small amounts of petroleum are recovered under a scientific investigation consent, this will be for purposes to which issues of apportionment are not relevant. 

 

The provisions in this Division of the Bill exist to assist in determining property rights as set out in clause 248, in demarcation between liability to pay royalty or petroleum resource rent tax and to determine whether excise is payable under Excise Tariff Act.

 

Equivalent provision in the PSL Act: paragraph 6A(8)(a)

 

Clause 33 - Titleholder and title area

 

This clause provides local definitions, applying only to this Division, to enable the following provisions to be set out with less repetition of words.

 

Equivalent provision in the PSL Act: paragraph 6A(8)(a)

 

Clause 34 - Petroleum recovered through inclined well

 

This clause is relevant because the title area from which petroleum is deemed to have been recovered by the titleholder could be significant for taxation purposes. If, for example, one title area were under the Petroleum Resource Rent Tax Act and the other were under the current or proposed Royalty Act, the provision in this clause would be decisive in determining whether the titleholder would be liable to pay tax or royalty. Whichever applied, the financial implications would not be the same as if the other Act applied.

 

Equivalent provision in the PSL Act: subsection 6A(2)

 

Clause 35 - Petroleum pool straddling 2 title areas etc.

 

This clause deals with the situation in which a company has two different titles such that a petroleum pool straddles the two title areas. In this situation, it is normal to assume that, if there is a well in just one of the title areas, petroleum will flow from the side of the pool which is in the other title area into the title area where the well is located. Thus one well will tap petroleum from two title areas. Likewise, if in this situation there is a well in both title areas, all the petroleum recovered from each well will not necessarily originate in the title area where the well is located.

 

This clause provides how the proportion of petroleum derived from each title area is to be determined. The purpose of this determination is the same as the one outlined under clause 34.

 

Equivalent provisions in the PSL Act: subsections 6A(3) and (4)

Policy change: conferral of jurisdiction on the Federal Court

 

Clause 36 - Petroleum pool straddling Commonwealth title area and State title area etc.

 

This clause addresses the same issue as clause 35 in cases where only one of the two title areas is under Commonwealth jurisdiction. In that situation, the determination would fix the proportions of recovered petroleum taxable respectively under State or Northern Territory legislation and Commonwealth legislation.

 

Equivalent provisions in the PSL Act: subsections 6A(5) and (6) and paragraphs 6A(8)(b) and (c)

Policy changes: empowerment of the responsible State or Northern Territory Minister, ie possibly an acting Minister; conferral of jurisdiction on the Federal Court

 

Clause 37 - Unit development

 

This clause refers to a situation of the kind envisaged in clause 163. Where a unit development agreement is in place, the most fundamental issue addressed in that agreement would be the proportions of petroleum deemed to be recovered from each title area. This clause provides that, when petroleum is recovered in a unitised production operation, the proportions specified in an agreement (if approved and registered as set out in clause 270) will have legal effect for all purposes including taxation.

 

Equivalent provision in the PSL Act: subsection 6A(7)

 

Part 1.3 Joint Authorities and Designated Authorities

 

Division 1 Joint Authorities

Clause 38 - Joint Authorities

 

This clause provides for the establishment of a Joint Authority for each offshore area. This is one of the ways in which, as envisaged in the Offshore Constitutional Settlement (clause 4 refers), the States and the Northern Ter ritory share in the administration of the Commonwealth offshore petroleum legislation.

 

The Joint Authority members, ie the responsible Commonwealth, State and Northern Territory Ministers, are the Ministers in each jurisdiction who exercise responsibility for petroleum resources. Specifically, the responsible Commonwealth Minister is the Minister administering the proposed Act, and the responsible State and Northern Territory Ministers are the ones administering the State and Northern Territory “mirror” Acts, which currently have the same title as, but a different year reference than, the Commonwealth Petroleum (Submerged Lands) Act 1967 .

 

In the case of the external territories, there is no joint administration. All powers are vested in the responsible Commonwealth Minister. The proposal that the Commonwealth Minister be nonetheless called the Joint Authority for external territories is merely a legislative drafting device adopted with a view to avoiding a proliferation of terms for entities with essentially identical functions.

 

Equivalent provision in the PSL Act: sections 8A and 8B and subsection 8G(1) 

Technical changes: that the Commonwealth Minister is actually called the Joint Authority for external territories, instead of merely being ascribed with the powers and functions that are elsewhere ascribed to a Joint Authority

 

Clause 39 - Functions and powers of Joint Authorities

 

This clause provides that the powers and functions of the Joint Authority for each offshore area are as set out in elsewhere in the Bill. They are in part powers and functions of a strategic kind, but they also enter into administration to the extent of deciding, for instance, whether any of the main types of titles under the proposed Act should be offered to a particular applicant.

 

Equivalent provision in the PSL Act: section 8C

 



Clause 40 - Procedure of Joint Authority

 

This clause leaves open all possible ways for the Joint Authority of a State or the Northern Territory to conduct its business, including telephone conferencing.

 

In accordance with current drafting practice, subclause (2) makes clear that a written communication between the Joint Authority members is not a legislative instrument in terms of the Legislative Instruments Act 2003.

 

Equivalent provision in the PSL Act: subsection 8D(1)

 

Clause 41 - Decision-making

 

This clause gives the responsible Commonwealth Minister overriding decision-making authority in a case where the members of a Joint Authority disagree on the decision to be taken about a particular matter. Where the responsible State or Northern Territory Minister does not communicate his or her opinion to the responsible Commonwealth Minister, subclause (3) provides the mechanism by which the Commonwealth Minister’s view will become the Joint Authority decision.

 

This power of the responsible Commonwealth Minister is counterbalanced by the fact that a large number of decisions under the proposed Act do not fall within the functions of the Joint Authority, but are made by the Designated Authority, who is the responsible State or Northern Territory Minister. These powers are dealt with in Division 2.

 

Equivalent provision in the PSL Act: subsection 8D(2)

 

Clause 42 - Opinion or state of mind of Joint Authority

 

This clause refers to the fact that a number of provisions in the Bill envisage the Joint Authority taking certain actions if the Joint Authority is satisfied that certain criteria are met. For such purposes, this clause sets out how the opinion or state of mind of the Joint Authority is to be understood.

 

Equivalent provision in the PSL Act: subsection 8D(3)

 

Clause 43 - Records of decisions of Joint Authority

 

This clause is required because two parties are involved in the Joint Authority and it would not otherwise be obvious which party would have responsibility for keeping records of Joint Authority decisions in respect of a State or the Northern Territory offshore area. This clause accordingly places this responsibility on the Designated Authority, ie the State or Northern Territory Minister, or his or her delegate.

 

This is because the implementation of the decision is always a responsibility of the Designated Authority and because the register of titles is kept by the Designated Authority. The Commonwealth Minister’s officials would keep departmental records of deliberations leading to any particular decision in the same way as is done in administering any other legislation, but such records might not have standing as prima facie evidence in law about the decision that was taken.

 

In accordance with current drafting practice, subclause (3) makes clear that a record of decision of the Joint Authority is not a legislative instrument in terms of the Legislative Instruments Act 2003 .

 

Decisions of the Joint Authority for an external territory are decisions of the Commonwealth Minister and that Minister would cause records to be kept of his or her decisions, or his or her delegates’ decisions.

 

Equivalent provision in the PSL Act: subsection 8D(4)

 

Clause 44 - Signing of documents

 

This clause deals with executing Joint Authority documents (not necessarily only records of decisions), and provides that the Designated Authority’s signature on the document is effective in giving it standing, particularly for court proceedings or hearings before tribunals.

 

Equivalent provision in the PSL Act: subsection 8D(5)

 

Clause 45 - Communications with Joint Authority

 

This clause makes it obligatory for all communications between industry-members and the Joint Authority to be made through the Designated Authority. This is for reasons of administrative efficiency given that the responsible State or Northern Territory Minister, who is the Designated Authority, is also a member of the Joint Authority.

 

Equivalent provision in the PSL Act: subsection 8D(6)

 

Clause 46 - Judicial notice of signature of member of a Joint Authority

 

This clause requires a court to take judicial notice of signatures and facts relating to membership or being a delegate of a Joint Authority. Judicial notice is a finding by a court of the existence of a fact which has not been established by evidence. Once judicial notice is taken of a matter, it is prima facie proved and evidence is not required to prove it. However, evidence may be led to rebut the fact noticed or the consequences of it.

 

A court to which this clause refers could be a Commonwealth, State or Territory court. Subclause (3) extends the provisions of this clause to persons authorised to receive evidence. This would include, for example, a tribunal or arbitrator who is authorised to receive evidence.

 

Equivalent provisions in the PSL Act:   subsections 8D(7) and (8)

Policy changes: that the signature, and the fact, of someone being a delegate of a Joint Authority require a court to take judicial notice of that signature and fact

 

Clause 47 - Issue of documents, and service of notices, on behalf of Joint Authority

 

This clause provides that, despite the fact that actions such as the grant of a title are set down in the Bill as actions of the Joint Authority, it is the Designated Authority who is to execute the title instrument, or any other document, on behalf of the Joint Authority.

Equivalent provision in the PSL Act: section 8F

 

Clause 48 - Delegation by a Joint Authority for a State or the Northern Territory

 

Replicating the equivalent provision in the Petroleum (Submerged Lands) Act, this clause provides that a delegation of Joint Authority powers and functions for a State or the Northern Territory is possible only if there is one delegate for the Commonwealth member and one delegate for the State or Northern Territory member and both members approve of both delegates. If there is no delegation, all business of the Joint Authority must involve both Ministers as decision-makers. Even when there is a delegation, if the delegates disagree, the matter must be referred to the Ministers for a decision. Likewise, if there is a disagreement, the opinion or state of mind of the delegates is not to be viewed as the opinion or state of mind of the Joint Authority.

 

In other respects, the provisions of the Acts Interpretation Act 1901 apply to delegations of Joint Authority powers. Section 34AA of the Acts Interpretation Act provides:

 

“Where an Act confers power to delegate a function or power, then, unless the contrary intention appears, the power of delegation shall not be construed as being limited to delegating the function or power to a specified person but shall be construed as including a power to delegate the function or power to any person from time to time holding, occupying, or performing the duties of, a specified office or position, even if the office or position does not come into existence until after the delegation is given.”

 

Section 34AB of the Acts Interpretation Act provides:

 

“Where an Act confers power on a person or body (in this section called the authority ) to delegate a function or power:

(a)     the delegation may be made either generally or as otherwise provided by the instrument of delegation;

(b)     the powers that may be delegated do not include that power to delegate;

(c)     a function or power so delegated, when performed or exercised by the delegate, shall, for the purposes of the Act, be deemed to have been performed or exercised by the authority;

(d)     a delegation by the authority does not prevent the performance or exercise of a function or power by the authority; and

(e)     if the authority is not a person, section 34A applies as if it were.”

 

Section 34A of the Acts Interpretation Act provides:

 

“Where, under any Act, the exercise of a power or function by a person is dependent upon the opinion, belief or state of mind of that person in relation to a matter and that power or function has been delegated in pursuance of that or any other Act, that power or function may be exercised by the delegate upon the opinion, belief or state of mind of the delegate in relation to that matter.”

 

Subclause (3), a new provision, addresses the situation that occurs from time to time of the responsible Commonwealth, State or Northern Territory Minister being replaced. It also addresses the less common situation of a Ministerial position in the Joint Authority falling vacant. For efficient administration, subclause (3) ensures that, in either case, any existing delegation continues to have effect. If the delegation is to the holder of a specific office in a Department of the Commonwealth, a State or the Northern Territory, the continuation of the delegation would not be affected by a change in the name of the Department.

 

Subsection 33(3) of the Acts Interpretation Act provides:

 

“Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.”

 

Subclause (4) accordingly clarifies that the continuation of effect of a delegation under subclause (3) does not limit the Joint Authority’s power to revoke a delegation, for example when a new person has been appointed as the Commonwealth Minister.

 

Subclause (8) has been included in compliance with the Australian Government policy that, if a delegation of this type is to be given to an APS (Australian Public Service) officer, it must be given to an officer at the SES (Senior Executive Service) level, defined in sections 34 and 35 of the Public Service Act 1999 .

 

Since the rank profiles in State and Northern Territory Public Service structures may vary from one jurisdiction to the next, no attempt has been made to include any analogous requirement in relation to the delegation of powers and functions to a State or Northern Territory public servant.

 

In accordance with current drafting practice, subclause (9) makes clear that the referral of a matter to the Joint Authority is not a legislative instrument in terms of the Legislative Instruments Act 2003 .

 

Equivalent provision in the PSL Act: section 8H

Policy changes : the continuation in effect of a delegation despite a vacancy in one or both of the Ministerial positions or a change in the identity of its holder; express recognition of the revocability of a delegation; the requirement that delegations to APS employees must be made to persons at the SES level  

 

Clause 49 - Delegation by Joint Authority for an external Territory

 

This clause deals with a delegation of the Commonwealth Minister’s powers as Joint Authority for an external territory. An instrument making, varying or revoking a Joint Authority delegation in respect of an external territory must be published in the Gazette . This replicates the policy in the Petroleum (Submerged Lands) Act, which names the Commonwealth Minister only as the Designated Authority in respect of external territories and ascribes to that Designated Authority all the powers of the Joint Authority. An instrument making, varying or revoking a Designated Authority delegation, whether for an external territory or a State or the Northern Territory, is required to be published in the Gazette .

 

This clause also provides that, if a delegation of this type is to be given to an Australian Public Service (APS) officer, it must be given to an officer at the Senior Executive Service (SES) level.

 

Equivalent provisions in the PSL Act: paragraph 8G(1)(a) and subsections 15(1), (4) and (6)

Policy changes : the requirement that delegations to APS employees must be made to persons at the SES level

 

Division 2 Designated Authorities

 

Clause 50 - Designated Authorities

 

The Offshore Constitutional Settlement (clause 4 refers) provides for the States and the Northern Territory to share in the administration of Commonwealth offshore petroleum legislation. As another of the ways in which this is achieved, this clause provides for the responsible State or Northern Territory Ministers to be appointed as Designated Authorities for the offshore areas of their respective States and the Northern Territory.

 

The Australian Parliament determines the powers to be vested in the Designated Authority. While, in a legal sense, the Designated Authority is mostly able to exercise those powers without overriding action by the Commonwealth Minister, at the administrative level guidelines and protocols have been developed, and are being further developed, to achieve maximum possible uniformity in the policies and practices adopted by the Designated Authorities.

 

The main reason why the Designated Authority arrangements exist is for reasons of efficiency. For example, government mining engineers of any particular State or the Northern Territory are able to advise on the technical aspects of petroleum exploration and production projects in the coastal waters of that State or Territory. It would be wasteful of resources to have an arrangement in which the Commonwealth had to engage a different group of mining engineers for the administration of petroleum exploration and production projects in the offshore area of that State or Territory adjacent to those coastal waters.

 

The Commonwealth Minister is the Designated Authority for external territories in the same way as he or she is the Joint Authority for those territories.

 

Equivalent provision in the PSL Act: section 14

 

Clause 51 - Functions and powers of Designated Authorities

 

This clause provides that the powers and functions of the Designated Authority for each offshore area are as set out in elsewhere in the Bill. They are routine powers and functions of an administrative kind but they have substantial influence on what titleholders and others may or may not do in the offshore area.

 

If the Designated Authority for a State or Northern Territory offshore area is inclined to take a particular decision that is permitted by the Designated Authority’s powers and functions, it cannot generally be vetoed by the Joint Authority or the Commonwealth Minister. Exceptions include powers or functions which are explicitly designated as being subject to specific provisions of the proposed Act or regulations, as in subclause 311(3). In such cases, the Commonwealth could, for example, promulgate regulations implementing the Commonwealth Minister’s position. Another exception is the stipulation in subclause 305(5) that the Designated Authority must not give a direction of a standing or permanent nature except with the approval of the Joint Authority.

 

In practice, administrative guidelines and protocols that have been developed to achieve maximum possible uniformity in the policies and practices adopted by the Designated Authorities would have a high degree of influence over what any particular Designated Authority chooses to do. Apart from this, it is open to the Australian Parliament to pass legislative amendments from time to time to vary the powers and functions of the Designated Authority if it so desires.

 

Equivalent provisions in the PSL Act: section 14

 

Clause 52 - Delegation by Designated Authority

 

This clause provides for the delegation of Designated Authority powers and functions, which could be conferred on, or divided between, more than one person. The provisions of the Acts Interpretation Act 1901 apply to delegations of Designated Authority powers. Section 34AA of the Acts Interpretation Act provides:

 

“Where an Act confers power to delegate a function or power, then, unless the contrary intention appears, the power of delegation shall not be construed as being limited to delegating the function or power to a specified person but shall be construed as including a power to delegate the function or power to any person from time to time holding, occupying, or performing the duties of, a specified office or position, even if the office or position does not come into existence until after the delegation is given.”

 

Section 34AB of the Acts Interpretation Act provides:

 

“Where an Act confers power on a person or body (in this section called the authority ) to delegate a function or power:

(a)     the delegation may be made either generally or as otherwise provided by the instrument of delegation;

(b)     the powers that may be delegated do not include that power to delegate;

(c)     a function or power so delegated, when performed or exercised by the delegate, shall, for the purposes of the Act, be deemed to have been performed or exercised by the authority;

(d)     a delegation by the authority does not prevent the performance or exercise of a function or power by the authority; and

(e)     if the authority is not a person, section 34A applies as if it were.”

 

Section 34A of the Acts Interpretation Act provides:

“Where, under any Act, the exercise of a power or function by a person is dependent upon the opinion, belief or state of mind of that person in relation to a matter and that power or function has been delegated in pursuance of that or any other Act, that power or function may be exercised by the delegate upon the opinion, belief or state of mind of the delegate in relation to that matter.”

 

Subclause (2) addresses the situation that occurs from time to time of the responsible State or Northern Territory Minister being replaced. It also addresses the less common situation of that Ministerial position falling vacant. For efficient administration, subclause (2) ensures that, in either case, any existing delegation continues to have effect.

 

The reason why, under subclause (4), a copy of each instrument making, varying or revoking a Designated Authority delegation must be published in the Gazette is that the public has to deal with the Designated Authority’s delegate(s) and should therefore be notified of any change in the identity of the person(s) concerned. Since the public does not deal directly with the Joint Authority, no comparable requirement is proposed in relation to the delegation of Joint Authority powers and functions (except those of a Joint Authority in respect of an external territory).

 

Subclause (5) has been included in compliance with the Australian Government policy that, if a delegation of this type is to be given to an APS (Australian Public Service) officer, it must be given to an officer at the SES (Senior Executive Service) level, defined in sections 34 and 35 of the Public Service Act 1999 . In practice, only the Designated Authority for an external territory, ie the responsible Commonwealth Minister, would be likely to delegate Designated Authority powers to an APS officer. Since the rank profiles in State and Northern Territory Public Service structures may vary from one jurisdiction to the next, no attempt has been made to include any analogous requirement in relation to the delegation of powers and functions to a State or Northern Territory public servant.

 

Equivalent provision in the PSL Act: subsections 15(1), (4) and (6)

Policy changes : the requirement that delegations to APS employees must be made to persons at the SES level

 



Clause 53 - Judicial notice of signature of Designated Authority

 

This clause requires a court to take judicial notice of signatures and facts relating to membership or being a delegate of a Designated Authority. Judicial notice is a finding by a court of the existence of a fact which has not been established by evidence. Once judicial notice is taken of a matter, it is prima facie proved and evidence is not required to prove it. However, evidence may be led to rebut the fact noticed or the consequences of it.

 

Subclause (2) extends the provisions of this clause to persons authorised to receive evidence. This would include, for example, a tribunal or arbitrator who is authorised to receive evidence.

 

Equivalent provision in the PSL Act: section 137

 

 

Division 3 Finance

 

Clause 54 - Payments by the Commonwealth to Western Australia—Royalty Act payments

 

This clause sets out the provisions for the sharing between the Commonwealth and Western Australia of royalty payments received under the current or proposed Royalty Act. The formula in subclause (1) provides for royalty to be shared in the ratio 60:40 between Western Australia and the Commonwealth if the rate of royalty is 10%. If the rate is higher, the additional royalty will all be paid to Western Australia.

 

As an example, if $1,000,000 worth of production is subjected to royalty at 10%, Western Australia will receive $60,000 in royalty and the Commonwealth will retain $40,000. If $1,000,000 worth of production is subjected to royalty at 12 ½ %, the formula provides that Western Australia will receive $85,000 in royalty and the Commonwealth will again retain $40,000.

 

The reference to clause 9 of the proposed Royalty Act is a reference to what may occur if the Designated Authority is satisfied that the rate of recovery of petroleum from a well has become so reduced that, having regard to the rate or rates of royalty that would otherwise be applicable, further recovery of petroleum from that well would be uneconomic. The Joint Authority may then, by written instrument, determine that the royalty in relation to any or all of the petroleum recovered from that well on or after a date specified in the determination is to be such a lower rate as is specified in the determination.

 

In that situation, the lowering of the royalty rate does not change the formula from what it was before the lowering. If the rate of royalty were reduced for an operation from, say, 12 ½ % to 5%, then $1,000,000 worth of production would lead to the payment of $50,000 of royalty, of which $34,000 would be paid to Western Australia and $16,000 would be retained by the Commonwealth. 

 

Subclause (2) refers to the fact that, in practice, all royalty payments under the Act are initially based on a provisional valuation of petroleum. Later, an agreed or determined value is arrived at and an adjustment can be made to the next royalty payment to take account of any difference. Given the possibility of an overpayment by a titleholder, a new provision appears in the proposed Royalty Act allowing the payment of a refund to a titleholder who has ceased paying royalty because the production operation has come to an end.

 

In most cases, this means that if, say, a refund of $1,000 dollars has been paid to a titleholder who has been paying royalty at the rate of 12 ½ %, then, in that particular month, the royalty payment remitted to Western Australia will be reduced by $680. However, if the cause of the overpayment and refund were an error in the percentage rate at which the royalty were calculated, then the reduction to Western Australia could be the whole of the refund amount. This can be understood by noting the fact that any component of royalty above 10% is remitted to Western Australia without any deduction to the Commonwealth.

 

Equivalent provision in the PSL Act: paragraph 129(1)(b), subsection 129(2)

Policy change : deduction from payments to Western Australia of the State’s component of refund amounts 

 

Clause 55 - Payments by the Commonwealth to the States and the Northern Territory

 

This clause covers most types of payments other than royalty. Paragraph (1)(a) refers to application fees for titles under the proposed Act and to fees paid by titleholders under the proposed Annual Fees Act and Registration Fees Act.

 

Paragraph (1)(b) refers to various fees not directly related to the grant of a title that are payable under the proposed Act, for example those mentioned in clauses 296, 297 and 427 and Schedule 5 clause 6.

 

The mention of Chapter 5 in subparagraph (1)(b)(iii) corrects an oversight dating from when the Petroleum (Submerged Lands) Act was amended in 2000. As a result, none of the fees associated with releasing information under Part IIIA of the Act are currently covered by the requirement to direct moneys back to the relevant Designated Authority. The relevant clause is clause 427 and the provision here rectifies this defect. Clause 427 is a broad provision enabling regulations to be made prescribing the fees payable for access to information and samples. Therefore, paragraph (1)(b) refers to regulations as well as Chapters of the proposed Act.

 

Paragraph (1)(c) refers to the fact that, if there are certain breaches of directions such as remedial directions under Part 4.3, the Designated Authority may take action to do what the recipient of the direction failed to do. In these cases, the costs or expenses incurred by the Designated Authority are a debt due to the Commonwealth, either by the recipient of the direction or by the owner of the property, and are recoverable in a court of competent jurisdiction.

 

In all these cases, once the moneys in question have been paid into the Commonwealth Consolidated Revenue Fund, they are to be directed back to the State or Northern Territory by the end of the following month. This does not apply to the GST component of any fee (if there is one) nor to any amount payable to the Safety Authority.

 

Moneys paid as cash bids in respect of cash-bid exploration permits are not subject to the provisions of this clause. This is because the consideration of Commonwealth -State- Northern Territory revenue sharing arrangements from the award of cash-bid exploration permits was expressly deferred when amendments were made to the Petroleum (Submerged Lands) Act in 1985 establishing the power to grant cash-bid exploration permits. At the time, it was envisaged that the cash-bid provisions would be implemented only in the offshore area of the Territory of Ashmore and Cartier Islands. In the event, some cash-bid permits were later issued in the offshore area of a State as well, but the revenue arrangement has not been changed. This creates an inconsistency with amounts paid as cash bids for special exploration permits and cash-bid production licences, as, under the Petroleum (Submerged Lands) Act, these amounts are to be directed back to the State or Northern Territory. This clause proposes to eliminate that inconsistency by proposing that amounts paid as cash bids for special exploration permits and cash-bid production licences should likewise be exempt from the provisions of subclause (1) and accordingly be retained in full by the Commonwealth.

 

Equivalent provision in the PSL Act: paragraph 129(1)(a) and subsections 129(1A) and (2A)

Technical change: explicit mention of excluding moneys payable to the Safety Authority on behalf of the Commonwealth

Policy changes: that amounts paid as cash bids for special exploration permits and cash-bid production licences are to be retained by the Commonwealth in the same way as amounts paid for cash-bid exploration permits; that annual fees and registration fees applicable to infrastructure licences and dealings, transfers etc in relation to them, are payable to the Designated Authority; that fees imposed by regulation are payable to the Designated Authority; that fees associated with information release are payable to the Designated Authority; that moneys gained through court action to recover the costs or expenses incurred by a Designated Authority are payable to the Designated Authority

 

Clause 56 - Appropriation

 

This clause provides a standing appropriation for the payment to the States and Northern Territory of moneys covered by the preceding two clauses.

 

Equivalent provision in the PSL Act: subsection 129(3).

 

Part 1.4 Application of State and Territory laws in offshore areas

 

Clause 57 - Simplified outline

 

This clause sets out a simplified outline of Part 1.4. This outline does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

Clause 58 - Meaning of laws

 

This clause gives a wide scope to what is meant by State and Territory laws under this Part.

 

Equivalent provision in the PSL Act: subsection 9(1)

 

Clause 59 - Application of State and Territory laws in offshore areas

 

This clause provides that the laws of a State, Northern Territory or external Territory that apply onshore from an offshore area will also operate in the offshore area in respect of anything that relates to petroleum exploration, exploitation or conveyance activities in the offshore area.

 

This application is subject to a number of qualifications which are set out in other clauses of Part 1.4 of this Bill. The most important qualification is set out in clause 63, which excludes certain criminal laws that are applied by the Crimes at Sea Act 2000 .

 

As a result of the exclusion of these laws, the remaining areas of State and Territory law now applied by this clause include, for example, the civil law of negligence. Thus, if a person causes damage to an offshore petroleum facility merely as a result of negligence, clause 59 could enable the owner or operator of the facility to launch a civil action under applied State or Territory law in respect of that damage.

 

Subclause (7) refers to laws that apply only in part of a State or Territory. Such laws would most typically be regulations of a technical kind that are different for one region than another, for example construction regulations for the fabrication of industrial plant in cyclone-prone areas of a State or Territory as distinct from regulations applying in other areas. Such regulations could have relevance offshore as well as on land.

 

Equivalent provisions in the PSL Act: subsections 9(1), (3), (4) and (5) and 11(1), (3), (4) and (5)  

 

Clause 60 - Disapplication and modification of laws

 

This clause provides for situations in which the applied provisions referred to above are premised on persons being onshore and lead to an inappropriate or anomalous result if adherence to them is imposed on persons working offshore. Regulations can then be made disapplying or modifying such State or Territory laws as far as the offshore area is concerned. Since this might raise questions about what court has jurisdiction to hear cases where infringement of one of these modified laws is alleged, subclause (3) provides for the regulations to invest a court of a State with federal jurisdiction and confer jurisdiction on a court of a Territory.

 

Equivalent provisions in the PSL Act: subsections 9(8), (9) and (10) and 11(8) and (9)

 

Clause 61 - Limit on application of laws

 

This clause provides that if a law of a State or the Northern Territory does not apply to the coastal waters (defined in clause 6), and any waters within the limits, of the State or Northern Territory, then clause 59 will not apply it to the offshore area of that State or Territory.

 

Equivalent provisions in the PSL Act: paragraphs 9(6)(a) and 11(6)(a)

 

Clause 62 - Inconsistent law not applied

 

This clause provides that Commonwealth law prevails in the offshore area in all cases where the State or Territory law would be inconsistent with it.

 

Equivalent provisions in the PSL Act: paragraphs 9(6)(b) and 11(6)(b)

Clause 63 - Criminal laws not applied

 

This clause ensures that there is no conflict between clause 59 and the Crimes at Sea Act 2000 . This clause provides that clause 59 does not apply substantive criminal laws or laws of criminal investigation, procedure and evidence. These laws are described in more detail in Schedule 1 to the Crimes at Sea Act.

 

The Crimes at Sea Act is the exclusive basis for applied State and Territory criminal laws. Under this Act, the States and the Northern Territory enact uniform Crimes at Sea Acts applying local criminal laws to the marine areas from the territorial sea baseline to 12 nautical miles. This Act then applies the criminal law of each jurisdiction (as Commonwealth law) to the respective offshore areas from 12 to 200 nautical miles, or to the outer limit of the continental shelf, whichever is further.

 

The existence of the Crimes at Sea Act means that State and Northern Territory criminal laws nowadays extend into the offshore areas without having to rely on any application of them under clause 59.

 

Equivalent provision in the PSL Act: subsections 9(2) and 11(2) 

 

Clause 64 - Tax laws not applied

 

This clause excludes State and Territory taxation laws, for example State secondary tax legislation that might apply onshore, from having any application in the offshore area.

 

Equivalent provisions in the PSL Act: paragraphs 9(6)(c) and 11(6)(c) 

 

Clause 65 - Appropriation law not applied

 

This clause refers to the fact that the Commonwealth has power, under section 122 of the Constitution, to appropriate the public money of a Territory. By applying in the offshore area a Territory law that appropriates public money of the Territory, the Commonwealth could be taken to have itself appropriated public money of the Territory. This clause ensures that clause 59 does not have this effect.

 

No equivalent provision is required in relation to State public moneys as the Commonwealth has no constitutional power to appropriate the public money of any State.

 

Equivalent provision in the PSL Act: paragraph 11(6)(d)

 

Clause 66 - Applied laws not to confer Commonwealth judicial power

 

This clause must be read in conjunction with clauses 71 and 72. This clause ensures that State and Territory courts exercise Commonwealth judicial power pursuant to a conferral of jurisdiction under clause 71 or 72. This clause also ensures that the application of State or Territory law does not breach the separation of powers by conferring Commonwealth judicial power on a non-judicial body or officer.

 

Equivalent provisions in the PSL Act: paragraphs 9(6)(d) and 11(6)(e)

 

Clause 67 - Applied laws not to contravene constitutional restrictions on conferral of powers on courts

 

This clause is inserted to take account of the fact that, under the Constitution, the Commonwealth is more constrained in the powers it can confer on a court than is a State or a Territory.

 

Equivalent provision in the PSL Act: paragraph 9(6)(e)

Technical change: inclusion under this provision of the court of a Territory

 

Clause 68 - State or Northern Territory occupational health and safety laws do not apply in relation to facilities

 

The purpose of this clause is to disapply State and Northern Territory occupational health and safety laws that would otherwise apply to facilities, activities at facilities and persons at or near facilities, in the Commonwealth marine jurisdiction. The kinds of vessels or structures that are “facilities” are set out in clause 4 under Schedule 3.

 

This clause not only disapplies Northern Territory occupational health and safety laws in Commonwealth waters forming the offshore area of the Northern Territory but also the offshore area of the Territory of Ashmore and Cartier Islands. Otherwise, these laws, as laws in force in the Northern Territory, would be applied in the Territory of Ashmore and Cartier Islands offshore area by the Territory of Ashmore and Cartier Islands Acceptance Act 1933 .

 

The reason for disapplying State and Northern Territory occupational health and safety laws in relation to facilities in the Commonwealth marine jurisdiction is to apply this proposed Act’s occupational health and safety regime (in Schedule 3) instead. This is so even if there is no direct inconsistency between a State or Northern Territory law and Schedule 3 or the regulations made for the purposes of Schedule 3. These Commonwealth laws are intended to be all-encompassing for occupational health and safety at a facility.

 

Schedule 3 applies only in relation to a “facility”. The State and Northern Territory laws are therefore disapplied by this clause only in relation to facilities, activities at facilities and persons at or near facilities.  State and Northern Territory occupational health and safety laws will continue to apply in Commonwealth waters, by virtue of the operation of clause 59, by its own force, by force of the Ashmore and Cartier Islands Acceptance Act or by force of the Crimes at Sea Act, in relation to any other vessels, structures and persons in Commonwealth waters for a purpose related to activities to which Chapters 2 and 4 of the proposed Act apply. 

 

This clause deals expressly with the different means by which State and Northern Territory occupational health and safety laws might otherwise apply, or be applied, to facilities and persons at or near facilities in the offshore area of a State or Territory.

Subclause (1) provides that regulations could be made providing that State or Northern Territory occupational health and safety laws specified in the regulations are not applied to facilities, or persons at or near facilities, located in State, Northern Territory or Ashmore and Cartier Islands' offshore areas.

 

Subclause (3) provides that State or Northern Territory occupational health and safety laws prescribed under subclause (1) do not apply of their own force in relation to facilities, or persons at or near facilities, located in the offshore area of that State or Territory. This provision is necessary because there is the possibility that State or Northern Territory laws may have been written to apply extra-territorially, and might apply in that way in the Commonwealth marine jurisdiction even if clause 59 is disapplied in relation to them.

 

Subclause (4) provides that State or Northern Territory laws referred to in subclauses 2(1) and (2) of Schedule 1 of the Crimes at Sea Act 2000 do not apply to facilities, or persons at or near facilities, located in State, Northern Territory, Ashmore or Cartier Islands' offshore areas. Subclauses 2(1) and (2) of Schedule 1 of the Crimes at Sea Act 2000 relate to "substantive criminal laws." 

 

Subclause (4) is necessary because the cooperative scheme set out in Schedule 1 to the Crimes at Sea Act 2000 provides that the “substantive criminal law” of a State or the Northern Territory applies, in net effect, to each offshore area. Many provisions of State and Northern Territory occupational health and safety laws create offences, and would therefore be applied offshore by the Crimes at Sea legislation even if clause 59 is disapplied in relation to them.

 

Subclause (6) is intended to ensure disapplication of the offence provisions of the State and Northern Territory “mirror” occupational health and safety laws that are enacted in State and Northern Territory Petroleum (Submerged Lands) Acts in relation to State and Territory coastal waters. This is despite subclauses 2(1) and (2) of Schedule 1 to the Crimes at Sea Act 2000, which might otherwise have the effect of applying these provisions to the offshore area.

 

Equivalent provision in the PSL Act: subsections 9(2A), (2B), (2C), (2D), (2E), (2F), (2H), (2I), (11) and (12)

Policy change: that, in each instance in the clause where it is mentioned, the disapplication in relation to a person near a facility is effective to the extent to which the person is affected by the facility or activities that take place at the facility

 

Clause 69 - Gas pipelines access legislation

 

The expressions “Gas Pipelines Access Law” and “gas pipelines access legislation” in this clause refer to the co-operative legislative arrangement concluded in 1997-98 by the Commonwealth and all States and Territories. 

 

The “Gas Pipelines Access Law” are the provisions in Schedules 1 and 2 (as amended and in force for the time being) of the Gas Pipelines Access (South Australia) Act 1997 [SA].  This law is applied in the Commonwealth, States (other than Western Australia which enacted substantially corresponding law) and Territories, and the application law and resulting legislation (including Western Australia’s legislation) is “gas pipelines access legislation”. 

 

Sections 9 and 11 of the Petroleum (Submerged Lands) Act applied the Gas Pipelines Access (Commonwealth) Act 1998 in the offshore areas of States and the Northern Territory prior to their gas pipelines access legislation commencing. While all States and the Northern Territory now have their own gas pipelines access legislation, this clause would provide a fall-back if a State’s or the Northern Territory’s gas pipelines access legislation ceased.

 

This clause needs to be read in conjunction with section 9 of the Gas Pipelines Access (Commonwealth) Act 1998 , as amended by the Offshore Petroleum (Repeals and Consequential Amendments) Bill. That section, as amended, would provide:

 

“If this Act applies in the offshore area in respect of a State or of the Northern Territory because of the operation of section 69 of the Offshore Petroleum Act 2005 :

 

(a) the Gas Pipelines Access Law also applies in that offshore area as a law of the Commonwealth; and

 

(b) as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Law.”

 

This clause has effect subject to clause 192, which provides that the Third Party Gas Access Code, which is Schedule 2 of the Gas Pipelines Access (South Australia) Act (or its Western Australian equivalent), cannot apply if the pipeline licensee has been directed to be a common carrier under that clause.

 

Equivalent provision in the PSL Act: subsections 9(1A) and (1B) and 11(1A) and (1B) 

 

Clause 70 - No limits on ordinary operation of law

 

This clause is intended to ensure that nothing in the operation of other laws that is unrelated to covering the types of issues that are relevant to petroleum exploration and development is inadvertently struck down because of the provisions in this Part.

 

Equivalent provision in the PSL Act: subsection 9(7) and 11(7)

 

Clause 71 - Jurisdiction of State courts

 

This clause provides that all State courts have federal jurisdiction to hear cases in respect of the applied provisions, which, by that application, have acquired status as Commonwealth law.

 

Subclause (2) refers to the limitations that apply to a State court, for example specifications about the kinds of cases that may be heard by a magistrate’s court compared with those heard by a district court. These limitations will apply despite federal jurisdiction and the extended geographic coverage of a State law by virtue of its application under clause 59.

 

The equivalent provision in the Petroleum (Submerged Lands) Act enables the Commonwealth to intervene by making regulations prescribing exceptions to this investiture of jurisdiction in relation to a given court or class or courts. No reason has been identified as to why there should be such a power and no equivalent wording is therefore included in this clause.

 

Equivalent provision in the PSL Act: section 10

Policy change : omission of Commonwealth power to make regulations prescribing exceptions in relation to the investiture of jurisdiction in relation to a given court or class or courts  

 

Clause 72 - Jurisdiction of Territory courts

 

This clause sets out provisions similar to those in clause 71 in relation to Territory courts but, replicating the Petroleum (Submerged Lands) Act, omits any Commonwealth power to make regulations disapplying the conferral of jurisdiction on any particular Territory court.

 

Equivalent provision in the PSL Act: section 12

 

Clause 73 - Validation of certain acts

 

This clause envisages a situation in which a regulatory act is performed, or a court decision is made, under the apparent authority of a State or Territory law and it is found that there is no authority under that law for taking that action, but the same action could have been taken under the applied provisions, which have become Commonwealth law. Then, to avoid beginning the process again, this clause deems the action, as far as it has been taken, to have been taken under the Commonwealth law. This enables the procedure to be completed without interruption.

 

Equivalent provision in the PSL Act:   section 155

 

Clause 74 - Certain provisions not affected by this Part

 

This clause addresses the risk that might otherwise exist that, if a State or Territory law is applied in a particular offshore area, it might conflict with some provision in the proposed Act that forms part of the regulation of activities relating to petroleum, procedures for registration, administration, information management, datum provisions or other miscellaneous provisions. This clause provides that all these segments of the proposed Act apply notwithstanding anything brought about by

Part 1.4.

 

Two inadvertent omissions made in recent amendments to the Petroleum (Submerged Lands) Act are also corrected in this clause.

 

Equivalent provision in the PSL Act: section 13

Technical change: indirect reference to the National Offshore Petroleum Safety Authority provisions, which form part of Chapter 4 and which have effect despite anything in Part 1.4

Policy changes: the mention of the datum provisions (Division 2 of Part 1.2) and the inclusion of the information provisions (Chapter 5), the equivalents of which were, until 2000 or 2001, part of Parts III and IV of the Petroleum (Submerged Lands) Act but were inadvertently omitted as part of this provision when replacement segments were inserted into the Act at that time

 

Chapter 2 - Regulation of activities relating to petroleum

Part 2.1 Introduction

Clause 75 - Simplified outline

 

This clause gives a summary of Chapter 2 covering the regulation of activities relating to petroleum. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

Part 2.2 Exploration permits for petroleum

DIVISION 1 GENERAL PROVISIONS

Clause 76 - Simplified outline

 

This clause gives a summary of Part 2.2 covering exploration permits. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Clause 77 - Prohibition of unauthorised exploration for petroleum in offshore area

 

This clause makes it mandatory for a person or company to have authority under this Act before that person or company explores for petroleum in areas forming part of the Commonwealth marine jurisdiction. If the regulations under the proposed Act impose further requirements before exploration may proceed, those requirements must also be met.

 

As set out in clause 15, exploration includes the carrying out of seismic and other surveys, whether by the exploration permittee or by a company (operating under a special prospecting authority) which aims to sell the survey results to petroleum explorers. Exploration could also be authorised under the proposed Act by a retention lease, production licence, access authority, or scientific investigation consent. This is referred to in subclause (2) by the words “otherwise authorised or required by or under this Act.” The notion that exploration could be “required” refers primarily to the fact that something connected with exploration might be required. For example, if the Designated Authority issues a direction to a permittee under clause 407 to collect a core, cutting or sample from the seabed, the permittee is then required to perform an act that amounts to exploration. The permittee can also be said to be subject to a requirement imposed by and under the proposed Act. 

 

Section 4D of the Crimes Act 1914 provides that the penalty shown is the maximum penalty. Imprisonment penalties may be converted to pecuniary penalties.  This is provided for in section 4B of the Crimes Act.

 

Subsection 4B(3) of the Crimes Act provides: “Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence.”

 

The fact that the defendant bears an evidential burden in relation to subclause (2) means that the person or company has the burden of adducing or pointing to evidence that suggests a reasonable possibility that the defendant is authorised to explore for petroleum in the area concerned. The notion that the defendant bears an evidential burden under section 19 of the Petroleum (Submerged Lands) Act has been deduced by legal interpretation of the section, even though it does not explicitly say so.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in PSL Act: subsection 19(1)

Policy changes: that exploration could be required, and could be required by or under the proposed Act

 

Clause 78 - Rights conferred by exploration permit 

 

This clause gives the holder of an exploration permit rights to do everything required in the permit area to explore for petroleum, including surveys, the drilling of wells and the recovery of petroleum (if discovered) for appraisal purposes.

 

The rights are subject to conditions that are entered on the permit. The most usual conditions impose a work program with specific milestones to be achieved by specified dates over the term of the permit.

 

The mention in subclause (2) of these rights also being subject to “this Act and the regulations” refers to a number of other processes that need to be gone through before actual activity may occur. In the case of drilling, this would include the submission of an environment management plan and the obtaining of approval to drill the particular well. It also refers to other provisions such as the fact that the permit could be suspended, cancelled, revoked, surrendered or simply expire. (The difference between expiry, cancellation and revocation is that expiry implies the life of the permit ends merely through the passage of a certain amount of time, cancellation is a considered act of bringing the permit to an end before the expiry date because of some infringement of the Act or regulations, and revocation is the occurrence of an event that brings the permit to an end before the expiry date without there being any infringement of the Act or regulations.)

 

Equivalent provision in PSL Act: section 28

Policy change: the express right to recover petroleum in the permit area on an appraisal basis

 

Clause 79 - Conditions of exploration permits 

 

The power to insert conditions in exploration permits exists to ensure that the individual characteristics of each exploration project are able to be dealt with in a way that satisfies the regulator and is accepted by the permittee. Thus the conditions typically impose a specific work program to be carried out over the term of the permit, especially for permits granted under the work program bidding system, where the amount, timing and type of work proposed is the basis for awarding permits. This is expressly provided for under subclause (5). The number of wells to be drilled and the amount of seismic surveying and other work that may be written into these conditions may differ from one permit to the next.

 

Permit conditions could also include temporal and spatial restrictions to address issues such as avoiding conflict with navigation in a shipping lane or exclusion from a marine park area (see clause 243). While the Joint Authority may grant a permit subject to whatever conditions the Joint Authority thinks appropriate, the conditions must conform to the general scope and purposes of the Act.

 

As it may not be possible to define precisely all permit obligations at the outset, paragraph (5)(c) provides for flexibility through the use of directions concerning permit conditions. This will enable the conditions to recognise changed circumstances which may arise in the course of petroleum exploration operations.

 

A permit to which the Royalty Act applies is deemed to be subject to a condition that the permittee must comply with the Royalty Act. This means that a permittee who is bound by the Royalty Act and infringes that Act has breached the conditions of the permit and could on those grounds be refused a renewal of the permit. This is in addition to the possibility of cancellation of the permit during its term. 

 

As the holder of a cash-bid permit has secured the permit through a tender process, that permittee is not to be subjected to a work program condition. It is assumed that the permittee will be commercially motivated to recoup returns from the investment the permittee has made and that any regulatory obligation to do so would be superfluous.

 

Equivalent provision in PSL Act: section 33

Technical change: substitution of “whatever conditions the Joint Authority thinks appropriate” for “such conditions as the Joint Authority thinks fit”; mention that the specific examples of conditions in subclause (5) do not limit the generality of the condition setting power as set out in subclause (1)

Policy change: the references in paragraph (5)(a) to “12 months or longer” instead of “one or more years”

 

Clause 80 - Duration of exploration permit

 

This clause sets out the basic provisions about the term of an exploration permit, but, in subclause (2), provides that the term could be longer or shorter depending on whether various scenarios dealt with in other parts of the Bill arise. These are indicated by the notes at the end of the clause. The initial term of a permit is 6 years. With a permit granted for the first time under the proposed Act, there would be the possibility of two 5 year renewals, ie a total permit life of 16 years, provided there is compliance with other provisions of the Act and regulations.  The area covered by a permit normally decreases at each renewal (clauses 100, 101 and 102 refer).

 

Equivalent provision in PSL Act: subsection 29(1)

 

Clause 81 - Extension of exploration permit if permittee applies for retention lease or production licence

 

For a permittee to apply for a retention lease or a production licence over a block or blocks, a location needs to have been declared in relation to the block(s). This is dealt with in Part 2.2 Division 6. Under the provisions about renewal of a permit set out in Part 2.2 Division 5, if a retention lease or production licence has been applied for and the permit is about to expire, it has generally been possible to renew the permit, including the location block(s) in the renewed permit area, and thereby avoid any difficulties with that application process. However, there are scenarios under which a permit cannot be further renewed. For example, a permit granted in respect of an area gazetted for competitive bidding since 2003 can be renewed no more than twice.  This clause sets out the provisions that will apply if a permittee whose permit cannot be renewed applies for a retention lease or a production licence and that title has not been granted at the time when the permit would expire. The term of the permit is then extended as set out in the table in subclause (1).

 

Subclause (2) provides that this extension is subject to Chapter 2. This means that the permit could, for example, be surrendered or cancelled, meaning it could come to an end earlier than the table indicates.

 

Equivalent provision in PSL Act: subsection 29(2)

Technical change : that the extension is subject to Chapter 2 but despite clause 80

 

DIVISION 2 OBTAINING A WORK-BID EXPLORATION PERMIT

Clause 82 - Application for work-bid exploration permit—advertising of blocks

 

This clause sets out the procedure for advertising areas for competitive bidding under work program criteria and the requirements that apply to making applications in response to such an invitation. While subclause (2) refers to another procedure for securing applicants for vacant areas, ie cash bidding, tendering under work program bidding has been, for many years, the normal way in which companies have obtained exploration permits.

 

Subclause (4) sets the maximum area of a permit at 400 blocks, each normally 5 minutes by 5 minutes in size. These tenements are large by international standards, reflecting the size and relative lack of exploration maturity of Australia’s continental shelf. On the other hand, provided there is adherence to the rules under subclauses (5), (6) and (8), it is not compulsory for an applicant to apply for all blocks offered in a particular set of blocks. There is no statutory limitation on the number of permits any particular operator may hold.

 

Equivalent provisions in PSL Act: section 20, paragraphs 21(1)(c) and (d), subsections 21(2) and (3)

 

Clause 83 - Grant of work-bid exploration permit - offer document

 

This clause provides that the decision of the Joint Authority about any work program permit application is to be conveyed to the applicant in writing.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Equivalent provision in PSL Act: subsection 22(1).

Policy change : that the Joint Authority must give an applicant written notice of a refusal decision as much as of an approval decision

 

Clause 84 - Ranking of multiple applicants for work-bid exploration permit

 

This clause enables the Joint Authority, using published selection criteria, to rank bids for exploration permits, exclude undeserving bids from the ranking and, if two or more parties have tendered the best and equal work program bids, invite them to submit supplementary bids as a further basis for the selection of a successful applicant. The ranking also enables the field of applicants to be revisited if a permit offer is not taken up. These provisions ensure that there is no need in these situations for the Joint Authority to recommence the entire process by issuing a new public invitation for permit applications.

 

In accordance with current drafting practice, subclause (9) makes clear that the selection criteria are not a legislative instrument in terms of the Legislative Instruments Act 2003 .

 

Equivalent provision in PSL Act: section 21A.

Technical change: that the Joint Authority may rank the applicants in the order in which, in the Joint Authority’s opinion, they are most deserving of a permit

 

Clause 85 - Grant of work-bid exploration permit

 

This clause ensures that, once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the permit provided the applicant requests the permit within 30 to 60 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224). This would even preclude the Joint Authority from attempting to renege on the offer by seeking to reserve the blocks under clause 242. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the permit as soon as practicable.

 

Equivalent provision in PSL Act: subsection 22(4)

 

Clause 86 - Withdrawal of application

 

This clause provides for permit applicants to withdraw their applications before the grant of the permit and deals with the implications of a withdrawal by a subset of the parties to a joint application. In the latter case, the application remains in effect for the remaining party or parties, but only if all parties to the application agree that those parties may withdraw. Assuming this is so, the remaining party or parties do not benefit from any offer of a permit that may already have been made, but the application is reassessed in competition with any other applications, as the change in the composition of the applicant group may be relevant to how the bid is assessed. However, if one or more parties withdraw from a joint application without the agreement of all the other parties, the application (assuming it leads to an offer of a permit) will lapse because not all the parties who made the application will be available to sign the written notice requesting the grant of the permit.

 

Equivalent provision in PSL Act: sections 22AA and 22AB

 

Clause 87 - Effect of withdrawal or lapse of application

 

This clause deals with the implications of permit applications being withdrawn before the grant of the permit and of applications lapsing (ie an offer not being taken up within the specified period). The application is removed from any assessment or offer process and the Joint Authority is required to continue assessing any remaining applications. However, if the Joint Authority originally excluded from the ranking an application on the grounds that, in the Joint Authority’s opinion, it was not deserving of the grant of the exploration permit (subclause 84(5) refers), that application does not need to be reassessed or again refused.

 

Equivalent provision in PSL Act: section 22AC

Policy change:  exclusion from reconsideration of an application ruled not deserving of a permit under subclause 84(5)

 

DIVISION 3 OBTAINING A CASH-BID EXPLORATION PERMIT

Clause 88 - Application for cash-bid exploration permit 

 

This clause sets out the invitation and application procedure for cash-bid permits. Provision for cash-bidding in awarding exploration permits in highly prospective areas was inserted into the legislation in 1985 to promote the more efficient allocation of these areas and improve the efficiency with which these permits are administered. There are therefore some differences between provisions applying to cash-bid and work-bid permits. Specifically, under subclause (3), a cash-bid permit may not be renewable and advice about this needs to be included the notice inviting bids. Under subclause (5), an application must cover all the advertised blocks.

 

Under subclause (6), details need to be provided about the technical qualifications of the applicant and of the applicant’s employees, the technical advice available to the applicant, and the financial resources available to the applicant. This information will be used by the Joint Authority to determine whether the applicant could viably carry on an exploration operation. If there is doubt about this, the Joint Authority may reject the bid under the following two clauses regardless of the cash amount tendered.

 

Equivalent provisions in PSL Act: subsections 22A(1), (2), (3) and (4) and paragraphs 22A(5)(a), (d), (e) and (f) 

Policy change: deletion of requirement to use an approved form

 

Clause 89 - Grant of cash-bid exploration permit - only one application

 

This clause sets out the procedure if only one cash-bid permit application is received in response to an invitation. Then it is up to the Joint Authority to determine, on the basis of the criteria publicised under paragraph 88(3)(b), information provided in the application and any other information the Designated Authority seeks and obtains from the applicant, whether to grant the permit or not. The decision is to be conveyed to the applicant in writing.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Equivalent provision in PSL Act: subsection 22B(1).

 

Clause 90 - Grant of cash-bid exploration permit - two or more applications

 

This clause sets out the procedure if two or more cash-bid permit applications are received in response to an invitation. Firstly, the Joint Authority has to determine, on the basis of the criteria publicised under paragraph 88(3)(b), information provided in the applications and any other information the Designated Authority seeks and obtains from the applicants, whether any or all of the applications should be rejected. Only after this is the level of the cash bids looked at, and only in the case of the unrejected applications. If there is one highest bidder, that applicant is to be given an offer document for the permit. If there are two or more equal highest bidders, the Joint Authority must determine, on the basis of the criteria and information referred to above, which of those applicants should be offered the permit. If an offer document is given and the applicant fails to take up the offer, ie the application lapses, then the remaining unrejected application(s) may be reassessed for the award of the permit. 

 

Equivalent provisions in PSL Act: subsections 22B(2) and (7).

Policy change: that the Joint Authority must give an applicant written notice of a refusal decision as much as of an approval decision

 

Clause 91 - Grant of cash-bid exploration permit

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the permit, provided the applicant requests the permit, and pays the cash bid amount, within 30 days of the offer document being given to the applicant. This would even preclude the Joint Authority from attempting to renege on the offer by seeking to reserve the block(s) under clause 242. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the permit as soon as practicable.

 

Equivalent provision in PSL Act: subsection 22B(5)

 

Clause 92 - Extension of cash-bid exploration permit

 

This clause addresses issues related to the fact that a cash-bid permit, being either a 6 year title or, at best, renewable only once, could, in the ordinary course of events, expire before all the steps to gaining a retention lease or production licence over a petroleum discovery had been completed.

 

This clause identifies various scenarios and process stages following on from the discovery of petroleum in a cash-bid permit area where the permit may continue in force past the expiry to a date that depends on the individual case, as set out in subclauses (2) and (3). If none of the processes referred to in the clause commence before the expiry date, the permit will come to an end on the expiry date.

 

Equivalent provision in PSL Act: section 22C

 

DIVISION 4 OBTAINING A SPECIAL EXPLORATION PERMIT OVER A SURRENDERED BLOCK OR CERTAIN OTHER BLOCKS

Clause 93 - Application for a special exploration permit over a surrendered block or certain other blocks

 

This clause provides for the granting of special exploration permits. These are broadly intended to enable continuation of exploration in blocks in which petroleum is known or presumed to occur but which have ceased to be covered by an exploration permit, retention lease or production licence at a time when any petroleum resource in the block has not been developed or fully exploited. This could happen in the case of a surrender, cancellation, revocation or termination (as applicable - see the notes to clauses 78 and 140 for an explanation of these terms) of a permit with a declared location, a lease or a licence over the block in question.

 

Applying for a special exploration permit requires both a cash bid and a work bid. The application must also cover all the blocks advertised in the Gazette notice inviting applications. Unlike the situation applying with an ordinary cash-bid permit, 10% of the cash bid is to accompany the application. This is refunded if the applicant is not granted the permit. However, to discourage frivolous applications, there is no refund if an applicant who is offered the special exploration permit fails to take up the offer. In other respects, the application procedure is as for work-bid permits. 

 

Equivalent provisions in PSL Act: subsection 23(1), paragraphs 23(4)(c) and (d) and section 24

Policy change: that a special exploration permit may be sought for blocks that have been covered by a terminated production licence; requirement for an application to cover all the blocks for which bids have been invited

 

Clause 94 - Grant of special exploration permit—only one application

 

This clause sets out the procedure if only one special exploration permit application is received in response to an invitation. Then it is up to the Joint Authority to determine, on the basis of information provided in the application and any other information the Designated Authority  seeks and obtains from the applicant, whether to grant the permit or not. The decision is to be conveyed to the applicant in writing.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Equivalent provision in PSL Act: subsection 25(1)

 

Clause 95 - Grant of special exploration permit— 2 or more applications

 

This clause sets out the procedure if two or more special exploration permit applications are received in response to an invitation. Firstly, the Joint Authority has to determine, on the basis of information provided in the applications and any other information the Designated Authority seeks and obtains from the applicants, whether any or all of the applications should be rejected. Only after this is the level of the cash bids looked at, and only in the case of the unrejected applications. If there is one highest bidder, that applicant is to be given an offer document for the permit. If there are two or more equal highest bidders, the Joint Authority must determine, on the basis of the information referred to above, which of those applicants should be offered the permit. If an offer document is given and the applicant fails to take up the offer or to pay the required amount, ie the application lapses, then the remaining unrejected applications may be reassessed for the award of the permit. 

 

Equivalent provision in PSL Act: subsection 25(2)

Policy change: that the Joint Authority must give an applicant written notice of a refusal decision as much as of an approval decision

 



Clause 96 - Grant of special exploration permit

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the special exploration permit, provided the applicant requests the permit within 90 to 180 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224), and pays the balance of the cash amount tendered within the same period. This would even preclude the Joint Authority from attempting to renege on the offer by seeking to reserve the block(s) under clause 242. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the special exploration permit as soon as practicable.

 

Equivalent provision in PSL Act: section 27

 

DIVISION 5 RENEWAL OF EXPLORATION PERMITS

 

Clause 97 - Application for renewal of exploration permit

 

This clause delineates the rights of the holder of an exploration permit to apply for renewal of the permit by pointing out the other provisions which impact on whether and how many times a renewal may be sought. The basic provisions about the application procedure set out here are complemented by Part 2.10.

 

This clause also provides for the continuation in force of the permit past the expiry date (if necessary) until the application is resolved one way or another. If the Joint Authority refuses to grant the renewal, the permit ceases to have effect at that time (if it is past the expiry date). If the Joint Authority offers the renewal and the applicant accepts it, the existing permit continues in force until the new one is granted. If the Joint Authority offers the renewal and the applicant does not take it up, the permit ceases to have effect when the application is deemed to have lapsed, ie 30 days after the offer document was given to the applicant. 

 

Equivalent provisions in PSL Act: subsections 30(1), (2) and (3) and 32(8)

Technical change: omission from subclause (4) of an equivalent to the phrase: “for reasons that the Designated Authority thinks sufficient” that appears in subsection 30(3)

Policy change: conversion of “3 months” to “90 days”

 

Clause 98 - Non-renewable cash-bid exploration permits

 

This clause makes it clear that, if the notice inviting applications for a cash-bid permit stated that the permit would not be renewable, then the holder is not permitted to even apply for a renewal of the permit. Any such application would be invalid.

 

Equivalent provision in PSL Act: paragraph 30(1A)(a)

 



Clause 99 - Limit on renewal of cash-bid exploration permits

 

This clause makes it clear that a cash bid permit may be renewed at most once, and, if such a renewal has already been granted, then the holder is not permitted to even apply for another renewal. Any such application would be invalid.

 

Equivalent provision in PSL Act: paragraph 30(1A)(b)

 

Clause 100 - Limits on renewal of work-bid exploration permits and special exploration permits

 

This clause refers to the fact that exploration permit renewals are generally granted over a smaller area, for example a half, of the area of the expired permit, eventually leading to a point where the permit can no longer be renewed, and that there may additionally be a cap on the number of possible renewals.

 

This clause addresses the fact that there are 3 different policies that could be applied to the renewal of a permit, depending on when the permit was first granted. This

multiple arrangement reflects a greater emphasis in the early days of existence of the Petroleum (Submerged Lands) Act to giving permittees maximum time to explore their areas, and a different emphasis in more recent times, namely to encouraging the recycling of seabed areas to other parties. 

 

The earliest policy, which ended as far as new permit applications was concerned on 7  March 2000, maximised both opportunities for permit renewal and block retention under those renewals. This policy has been preserved intact for permittees whose original permit was granted before 7 March 2000, but only for one renewal past that date, and then only if the individual circumstances allow the permittee to benefit from it. This is provided for in item 3 of the table in subclause (2). For this class of permittees the number of blocks that could be included in the renewed permit area will be determined by the “modified” halving rules set out in clause 102. These permittees are generally able to obtain more than two renewals of their permit. 

 

A more recent policy applies to permits granted for the first time between 7 March 2000 and 31 December 2002 inclusive. This is provided for in item 4 of the table in subclause (2). For reasons of achieving an administratively tidy transition, any permittee whose work-bid permit was granted on or after 1 January 2003 as a result of an application made in response to an invitation published before 2003 is also covered by this policy. These permits can likewise generally be renewed more than twice and the number of blocks that could be included in the renewed permit area will be determined by the “standard” halving rules set out in clause 101.

 

The most recent policy applying generally to work-bid and special exploration permits granted for the first time on or after 1 January 2003 is that no more than two renewals of a permit may be granted and the number of blocks that could be included in the renewed permit area will be determined by the “standard” halving rules set out in clause 101. This is provided for in items 1 and 2 of the table in subclause (2).

 

In the table in subclause (2), item 2 shows the same entries in columns 3, 4, and 5 as item 1, but it is a separate item because the exception that applies to a work-bid permit granted as the result of a pre-2003 invitation for bids does not apply to special exploration permits. This is because no invitations for bids for special exploration permits were gazetted in 2002. 

 

Equivalent provisions in PSL Act: sections 31 and 31A

 

Clause 101 - Standard halving rules

 

When a permittee applies to renew a permit to which the standard halving rules apply, the permittee is normally obliged to omit from the renewal application about half the blocks held under the existing permit, but any location (ie discovery) blocks can be held in addition to what the halving rules allow. As set out in subclauses (6) to (9), the rule has an inbuilt adjustment when the number of blocks in a permit area falls to 6 or less so as to give the permittee maximum opportunity to explore the remaining small number of blocks.

 

As an example, assuming item 4 of the table in subclause 100(2) applies, if the holder of an 80 block permit first granted between 7 March 2000 and 1 January 2003

chooses to apply for every available renewal and is on each occasion successful, the permit will be renewed 6 times and the number of blocks held under the renewed permits will follow the pattern: 40, 20, 10, 5, 4, 4. A renewed permit covering 2 or 3 blocks, as envisaged in subclause (8), could become a reality under this scenario if the permittee chose to surrender one or two blocks during the fifth renewal term.

 

If item 1 or 2 of the table in subclause 100(2) applies, and the holder of an 80 block permit chooses to apply for every renewal available and is on each occasion successful, the permit will be renewed 2 times and the number of blocks held under the renewed permits will be respectively 40 and 20.

 

Equivalent provision in PSL Act: section 31

 

Clause 102 - Modified halving rules

 

This clause is a vestige of the provisions that applied to permit renewals before 7 March 2000. While the halving rule had to be rigorously applied to renewals when the number of blocks contemplated for renewal was above 16, the Joint Authority had a discretion to intervene when the halving rule would have required a renewed permit to cover a number of blocks less than 16. The modifying element is that the Joint Authority could fix the number of blocks covered by the renewal at some number above or below what the halving rule would allow, as long as that number was no higher than 16. Incidentally, this meant that, unlike what the standard halving rules now allow, a one block permit could be renewed any number of times if the Joint Authority was inclined to grant such a renewal.

 

In practice, this meant that, in 2000, there were in existence a number of permits in respect of 16 blocks because of a discretionary decision by the Joint Authority and some of them had in fact been granted over 16 blocks for more than one renewal term. When the Act was amended that year, it was understood that the forward exploration plans of existing permittees had been formulated within the parameters of the abovementioned renewal policy. It was therefore considered prudent and fair to extend the application of that policy for those permittees for one more renewal on or after 7 March 2000. 

 

This policy is set out in subclause (3). Given that this provision can be availed of only for the first renewal of one of these permits on or after the above date, not all pre- March 2000 permit holders will gain any benefit from it. This is because not all those permit areas are of such a size that application of the halving rule in relation to the first renewal application on or after 7 March 2000 would require a renewed permit to cover less than 16 blocks.

 

Equivalent provision in PSL Act: section 31 plus the saving provision set out in item 32 of Schedule 1 to the Petroleum (Submerged Lands) Legislation Amendment Act (No. 1) 2000

 

Clause 103 - Renewal of exploration permit - offer document

 

This clause ensures that, within the renewal rules set out in the preceding clauses, a permittee cannot be denied an offer of renewal of the permit if the permittee has

complied with the permit conditions and with the proposed Act and regulations to the extent that they place obligations on the permittee as a permittee. If the term of the expiring permit straddles the commencement date of the proposed Act, clauses 4, 5 and 6 of Schedule 6 provide that compliance with the current Act and regulations is also relevant.

 

If the permittee has not complied with the permit conditions and with the proposed Act and regulations but the Joint Authority is satisfied that there are sufficient grounds to justify the granting of the renewal of the permit, this clause provides that the Joint Authority may offer the permittee a renewal. However, it is not obliged to do so.

 

Equivalent provision in PSL Act: subsection 32(1)

Policy change : requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to warrant renewal of a permit in a situation of non-compliance

 

Clause 104 - Refusal to renew exploration permit

 

This clause refers to a situation where a permittee has not complied with the permit conditions or with the proposed Act or regulations and the Joint Authority is not satisfied that there are sufficient grounds to justify the granting of a renewal of the permit. Then the Joint Authority is obliged to enter into a consultation procedure as set out in clause 226, possibly involving other parties as well as the permittee, so that information may be brought forward that may cause the Joint Authority to come to a different view. If that procedure does not yield information that causes the Joint Authority to come to a different view, this clause provides that the Joint Authority must refuse to renew the permit and advise the applicant in writing of this decision.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Equivalent provision in PSL Act: section 32(2)

Policy change : requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to enable renewal of a permit in a situation of non-compliance

 

Clause 105 - Renewal of exploration permit

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the permit renewal provided the applicant requests the permit within 30 days after the document was given to the applicant. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the renewal as soon as practicable.

 

Equivalent provision in PSL Act: subsection 32(6)

 

D IVISION 6 LOCATIONS

 

Clause 106 - Simplified outline

 

This clause gives a summary of Part 2.2 Division 6 covering locations. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Clause 107 - Nomination of blocks as a location

 

A location provides the mechanism for transition from an exploration permit to a retention lease or production licence following the discovery of petroleum. It is not a title in itself; rather, it is a means of setting aside and identifying the block or blocks necessary to cover the discovery from which the permittee may select the blocks to form a lease or licence area. The declaration of a location also pinpoints the date from which the application period for the lease or licence starts.

 

This clause enables the permittee to nominate a block or blocks for declaration as a location and establishes the rules for doing so. For a location to be nominated, petroleum must have been recovered, although not necessarily from within the nominating permittee’s area. It is sufficient if a petroleum pool has been identified extending into the permit area in question and an operator outside the permit area has drilled a well and recovered petroleum from the same pool.

 

Equivalent provisions in PSL Act: subsections 36(1), (2), (3), (4) and (5), section 38 

 

Clause 108 - Requirement to nominate blocks as a location

 

This clause gives the Designated Authority a power to require a permittee to nominate blocks as a location. If the permittee does not do so even when required, the Designated Authority has power to nominate the blocks of his or her own volition. This power is intended to counter the possibility of a permittee engineering an inordinate delay in progressing a significant petroleum discovery to either a retention lease application or a production licence application.

 

Equivalent provisions in PSL Act: subsections 36(6), (7), (8) and (9)

Policy changes: conversion of “3 months” and “6 months” to “90 days” and “180 days” respectively

 

Clause 109 - Declaration of location

 

This clause provides that the Designated Authority must consider the available geoscientific evidence supporting a location nomination by a permittee, and, if the Designated Authority considers there are reasonable grounds for accepting that evidence, the Designated Authority is obliged to declare the nominated block(s) as a location. If the Designated Authority is the one who has nominated the block(s), the Designated Authority is likewise obliged to formalise the declaration.

If there has been a nomination by the permittee, the declaration will come into effect on the date of its issue rather than on the date of its gazettal as provided under the Petroleum (Submerged Lands) Act. Only a copy of the declaration will be published in the Gazette . This change is intended to deal with a situation where a permittee has a need to secure a prompt declaration of a location over a block (for example for purposes of a renewal application). If the date of gazettal were significant, any inadvertent delay in the process of arranging that gazettal could be disadvantageous. However, if the Designated Authority has nominated the block(s), the declaration of the location will come into effect on gazettal, as is the case under the Petroleum (Submerged Lands) Act. 

 

Equivalent provisions in PSL Act: subsections 37(1), (2) and (7) 

Policy change: the requirement to publish a copy of the declaration in the Gazette instead of retaining a Gazette notice as the operative document

 

Clause 110 - Revocation of declaration

 

This clause allows the Designated Authority to revoke a location under a number of scenarios. If the holder of the permit over a location block requests it, the Designated Authority may revoke the location. The Designated Authority could be expected to do so if new geoscientific information gained through exploration suggests the limits of the discovery are different from those originally identified, or the discovery is assessed as being non-commercial.

 

Under the other scenarios envisaged for revocation under this clause, the requirements are imposed to ensure administrative tidiness so that blocks which revert to vacant status, and possibly then get awarded to another party, do not remain covered by any location declared during the previous titleholder’s tenure.

 

The scenario referred to in subclause (7) is slightly more complex in that the Joint Authority may reject a retention lease application on two entirely contrasting commercial viability grounds. The applicant could be ruled ineligible for the lease because the discovery is currently viable. In other words, the permittee should apply for a production licence instead of a retention lease.  The other possibility is that the applicant could be ruled ineligible for the lease because the discovery is currently unviable and unlikely to become viable within 15 years. For purposes of what is done with the location declaration, the latter hypothesis is assumed to be the reality. Therefore, the location is to be revoked and, if this revocation does not fit the permittee’s plans, ie if the permittee wants to apply for a production licence, a fresh location nomination must be made.

 

Subclause (8) refers to a situation where a production licence application has been made over a number of blocks and the application is rejected in respect of one or more, but not all, of the blocks. This would happen if the Joint Authority were not satisfied that blocks in that subset contained petroleum. As a new provision, this subclause requires the Designated Authority to then revoke the location in respect of those blocks.

 

This requirement, and the similar requirement under subclause (6), are included not only because a continuing location declaration in those cases would convey inaccurate

information to the public, but also to avoid possible inequity in the treatment of permit renewal applications. This is because location blocks create a supplementary entitlement to the number of blocks qualifying for renewal under the halving rule when a permit renewal application is being considered. If a location over a block persisted past a retention lease refusal decision or a production licence refusal decision, this could give the permittee an unwarranted advantage in the number of blocks over which the permit could be renewed.

 

The revocation of the location does not in any way affect the continuation in effect of the permit or lease over the block(s) in question for the remainder of the term of the permit or lease.

 

Under the Petroleum (Submerged Lands) Act, there has been no requirement to gazette location revocation notices where the revocation has been sought by the permittee. For uniformity, it is proposed that this situation should change, but only to the extent that a copy of the revocation document needs to be published in the Gazette.

 

The rationale for this is that, under the scenario addressed in subclause 160(1), which provides for the revocation of a permit if no production licence application has been made during the application period, the timing of a location revocation may be crucial. It is therefore desirable to avoid the situation where a chance delay in arranging gazettal might impact on the date of effect of a revocation decision. Under subclauses (1) and (2), the revocation document is the operative instrument and the date of its publication in the Gazette is intended to have no relevance for the date of revocation.

 

This policy does not change the arrangement, set out in subclauses (3), (6), (7) and (8) whereby revocation of a location in circumstances other than request by the permittee is by a Gazette notice which is effective on the date of the Gazette .

 

Equivalent provision in PSL Act: subsections 37(3) and 46(3), (4), (5) and (6)

Technical changes : deletion of a superfluous reference to a production licence or retention lease application not having lapsed that occurs in the equivalent to subclauses (4) and (5)

Policy change: publication of a copy of the revocation document in the Gazette; that upon a production licence application being rejected in respect of a block, the location is to be revoked

 

Clause 111 - Variation of declaration

 

This clause enables the Designated Authority to vary a location by adding or deleting a block or blocks to or from the location. The considerations impacting on a decision to do so would be similar to those affecting a location declaration or revocation decision.  The action may be taken in response to a request from the permittee or on the Designated Authority’s own volition. A consultation procedure applies in the latter case, which includes, for reasons of adhering to good administrative principles, a number of new steps (subparagraphs (3)(b)(ii) and (iii) and subclause (4)) which are not explicitly provided for in the Petroleum (Submerged Lands) Act. The gazettal arrangement matches the one proposed for the declaration and revocation of a location at the permittee’s request.

 

Equivalent provisions in PSL Act: subsections 37(4), (5), (6) and (7) 

Policy changes: publication of a copy of the variation document in the Gazette; requirement for inviting submissions, specifying a time limit and the requirement that the limit be at least 30 days after the notice is given

 

Part 2.3 Retention leases for petroleum

DIVISION 1 GENERAL PROVISIONS

Clause 112 - Simplified outline

 

This clause gives a summary of Part 2.3 covering retention leases. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Clause 113 - Rights conferred by retention lease 

 

This clause gives the holder of a retention lease rights to do everything required in the lease area to explore for petroleum, including seismic surveys, gravity surveys, magnetic surveys or seabed sampling, the drilling of wells and the recovery of petroleum for appraisal purposes. The rights are subject to conditions that are entered on the lease.

 

The mention in subclause (2) of these rights also being subject to “this Act and the regulations” refers to a number of other processes that need to be gone through. For example, before new drilling may occur, the lessee would need to obtain approval to drill the particular well. It also refers to other provisions such as the fact that the lease could be suspended, cancelled, surrendered or simply expire.

 

Equivalent provision in PSL Act: section 38C

Policy changes: the express right to recover petroleum in the lease area on an appraisal basis

 

Clause 114 - Conditions of retention leases

 

The power to insert conditions in retention leases exists to ensure that the individual characteristics of each exploration project are able to be dealt with in a way that satisfies the regulator and is accepted by the lessee. Thus the conditions typically impose a specific work program to be carried out over the term of the lease. This may include the drilling of appraisal wells, new wells, seismic surveying or other work, and the program may be different from one lease to the next.

 

Under subclause (5), a retention lease is subject as a matter of course to a condition that the lessee re-evaluate the commercial viability of petroleum production in the lease area when directed to do so by the Designated Authority, but no more than once during the term of the lease. However, if such a direction were given, in many cases the lessee would in practice need to carry out another re-evaluation of commercial viability towards the end of the term of the lease, as this would be required information if the lessee were to seek a renewal.

 

Lease conditions could also include temporal and spatial restrictions to address issues such as avoiding conflict with navigation in a shipping lane or exclusion from a marine park area (see clause 243). While the Joint Authority may grant a lease subject to whatever conditions the Joint Authority thinks appropriate, the conditions must conform to the general scope and purposes of the Act.

 

As it may not be possible to define precisely all lease obligations at the outset, paragraph (9)(c) provides for flexibility through the use of directions concerning lease conditions. This will enable the conditions to recognise changed circumstances which may arise in the course of petroleum exploration operations.

 

A lease to which the Royalty Act applies is deemed to be subject to a condition that the lessee must comply with the Royalty Act. This means that a lessee who is bound by the Royalty Act and infringes that Act has breached the conditions of the lease and could on those grounds be refused a renewal of the lease.  

 

Equivalent provision in PSL Act: section 38H

Technical changes: that the Joint Authority may grant a retention lease “subject to whatever conditions the Joint Authority thinks appropriate” rather than “such conditions as the Joint Authority thinks fit”; mention that the specific examples of conditions in subclause (9) do not limit the generality of the condition setting power as set out in subclause (1)

Policy change: conversion of “3 months” to “90 days”

 

Clause 115 - Duration of retention lease

 

This clause sets out the basic provisions about the term of a retention lease, but, in subclause (2), provides that the term could be longer or shorter depending on whether various scenarios dealt with in other parts of the Bill arise. These are indicated by the notes at the end of the clause.

 

Equivalent provision in PSL Act: section 38D

 

Clause 116 - Extension of retention lease if lessee applies for production licence

 

This clause sets out the provisions that will apply if a lessee applies for a production licence and that title has not been granted at the time when the lease would expire. The term of the lease is then extended as set out in the table in subclause (1).

 

Subclause (2) provides that this extension is subject to Chapter 2 but despite clause 115. This means that the lease could, for example, be surrendered or cancelled, meaning it could come to an end earlier than the table indicates.

 

Equivalent provision in PSL Act: subsection 44(5)

Policy change: that this extension of a retention lease term applies as a clear policy

 

DIVISION 2 OBTAINING A RETENTION LEASE

Subdivision A Application for retention lease by the holder of an exploration permit

Clause 117 - Application for retention lease by the holder of an exploration permit

 

This clause sets out basic provisions applicable to holders of exploration permits about applying for a retention lease. These are complemented by other provisions set out in Part 2.10.

 

The timeframe for a retention lease application, which depends on the date when a location was declared over the block(s) in question and whether and by how much the Designated Authority is prepared to extend the application period past 2 years (to a maximum 4 years), is intended to ensure that the initial evaluation of the commercial viability of the discovery is carried out without undue delay.

 

Details about the possible commercial viability of the discovery are vitally important to determining whether a retention lease should be granted. This is because a retention lease is a holding right over a block or blocks in which a petroleum resource has been discovered that is currently commercially unviable but is considered likely to become viable within the next 15 years.

 

Equivalent provisions in PSL Act: subsection 38A(1), paragraph 38A(2)(c) and subsection 38A(4)

 

Clause 118 - Grant of retention lease - offer document

 

This clause provides that one of the things about which the Joint Authority must satisfy itself before offering a retention lease is that the block(s) specified in the application contain(s) petroleum. While the Designated Authority would have concluded at the time of declaring the location that the block(s) contain(s) petroleum, requiring the Joint Authority to examine the evidence is useful in that it brings into the process the expertise of Australian Government geoscientists. It is also appropriate because the petroleum-bearing status of the block(s) may have changed since the date of the location declaration. This could happen if, for example, the petroleum pool extends into some other title area where petroleum has been recovered from the pool by another party with the result that petroleum has flowed out of the block(s) in question.

 

The second issue about which the Joint Authority must satisfy itself is that the petroleum resource is currently commercially unviable but likely to become viable within the next 15 years.

 

The Joint Authority may seek further information from the applicant about these matters, and, if it is satisfied in relation to them, this clause requires the Joint Authority to offer the applicant a retention lease and to do so in writing. This obligation exists in view of the permittee’s investment in making the discovery.

 

Equivalent provision in PSL Act: paragraphs 38B(1)(a) and (c)  

 

Clause 119 - Refusal to grant retention lease

 

This clause sets out the grounds on which a retention lease application is to be refused and provides that an application could be refused in part, ie in respect of only a subset of the blocks to which the application relates.

 

The application is to be refused if the Joint Authority is not satisfied that the block(s) contain(s) petroleum. On the other hand, if the Joint Authority believes that petroleum is present and is currently commercially viable, it must likewise refuse the application. If the Joint Authority believes that petroleum is present and is currently commercially unviable, but is not satisfied that it is likely to become viable within the next 15 years, the Joint Authority must then also refuse the application.

If two or more blocks are covered by the application, the Joint Authority can come to a different conclusion about one, or some, of them than about the other, or others, of them. The Joint Authority is then required to refuse the application only in respect of the block(s) about which the above criteria imply the application must be refused.

 

In each case, the notice of refusal is to be conveyed to the applicant in writing.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it

 

Equivalent provision in PSL Act: paragraph 38B(2)(b) and subsection 38B(2A)

 

Clause 120 - Grant of retention lease

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the retention lease provided the applicant requests the lease within 30 to 60 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224). As in every other case where there is a duty to grant a title, the Joint Authority is to grant the lease as soon as practicable.

 

Equivalent provision in PSL Act: subsection 38B(5)

 

Clause 121 - Exploration permit ceases to be in force when retention lease comes into force

 

For reasons of administrative tidiness, this clause brings the exploration permit to an end over the blocks in respect of which a retention lease has been granted. Among other things, this ensures that the lessee will not be charged two lots of annual fees.

 

Equivalent provision in PSL Act: subsection 38B(7)

 

Clause 122 - Exploration permit transferred—transferee to be treated as applicant

 

This clause covers the situation where an exploration permit is transferred (within the meaning of Chapter 3) in the period between the lodgement of a retention lease application and the grant or refusal of the retention lease. The new holder of the permit will then be treated as the applicant for all purposes. For example, the proposals for work and expenditure identified by the party who made the application will be considered to be the proposals of the new permittee and the Designated Authority may require further information from the new permittee.

 

If a retention lease is offered and the new permittee does not want to be bound by the undertakings of the previous holder of the permit, the permittee has the option of not taking up the offer by allowing the retention lease application to lapse. If the permittee takes that option, then, in most cases, a new, modified retention lease application may be lodged. The only situation where re-applying for a retention lease might be problematic would be if the relevant application period of 2 to 4 years were very near its end. If the end date were imminent, the feasibility of lodging a new retention lease application could depend on whether the Designated Authority were prepared to revoke the location over the block(s) in question, with a new location declaration to follow. Otherwise, if no new retention lease application were received by the end of the application period, the permit would be revoked in respect of the blocks included in the application.

 

Equivalent provision in PSL Act: section 38BA

 

Subdivision B—Application for retention lease by the holder of a life-of-field production licence

Clause 123 - Application for retention lease by the holder of a life-of-field production licence

 

This clause refers to the fact that production licences granted for the first time on or after 30 July 1998 provide a “life of field” term, but may be terminated if there have been no operations for the recovery of petroleum for a period of 5 years. However, if the only reason why operations in a licence area have never commenced, or have ceased, is current lack of commercial viability, it could be unfair to terminate the licence and deprive the licensee of all continuing rights in relation to the petroleum discovery. Accordingly, this clause enables a licensee facing that situation to seek a retention lease for the whole or a part of the licence area which, if granted, could be upgraded to another production licence at some later time when the resource became, or again became, commercially viable.

 

In a multiple block licence area, all blocks to which the one pool extends are deemed to be producing even if there is a well in only one of the blocks. However, it may have been determined since the discovery of the resource that one or more of the blocks in the licence area contain a discrete pool. In that situation, a retention lease could be sought over that subset of blocks. An advantage of obtaining such a retention lease would be that the annual fees payable would be far lower than those payable in respect of a production licence block. Such advantages aside, if petroleum is being produced somewhere in a production licence area, the existence of non-producing blocks within that licence area does not raise any questions about the licensee’s right to continue to retain the licence over all blocks in the licence area if the licensee so chooses.

 

This clause stipulates that the application for a retention lease by a licensee must be made within 5 years of the cessation of petroleum recovery operations. If no operations under the licence have ever been carried out in the unused area, the application must be made within 5 years of the day on which the licence was granted.

 

Equivalent provision in PSL Act: subsection 38BB(1), paragraph 38BB(2)(c) and subsection 38BB(4) 

Policy change : omission from paragraph (1)(b) of an equivalent of the erroneous reference in paragraph 38BB(1)(b) of the PSL Act to an unused area possibly covering a part of a block; omission of a mention of an approved form

 

Clause 124 - Grant of retention lease—offer document

 

This clause provides that, in considering a retention lease application from a production licensee, the only issue about which the Joint Authority must satisfy itself

is that the petroleum resource is currently commercially unviable but likely to become viable within the next 15 years.

 

To this end, the Joint Authority may seek further information from the applicant, and, if it forms this view, this clause requires the Joint Authority to offer the applicant a retention lease and to do so in writing.

 

Equivalent provisions in PSL Act: paragraphs 38BC(1)(a) and (c)

 

Clause 125 - Refusal to grant retention lease

 

This clause refers to a situation where the Joint Authority is not satisfied that the petroleum resource in the unused area is currently commercially unviable but likely to become viable within the next 15 years. Then the Joint Authority is obliged to enter into a consultation procedure as set out in clause 226, possibly involving other parties as well as the licensee. If that procedure does not yield information that causes the Joint Authority to come to a different view, this clause provides that the Joint Authority must refuse to grant the retention lease and advise the applicant in writing of this decision.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Equivalent provision in PSL Act: paragraph 38BC(2)(b)

 

Clause 126 - Grant of retention lease

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the retention lease provided the applicant requests the lease within 30 to 60 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224). As in every other case where there is a duty to grant a title, the Joint Authority is to grant the lease as soon as practicable.

 

Equivalent provision in PSL Act: subsection 38BC(5)

 

Clause 127 - Production licence ceases to be in force when retention lease comes into force

 

For reasons of administrative tidiness, this clause brings the production licence to an end in respect of the unused area. Among other things, this ensures that the lessee will not be charged two lots of annual fees.

 

Equivalent provision in PSL Act: subsection 38BC(7)

 

Clause 128 - Production licence transferred—transferee to be treated as applicant  

 

This clause covers the situation where a production licence is transferred (within the meaning of Chapter 3) in the period between the lodgement of a retention lease application and the grant or refusal of the retention lease. The new holder of the licence will then be treated as the applicant for all purposes. For example, the

proposals for work and expenditure identified by the party who made the application will be considered to be the proposals of the new licensee and the Designated Authority may require further information from the new licensee. If a retention lease is offered and the new licensee does not want to be bound by the undertakings of the previous holder of the licence, the licensee has the option of not taking up the offer, and, in most cases, of lodging a new, modified retention lease application. A new application could be made if sufficient time remains before the end of the 5 years referred to in clause 123.

 

Equivalent provision in PSL Act: section 38BD

DIVISION 3—RENEWAL OF RETENTION LEASES

 

Clause 129 - Application for renewal of retention lease

 

This clause outlines the rights of the holder of a retention lease to apply for renewal of the lease. The basic provisions about the application procedure set out here are complemented by Part 2.10.

 

This clause also provides for the continuation in force of the lease past the expiry date (if necessary) until the application is resolved one way or another. If the Joint Authority refuses to grant the renewal, the lease ceases to have effect at that time. If the Joint Authority offers the renewal and the applicant accepts it, the existing lease continues in force until the new one is granted. If the Joint Authority offers the renewal and the applicant does not take it up, the lease ceases to have effect when the application is deemed to have lapsed, ie 30 days after the offer document was given to the applicant. 

 

Subclause (6) provides that this extension of effect of the lease is subject to Chapter 2. This means that the lease could, for example, be surrendered or cancelled, meaning it could come to an end earlier than this clause indicates.

 

Equivalent provisions in PSL Act:   subsection 38F(1), paragraphs 38F(2)(b) and (c) and subsections 38F(3) and 38G(9)

Technical change : omission from subclause (3) of an equivalent to the phrase: “for reasons that the Designated Authority thinks sufficient” that appears in subsection 38F(3)

Policy change : conversion of “6 months” to “180 days”

 

Clause 130 - Renewal of retention lease—offer document

 

This clause ensures that, if the commercial viability criteria set out in clause 118 are met, a lessee cannot be denied an offer of renewal of the lease if the lessee has complied with the lease conditions and with the proposed Act and regulations to the extent that they place obligations on the lessee as a lessee. If the term of the expiring lease straddles the commencement date of the proposed Act, Schedule 6 clauses 4, 5 and 6 provide that compliance with the current Act and regulations is also relevant.   If the lessee has not complied with the lease conditions and with the proposed Act and regulations but the Joint Authority is satisfied that the commercial viability criteria are met and there are sufficient grounds to justify the granting of the renewal of the lease,

this clause provides that the Joint Authority may offer the lessee a renewal. However, it is not obliged to do so.

 

Equivalent provision in PSL Act: paragraphs 38G(1)(a), (c), (d) and (e)

Policy change : requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to warrant renewal of a lease in a situation of non-compliance

 

Clause 131 - Refusal to renew retention lease

 

This clause sets out the circumstances in which a retention lease renewal application must be refused. If that appears to be the appropriate decision, the Joint Authority is obliged to enter into a consultation procedure as set out in clause 226, possibly involving other parties as well as the lessee. If that procedure does not yield information that causes the Joint Authority to come to a different view, the Joint Authority must refuse to renew the lease and advise the applicant in writing of this decision.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

A special provision applies if the basis of the refusal is the current commercial viability of the discovery. In that case, the existing retention lease usually continues in force past the expiry date. If the lessee does not apply for a production licence, the lease continues in force for 12 months from the date of the notice of refusal of the lease renewal. If the lessee applies for a production licence and the application is refused, the lease continues in force to the date of that refusal. If the lessee applies for a production licence and the Joint Authority gives the lessee an offer document for the licence but the lessee does not take up the offer, the lease continues in force for 90 to 180 days after the date of the offer document (the detailed rule about the timeframe is set out in clause 224). If the lessee does take up the offer, the lease continues in force until the production licence is granted.

 

Subclause (8) provides that this extension is subject to Chapter 2. This means that the lease could, for example, be surrendered or cancelled, meaning it could come to an end earlier than this clause indicates.

 

Equivalent provision in PSL Act: paragraphs 38G(2)(b) and (c) and subsections 38G(5) and (10)

Policy change : requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to enable renewal of a lease in a situation of non-compliance

 

Clause 132 - Renewal of retention lease

 

This clause ensures that once the Joint Authority has given an offer document to an applicant, the Joint Authority cannot renege on granting the renewal of the retention lease provided the applicant requests the lease within 30 days of the offer document being given to the applicant. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the renewal as soon as practicable.

 

Equivalent provision in PSL Act: subsection 38G(7)

 

DIVISION 4 REVOCATION OF RETENTION LEASES

Clause 133 - Notice of proposal to revoke retention lease

 

This clause refers to the provisions of subclause 114(5) which provides that a retention lease is subject to a condition that, if the Designated Authority gives the lessee a written notice requesting the lessee to re-evaluate the commercial viability of petroleum production in the lease area and inform the Designated Authority in writing of the results of the re-evaluation, the lessee must comply as set out in that subclause.

 

If the re-evaluation demonstrates that the petroleum discovery is commercially viable, the lessee may lodge a production licence application for the area. This clause sets out the course of action open to the Joint Authority if the lessee does not do so.

 

The notice that the Joint Authority may give the lessee and other parties under subclause (2) cannot include any information about the lease other than what is set out in paragraph (2)(a). The Joint Authority could not divulge anything about the re-evaluation of commercial viability or its results.

 

Equivalent provision in the PSL Act: subsection 38E(1)

Policy changes: conversion of “one month” to “30 days”; clarification that the Joint Authority is to give a copy of the notice of the proposal to revoke the lease to persons other than the lessee only if the Joint Authority thinks there are appropriate persons to receive it, a point conveyed by the use of the words “if any”; change of term from “cancel” to “revoke”  

 

Clause 134 - Revocation of retention lease

 

Replicating the provisions of the Petroleum (Submerged Lands) Act, this clause gives the Joint Authority the power to revoke a lease in the situation outlined in clause 133 but provides that the revocation cannot then come into effect immediately. This is so as to give the lessee the opportunity to apply for a production licence over the block(s) covered by the lease.

 

Equivalent provisions in the PSL Act : subsections 38E(2), (3) and (4) 

Policy change : that, before revoking the lease, the Joint Authority is to consider not only submissions made by the lessee but also by parties other than the lessee who were given a copy of the notice under clause 133; change of term from “cancel” to “revoke”   

 

Part 2.4—Production licences for petroleum

DIVISION 1—GENERAL PROVISIONS

 

Clause 135 - Simplified outline

 

This clause gives a summary of Part 2.4 covering production licences. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Clause 136 - Prohibition of unauthorised recovery of petroleum in offshore area

 

This clause makes it mandatory for a person or company to have authority under this Act before that person or company can engage in petroleum recovery operations in areas forming part of the Commonwealth marine jurisdiction. This means, for example, that it would be an offence for persons without authority under the proposed Act to drill a well into a known petroleum pool with the intention of producing petroleum from it or to attempt to activate an abandoned production platform.

 

A production licence is required for a company to produce petroleum as a commercial enterprise. Limited quantities of petroleum may, however, be recovered from the seabed under an exploration permit, retention lease or scientific investigation consent. This would be for trial or research purposes only. This is provided for under paragraph (2)(b). The notion that petroleum recovery could be “required” is a reference to the Joint Authority’s powers under clause 161. If a notice under clause 161 were issued, the licensee would then be under a requirement imposed by and under the proposed Act.

 

Section 4D of the Crimes Act 1914 provides that the penalty shown is the maximum penalty. Imprisonment penalties may be converted to pecuniary penalties.  This is provided for in section 4B of the Crimes Act.

 

Subsection 4B(3) of the Crimes Act provides: “Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence.”

 

The fact that the defendant bears an evidential burden in relation to subclause (2) means that the person or company has the burden of adducing or pointing to evidence that suggests a reasonable possibility that the defendant is authorised to recover petroleum in the area concerned. The notion that the defendant bears an evidential burden under section 39 of the Petroleum (Submerged Lands) Act has been deduced by legal interpretation of the section, even though it does not explicitly say so.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in PSL Act: section 39

Policy change: that petroleum recovery could be required, and could be required by or under the proposed Act

 

Clause 137 - Rights conferred by production licence

 

This clause gives the holder of a production licence rights to do in the licence area everything required to recover petroleum, including the drilling of new wells, if required, and the construction and operation of production platforms, processing

plant, secondary lines and water lines. If the licensee holds another production licence covering a block outside the licence area, an inclined well could also be drilled from that outside block into the licence area and petroleum could be recovered through that well. The petroleum would be deemed to be sourced from the first-mentioned licence area even though the wellhead was situated elsewhere. The term “lawful access” in paragraph (1)(b) refers to the fact that the inclined well could equally be drilled from an area outside Commonwealth waters in relation to which the licensee held a State or Northern Territory equivalent of a production licence.

 

In addition, a production licence confers on the holder the same rights to explore the licence area as would be held if the title were an exploration permit or a retention lease. This is because the licensee is expected to be keen to explore the whole licence area thoroughly in the hope of finding other petroleum-bearing structures.

 

The rights are subject to conditions that are entered on the licence. In recent years, the only condition entered on production licensees has been that the licensee continue to explore the licence area.

 

The mention in subclause (2) of these rights also being subject to “this Act and the regulations” refers to a number of other processes that need to be gone through before recovery may occur, for example the submission of an environment management plan and the obtaining of approval to drill a particular well. It also refers to other provisions such as the fact that the licence could be cancelled or surrendered.

 

Equivalent provision in PSL Act: section 52

 

Clause 138 - Conditions of production licences

 

The power to insert conditions in production licences exists to ensure that the individual characteristics of each production project are able to be dealt with in a way that satisfies the regulator and is accepted by the licensee.

 

While the Joint Authority may grant a licence subject to whatever conditions the Joint Authority thinks appropriate, the conditions must conform to the general scope and purposes of the Act.

 

The power of the Joint Authority to set conditions includes the power to set a general condition requiring exploration in the licence area. However, subclauses (7) to (8) make clear that the conditions imposed by the Joint Authority on the holder of a production licence are not to be prescriptive to the point of requiring the holder to drill a well, to carry out a survey or to spend any specific dollar amount on exploration activities. 

 

The specific reference in subclause (9) to the investment of the licensee or a former licensee as a factor the Joint Authority must take into account in imposing conditions on a renewed production licence recognises that the production of petroleum involves a substantial and long term financial commitment by licensees and that, accordingly, continuity and predictability are important features of the regime as it relates to production licences.

 

A licence to which the Royalty Act applies is deemed to be subject to a condition that the licensee must comply with the Royalty Act. This means that a licensee who is bound by the Royalty Act and infringes that Act has breached the conditions of the licence and could on those grounds be refused a renewal of the licence, if applicable.  This option is in addition to the possibility that the licence could be cancelled under clause 237 during the term of the licence. 

 

Equivalent provision in PSL Act: section 56

Technical change: substitution of “whatever conditions the Joint Authority thinks appropriate” for “such conditions as the Joint Authority thinks fit”; mention that the specific examples of conditions in subclause (5) do not limit the generality of the condition setting power as set out in subclause (1)

Policy change: explicit provision for a power to set a general condition requiring exploration in the licence area and recovery of any discovered petroleum if commercially viable, but not including a power to require the holder to drill a well, to carry out a survey or to spend any specific dollar amount on exploration activities; that, in determining conditions to apply on the renewal of an existing production licence, the Joint Authority must have regard to matters such as investment in the project to date  

 

Clause 139 - Duration of production licence

 

This clause sets out the basic provisions about the duration of a production licence, dependent on whether it is a fixed-term production licence or a life-of-field production licence. Before 30 July 1998, all production licences were fixed-term licences with 21 year terms and renewability provisions. Under amendments to the Petroleum (Submerged Lands) Act that came into effect on that date, the duration of production licences was linked to the life of the field, rather than being set down as a specified number of years. This applied immediately to operators who were awarded a production licence for the first time on or after 30 July 1998.

 

However, taking account of views expressed prior to that time by existing licence-holders, it was decided to phase in the change in its application to licences granted before 30 July 1998. This was considered prudent and fair given that existing licensees had formulated their forward production plans within the parameters of the earlier fixed-term renewal arrangements. This position is reflected in items 2, 3 and 4 of the table in subclause (1). In essence, those licences will have an initial term of 21 years and one renewal term of 21 years. The licence can be renewed once more after that, and, at that point, its term will become linked to the life of the field.

 

In each case, subclause (2) provides that the term could be longer or shorter depending on whether various scenarios dealt with in other parts of the Bill arise. These are indicated by the notes at the end of the clause.

 

Equivalent provision in PSL Act: section 53

Policy changes: owing to a drafting defect in the 1998 amendment, the legal effect of this clause differs from the legal effect of section 53 of the PSL Act when that section is read literally

 

Clause 140 - Termination of life-of-field production licence if no recovery operations for 5 years

 

This clause sets out the other component of the “life of field” licence duration policy referred to above, namely the possible termination of the licence if there have been no

petroleum recovery operations in the licence area for a continuous period of at least 5 years. Even then, the Joint Authority is not required to terminate the licence, and the Joint Authority must in any case discount any part of the period of inactivity during which no operations were carried on because of circumstances beyond the licensee’s control.

 

The circumstances could include events such as the failure by a manufacturer of vital plant or equipment to deliver on time under contract. However, it is not intended that commercial factors related to the price of petroleum should qualify under this heading. As set out in clause 123, a licensee finding it impossible to produce at a profit can apply to revert to a retention lease until commercial viability improves. The depletion of recoverable petroleum is likewise not a factor that could influence the timeframe after which the licence could be terminated.

 

This clause also sets out the consultation procedure, possibly involving other parties as well as the licensee, that the Joint Authority must complete before terminating a licence.

 

In this Bill, the word “termination” is used only in relation to production licences, pipeline licences and infrastructure licences and is a considered act of bringing the title to an end on grounds of economic inactivity. Termination does not connote any infringement of the Act or regulations.

 

Equivalent provision in PSL Act: section 53A

Policy changes: conversion of “one month” to “30 days”; addition of a mention of depletion of recoverable petroleum not qualifying as circumstances beyond the licensee’s control; consultation possibly with other parties; invitation for submissions; specification of a time limit for submissions; requirement for Joint Authority to take account of submissions

 

Clause 141 - Production licences to which the Royalty Act applies

 

The current and proposed Royalty Acts apply, or would apply, only to petroleum produced under production licences derived from the North West Shelf exploration permits known as WA-1-P and WA-28-P, as well as to any petroleum that may be produced for appraisal purposes under those permits or retention leases derived from them. This being the case, to avoid unnecessary confusion, it is felt that the somewhat different arrangements that apply to seeking, obtaining and varying production licences to which the Royalty Act applies do not need to figure in the main body of the proposed Act. This clause accordingly provides for these provisions to appear in Schedule 4. Subclause (2) means that the general framework of provisions in Chapter 2, for instance in relation to renewal, applies to these licences in the same way as it applies to all other production licences.

 

Equivalent provision in PSL Act: nil.

 

DIVISION 2—OBTAINING A PRODUCTION LICENCE AS A RESULT OF AN APPLICATION MADE BY AN EXPLORATION PERMITTEE OR A RETENTION LESSEE

 

Clause 142 - Application for production licence by permittee

 

This clause sets out the basic provisions for a permittee to apply for a production licence, assuming the Royalty Act does not apply. The procedure is complemented by the provisions set out in Part 2.10.

 

The permittee does not have to seek a production licence over all blocks in the permit area over which a location has been declared. However, normally an application for a production licence over a smaller area than the full location would be made only in circumstances where it had been determined, since the discovery of petroleum, that one or more of the blocks in the location contained a discrete pool instead of being linked to the main pool in the location. In that situation, a retention lease could be sought over that subset of blocks instead of them being included in the production licence application, but a new location would first need to be declared over them.

The details the applicant must provide about proposals for work and expenditure in respect of the application area are not intended to have any effect on whether the applicant is offered a licence or not. Rather, these details need to be submitted so that the Joint Authority can formulate appropriate licence conditions as required.

 

Equivalent provisions in PSL Act: subsections 39A(1), (2), (3) and (4) and paragraph 41(1)(c) 

Policy change : that, for varying the number of blocks in an application under this clause, the applicant no longer needs to withdraw it and make a fresh application

 

Clause 143 - Application period

 

This clause sets out the timeframe for making a production licence application. This is intended to ensure that the initial evaluation of the commercial viability of a discovery is carried out without undue delay, as is the submission of a production licence application if a decision is taken not to lodge a retention lease application. 

 

The starting and finishing dates of the application period depend on when the location was declared over the block(s) in question, on whether and by how much the Designated Authority is prepared to extend the application period past 2 years (to a maximum 4 years), and on whether there is first an unsuccessful retention lease application.

 

At the end of the application period, if a licence application (or a retention lease application) has not been made, the permit is revoked to the extent to which it relates to the location block(s) concerned. The permittee can, however, try to prevent this from occurring by seeking a revocation of the location under subclause 110(1) before the end of the application period. An application for revocation of a location would be justifiable if a petroleum discovery were made and a location declared but subsequent assessment revealed the discovery to be non-commercial.

 

If the Designated Authority agrees and revokes the location, the risk of the permit being revoked is avoided because subclause 160(1) applies only if the permittee could apply under clause 142 for a production licence in relation to a block. The permittee could not apply for a production licence in respect of a block which is no longer the subject of a location.

 

Equivalent provision in PSL Act: subsections 39A(5) and (6) and 40(4) and (5) 

 



Clause 144 - Application for production licence by lessee

 

This clause sets out the basic provisions for a lessee to apply for a production licence, assuming the Royalty Act does not apply. The procedure is complemented by the provisions set out in Part 2.10.

 

The details the applicant must provide about proposals for work and expenditure in respect of the application area are not intended to have any effect on whether the applicant is offered a licence or not. Rather, these details need to be submitted so that the Joint Authority can formulate appropriate licence conditions as required.

 

Equivalent provision in PSL Act: section 40A 

 

Clause 145 - Offer document

 

This clause sets out the criteria for determining whether an applicant is to be offered a production licence. The same criteria apply whether the applicant is a permittee or a lessee and whether the current or proposed Royalty Act applies to the area in question or not.

 

If the applicant has given the Designated Authority any additional information that may have been required under clause 222 and the Joint Authority is satisfied that the block, or all the blocks, specified in the application contain(s) petroleum, the Joint Authority is obliged to offer the applicant a production licence in respect of the block(s) and to do so in writing. This obligation exists in view of the permittee’s investment in making the discovery.

 

While the Designated Authority would have concluded at the time of declaring the location that the block(s) contain(s) petroleum, requiring the Joint Authority to examine the evidence is useful in that it brings into the process the expertise of Australian Government geoscientists. It is also appropriate because the petroleum-bearing status of the block(s) may have changed since the date of the location declaration. This could happen if the petroleum pool extends into some other title area where petroleum has been recovered from the pool by another party with the result that petroleum has flowed out of the block(s) in question.

 

Equivalent provision in PSL Act: subsections 43(1) and (1A) 

 

Clause 146 - Refusal to grant production licence

 

This clause sets out the grounds on which a production licence application must be refused and provides that an application could be refused in part, ie in respect of only a subset of the blocks to which the application relates.

 

The application must be refused if the Joint Authority is not satisfied that the block(s) contain(s) petroleum.

 

If two or more blocks are covered by the application, the Joint Authority can come to a different conclusion about one, or some, of them than about the other, or others, of them. The Joint Authority is then required to refuse the application only in respect of the block(s) about which the abovementioned criterion demands that the application be refused.

 

The notice of refusal is to be conveyed to the applicant in writing with a statement of reasons. Additionally, under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Under subclause 222(3), the Joint Authority could refuse a licence application if the applicant does not provide further information as and when required by the Designated Authority. However, this provision is not a binding obligation on the Joint Authority to refuse the application.

 

Equivalent provision in PSL Act: subsection 43(3)

Policy change: express provision that the Joint Authority is obliged to refuse the application if it is not satisfied that the block in question contains petroleum

 

Clause 147 - Grant of production licence

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the production licence provided the applicant requests the licence within 90 to 180 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224). As in every other case where there is a duty to grant a title, the Joint Authority is to grant the licence as soon as practicable.

 

As indicated by the notes at the end of the clause, if the applicant does not make a request within the set time, this has notable repercussions for the application and for the applicant’s existing permit or lease.

 

Equivalent provision in PSL Act: subsection 44(2)

 

Clause 148 - Exploration permit or retention lease ceases to be in force when production licence comes into force

 

For reasons of administrative tidiness, this clause brings the exploration permit or retention lease to an end over the block(s) in respect of which a production licence has been granted. Among other things, this ensures that the licensee will not be charged two lots of annual fees.

 

Equivalent provision in PSL Act: subsection 44(5)

 

Clause 149 - Exploration permit or retention lease transferred—transferee to be treated as applicant

 

This clause covers the situation where an exploration permit or retention lease is transferred (within the meaning of Chapter 3) in the period between the lodgement of

a production licence application and the grant or refusal of the licence. The new holder of the permit or lease will then be treated as the applicant for all purposes. For example, a new permittee may vary the application without paying another application fee, as provided under subclauses 142(3) and (4). The Designated Authority may require the new permittee or lessee to elaborate on information given by the previous holder of the permit or lease. The consequences of not requesting an offered licence within the timeframe indicated in clause 224 are also identical for the new holder of the permit or lease to what would have applied to the previous holder if the permit or lease had not been transferred.

 

If a permit or lease transfer transaction is being contemplated and does not get completed and approved before the Joint Authority gives the permittee or lessee an offer document for a production licence, the appropriate course of action would be to wait until the licence has actually been granted and then to apply to the Designated Authority for the approval of its transfer.

 

Subclause 6(2) of the proposed Royalty Act (embodying in part what appears in section 42 of the Petroleum (Submerged Lands) Act) refers to applications for a primary production licence and a secondary production licence, which are described in more detail in the notes under Schedule 4 to this Bill. That subclause reads:

 

“If:

(a) a person has applied for a primary production licence; and

(b) before or after the grant of the primary production licence, the person applies for a secondary production licence;

      the Joint Authority must, by written instrument, determine the rate of royalty payable in relation to petroleum recovered, whether under the primary production licence or under the secondary production licence.”

 

The mention in paragraph (2)(b) of subclause 6(2) means that, if, after a permittee or lessee has applied for a primary production licence or a secondary production licence, the permit or lease is transferred, then the transferee will be deemed to have applied for the primary production licence or the secondary production licence and will face the same repercussions in terms of royalty rate determination as the party that previously held the permit or lease would have faced had the transfer not gone ahead.

 

Equivalent provision in PSL Act: section 44A

 

DIVISION 3 OBTAINING A CASH-BID PRODUCTION LICENCE OVER A SURRENDERED BLOCK OR SIMILAR BLOCK

Clause 150 - Application for cash-bid production licence over surrendered blocks or similar blocks

 

This clause provides for the granting of cash-bid production licences over single blocks. These are broadly intended to enable the development of, or continuation of petroleum recovery in, blocks in which petroleum is known or presumed to occur but which have ceased to be covered by an exploration permit, retention lease or production licence at a time when any petroleum resource in the block has not been developed or fully exploited. This could happen in the case of a surrender, cancellation, revocation or termination (as applicable: see the notes to clauses 78 and 140 about the meaning of these terms) of a permit with a declared location, a lease or

a licence over the block in question. However, the expiry of a title has not been identified as a situation that could lead to the granting of a cash-bid production licence. This is because the expiry of an exploration permit normally means that no useful petroleum resource has been discovered, the expiry of a retention lease normally means the discovered petroleum resource is not going to be commercially viable for at least 15 years, if ever, and the expiry of a production licence normally means the commercially recoverable petroleum in the block has been exhausted. 

 

Applying for a cash-bid licence requires details to be given of the proposed work program and a cash bid, 10% of which is to accompany the application. This is refunded if the applicant is not granted the permit. However, to discourage frivolous applications, there is no refund if an applicant who is offered the cash-bid licence fails to take up the offer. In other respects, the application procedure is as for other production licences, and a cash-bid production licence could be granted equally well in the North West Shelf project area (to which the proposed Royalty Act would apply) as it could be granted elsewhere in the Commonwealth marine jurisdiction. 

 

Equivalent provisions in PSL Act: subsections 47(1) and (2), paragraphs 47(6)(c) and (d) and 48(1)(b) and subsections 48(2) and (3)

Policy change: that the termination of a production licence over a block is another scenario under which applications could be invited for the grant of a production licence under this clause

 

Clause 151 - Grant of cash-bid production licence—only one application

 

This clause sets out the procedure if only one cash-bid production licence application is received in response to an invitation. Then it is up to the Joint Authority to determine, on the basis of information provided in the application and any other information the Designated Authority seeks and obtains from the applicant, whether to grant the licence or not. The decision is to be conveyed to the applicant in writing.

 

Equivalent provision in PSL Act: subsection 49(1)

 

 

Clause 152 - Grant of cash-bid production licence—2 or more applications

 

This clause sets out the procedure if two or more cash-bid production licence applications are received in response to an invitation. Firstly, the Joint Authority has to determine, on the basis of information provided in the applications and any other information the Designated Authority seeks and obtains from the applicants, whether any or all of the applications should be rejected. Only after this is the level of the cash bids looked at, and only in the case of the unrejected applications. If there is one highest bidder, that applicant is to be given an offer document for the licence. If there are two or more equal highest bidders, the Joint Authority must determine, on the basis of the information referred to above, which of those applicants should be offered the licence. If an offer document is given and the applicant fails to take up the offer or pay the required amount, ie the application lapses, then the remaining unrejected applications may be reassessed for the award of the permit. 

 

Equivalent provisions in PSL Act: subsections 49(2) and (8)

Policy change : that the Joint Authority must give an applicant written notice of a refusal decision as much as of an approval decision

 

Clause 153 - Grant of cash-bid production licence

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the cash-bid licence, provided the applicant requests the licence within 90 to 180 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224), and pays (if applicable) the balance of the cash amount tendered within the same period. This would even preclude the Joint Authority from attempting to renege on the offer by seeking to reserve the block under clause 242. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the licence as soon as practicable. 

 

As provided under subclause 223(5), the balance of the cash amount is not payable if there is only one applicant, as set out in clause 151. This exemption appears in the Petroleum (Submerged Lands) Act but the basis for it has not been detailed in explanatory memoranda considered by Parliament in connection with past amendments to the Act. However, the provision is proposed for retention, as the possible exemption from paying 90% of the cash bid could improve the economics of bidding for a block that petroleum companies might otherwise consider of marginal interest and thereby increase the likelihood of a bid being submitted. 

 

Equivalent provision in PSL Act: subsection 49(6), section 50

 

DIVISION 4 OBTAINING PRODUCTION LICENCES OVER INDIVIDUAL BLOCKS

 

Clause 154 - Applications for production licences over individual blocks

 

This clause is intended to facilitate transfers of, and dealings in, the potentially wealth-creating assets that are inherent in the holding of a production licence, specifically one covering 2 or more blocks. This clause enables the licensee to apply to effectively split the initial production licence into 2 or more separate licences, each covering at least one block, thereby enhancing opportunities for making advantageous commercial arrangements.

 

The stipulation in paragraph (1)(b) that the blocks must not form a location or part of a location is significant in relation to licences granted under the provisions of Schedule 4. That Schedule is not designed to deal with 2 or more holders of a primary production licence being associated with the one secondary entitlement. Therefore, paragraph (1)(b) effectively bars a licensee to whom Schedule 4 applies from applying to split the licence until both a primary production licence and a secondary production licence are held or until the permit or lease over the whole secondary entitlement is revoked.  The revocation of the location would also need to be sought before an application under this clause could be lodged.

 

Equivalent provision in PSL Act: subsection 51(1) and paragraphs 51(2)(c) and (d)

 

Clause 155 - Grant of production licences over individual blocks

 

This clause provides that the Joint Authority is obliged to grant 2 or more production licences in exchange for an initial production licence as sought by an applicant under clause 154.

 

If the initial licence had a fixed term, the new licences must expire on the same date as the initial one. If the initial licence had an indefinite duration, the new licences must likewise be of indefinite duration.

 

The provision in subclause (5) that the duration of the new licences is subject to this Chapter but despite clause 139 means that a licence could, for example, be surrendered or cancelled, meaning it could come to an end earlier than subclause (3) or (4) indicates.

 

The provision in subclause (6) by which the conditions of the new licences may not be absolutely identical to those affecting the initial licence recognises the possibility that a condition of the initial licence may have addressed a feature of only one of the blocks that it covered, for example a marine park, the boundary of which transected only that block. Then that condition would be replicated only in the new licence covering that particular block.  

 

Equivalent provision in PSL Act: subsections 51(4), (5) and (6)

 

DIVISION 5 RENEWAL OF FIXED-TERM PRODUCTION LICENCES

Clause 156 - Application for renewal of fixed-term production licence

 

This clause outlines the rights of the holder of a fixed-term production licence to apply for renewal of the licence. The basic provisions about the application procedure set out here are complemented by Part 2.10.

 

This clause also provides for the continuation in force of the licence past the expiry date (if necessary) until the application is resolved one way or another. If the Joint Authority refuses to grant the renewal, the licence ceases to have effect at that time (if it is after the expiry date). If the Joint Authority offers the renewal and the applicant accepts it, the existing licence continues in force until the new one is granted. If the Joint Authority offers the renewal and the applicant does not take it up, the licence ceases to have effect when the application is deemed to have lapsed, ie 30 days after the offer document was given to the applicant. 

 

Subclause (7) provides that this extension is subject to Chapter 2. This means that the licence could, for example, be surrendered or cancelled, meaning it could come to an end earlier than this clause indicates.

 

Equivalent provisions in PSL Act: subsection 54(1), paragraphs 54(2)(b) and (c) and subsections 54(3) and 55(11) 

Technical change : omission from subclause (4) of an equivalent to the phrase: “for reasons that he [the Designated Authority] thinks sufficient” that appears in subsection 54(3)

Policy change : conversion of “6 months” to “180 days”

 

Clause 157 - Renewal of fixed-term production licence—offer document

 

This clause sets out the circumstances in which a fixed-term licensee must be offered a licence renewal. A necessary precondition is that the licensee has complied with the licence conditions and with the proposed Act and regulations to the extent that they place obligations on the licensee as a licensee. If the term of the expiring licence straddles the commencement date of the proposed Act, Schedule 6 clauses 4, 5 and 6 provide that compliance with the current Act and regulations is also relevant. If the licence is coming to the end of its first 21 year term, this is the only precondition to obtaining a renewal offer. If the licence is coming to the end of its second 21 year term, the other precondition that needs to be met is that either petroleum recovery operations were being carried on in the licence area at the date of lodgement of the renewal application, or had been carried on not more than 5 years prior to that date.

 

If the licensee has not complied with the licence conditions and with the proposed Act and regulations but the Joint Authority is satisfied that there are sufficient grounds to justify the granting of the renewal of the licence, this clause provides that the Joint Authority may offer the licensee a renewal. However, it is not obliged to do so.

 

In the case of an application for the second renewal of a licence, the Joint Authority has a discretion to offer a renewal despite non-compliance as set out above whether or not petroleum recovery operations were being carried on in the licence area at the date of lodgement of the renewal application, or had been carried on not more than 5 years prior to that date.

 

Equivalent provision in PSL Act: subsections 55(1) and (2)

Policy change : requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to warrant renewal of a licence in a situation of non-compliance

 

Clause 158 - Refusal to renew fixed-term production licence

 

This clause refers to a situation where the licensee has not complied with the licence conditions and with the proposed Act and regulations and the Joint Authority is not satisfied that there are sufficient grounds to justify the granting of the renewal of the licence. Then the Joint Authority is obliged to enter into a consultation procedure as set out in clause 226, possibly involving other parties as well as the licensee. If that procedure does not yield information that causes the Joint Authority to come to a different view, this clause provides that the Joint Authority must refuse to renew the licence and advise the applicant in writing of this decision.

 

If the licensee has complied with the licence conditions and with the Act and regulations but there have been no petroleum recovery operations in the licence area for 5 or more years before an application for the second renewal of a production licence is made, the Joint Authority may on that basis refuse the renewal application but is not obliged to refuse it. If the Joint Authority is inclined to refuse the application on these grounds, then likewise the Joint Authority is obliged to enter into a consultation procedure as set out in clause 226, possibly involving other parties as well as the licensee. Any information that comes to light through this procedure must be taken into account by the Joint Authority in reaching a final decision, and, if that decision is to refuse the renewal, the Joint Authority must advise the applicant in writing accordingly.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Equivalent provision in PSL Act: subsections 55(3), (4) and (5) 

Technical change : making explicit that it is only if no petroleum recovery operations have been carried on in the licence area within 5 years before the application for the renewal was made that the Joint Authority may refuse to renew the licence a second time

Policy changes: that the consultation procedure applies even when the only ground for refusal is cessation of petroleum recovery operations for 5 years; requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to enable renewal of a licence in a situation of non-compliance

 

Clause 159 - Renewal of fixed-term production licence

 

This clause ensures that once the Joint Authority has given an offer document to an applicant, the Joint Authority cannot renege on granting the renewal of the production licence provided the applicant requests the licence within 30 days of the offer document being given to the applicant. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the renewal as soon as practicable.

 

Equivalent provision in PSL Act: subsection 55(9)

 

DIVISION 6 WHAT HAPPENS IF A BLOCK IS NOT TAKEN UP

Clause 160 - Revocation of exploration permit or retention lease to the extent to which it relates to a block not taken up

 

This clause sets out provisions by which an exploration permit or retention lease could be revoked in respect of a particular block by force of the proposed Act, and this could occur before or after the set expiry date of the permit or lease.

 

If petroleum is discovered in a permit block and a location is declared over that block, the permittee will have 2 years, extendable up to 4 years if the Designated Authority so agrees, to make a retention lease application or a production licence application. Unless the Designated Authority agrees to revoke the location in the meantime, and the permittee lodges neither a retention lease application nor a production licence application before the end of the abovementioned period, the permit is then revoked, but only in respect of that particular block.

 

The wording of subclause (1) refers only to the consequences of not applying for a production licence. If the permittee, within the application period, applies instead for a retention lease and gains it, subclause (1) has no negative effect on that lessee as there is then no longer a permit or permittee in respect of the block. If the permittee applies for, but does not gain, a retention lease, subclause 143(3) may extend the period during which the permittee may seek instead a production licence.

 

If, on further consideration, a permittee with one or more location blocks decides not to seek a retention lease or a production licence over those blocks, the permittee could avoid revocation of the permit in relation to those blocks if the Designated Authority agreed to revoke the location. This is because, if there is no location, the permittee could not apply under section 142 for a production licence in relation to the block, as paragraph 160(1)(a) envisages. There could then no longer be any repercussions for the permittee under subclause 160(1).

 

If the location is not revoked and the permittee fails to seek either a retention lease or a production licence within the application period, whether that choice is based on solid commercial grounds or not, the permittee is deemed to have forgone any further rights to explore or develop that block and it may be considered appropriate to give some other party the opportunity to do work in that block. This could be done under a new work-bid exploration permit, cash-bid exploration permit or special exploration permit.

 

The same end result will follow under this clause if the permittee unsuccessfully applies for a retention lease within the abovementioned period but thereafter fails to apply for a production licence. Then the timing of the revocation could be later, as provided under subclause 143(3).

 

The same end result will also follow under this clause if a permittee or a lessee has made a production licence application and is given an offer document for the licence but fails to request the licence within 90 to 180 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224). In the case of a lease, the revocation occurs at that time. In the case of a permit, the revocation could occur then or later, depending on when the abovementioned application period ends.

 

Equivalent provisions in PSL Act: subsections 46(1) and (1A) 

 

DIVISION 7 PETROLEUM FIELD DEVELOPMENT

Subdivision A Directions about the recovery of petroleum

Clause 161 - Direction to recover petroleum

 

This clause replicates a power of the Joint Authority which exists under the Petroleum (Submerged Lands) Act and which was considered important in the early days of existence of the Act for reasons of enhancing Australia’s fuel self-sufficiency.

 

Use of this power would nowadays be considered less appropriate in the ordinary course of events but this provision could have relevance in a situation of national or global fuel emergency.

 

Equivalent provisions in PSL Act: subsections 58(1) and (2)

Policy change: that the steps identified by the Joint Authority under subclause (2) be practicable as well as necessary for, or in relation to, the recovery of petroleum in the licence area

 

Clause 162 - Directions about the rate of recovery of petroleum

 

This clause is an elaboration of the Joint Authority’s abovementioned power to direct a production licensee to recover petroleum.

 

The fact that the Joint Authority may direct a licensee not only to increase, but also to reduce, the rate of recovery of petroleum, was considered important in the early days of existence of the Petroleum (Submerged Lands) Act for reasons of countering possible problems of overproduction in the petroleum industry.

 

In more recent times, this power has assumed a degree of relevance for a different reason. The mention of effects on Commonwealth revenue in subclause (3) is a reference to the possibility of a producer using selective extraction to manipulate taxation outcomes. Where the same party holds more than one production licence and different taxation regimes apply to petroleum deposits, for example petroleum resource rent tax (PRRT) as opposed to royalty and crude oil excise, there could be taxation advantages to a producer in delaying the PRRT-liable extraction to maximise the uplift of deductions against future revenue, while extracting from a royalty-liable pool, which does not have such generous uplifts of deductions. While there is not a high probability that such a situation would exist, it does become more likely with trends to shared infrastructure.

 

In the case of crude oil excise, the impact of higher excise rates at increasing production tranches could be an incentive (in particular circumstances) to adjust production rates within a fiscal period to moderate the excise liability.

 

The Joint Authority’s power to make a direction about the rate at which petroleum is to be recovered can also be used to address resource management issues, such as pressure depletion.

 

As set out in subclause (5), the power of the Joint Authority to give directions under this clause, whether based on Commonwealth revenue or any other considerations, is circumscribed by the provision that no direction requiring action that is contrary to good oilfield practice may be given.

 

Equivalent provision in PSL Act: subsections 58(3), (4) and (5) 

Technical change: omission from subclause (1) of an equivalent to the phrase: “for reasons that the Joint Authority thinks sufficient” that appears in subsection 58(3)

Policy changes: that the steps identified by the Joint Authority under subclause (2) be practicable as well as necessary for, or in relation to, the increase or reduction of the rate at which petroleum is being recovered

 



Subdivision B Unit development

Clause 163 - Unit development

 

This clause replicates, with only minor presentational changes, the provisions of section 59 of the Petroleum (Submerged Lands) Act. While some sections of the upstream petroleum industry have advocated changing these provisions, no policy amendments are proposed at this time.

 

Unit development means, in brief, the coordination of operations for recovering petroleum from a pool which is situated partly in one production licence area and partly in another licensee’s production licence area, or the State or Northern Territory equivalent of a production licence area. The latter case, referred to in paragraphs (1)(a)(ii) and (3)(b), assumes the first-mentioned licence area borders on State or Northern Territory waters.

 

The overriding principle behind section 59 has been that, unless there is some provision enabling the coordinated recovery of petroleum from such a pool, severe injustices may be inflicted on a licensee having rights in respect of the pool by the actions of another party having rights in respect of the same pool, and who unfairly, or improperly, draws petroleum from the pool.

 

A unit development agreement provided for in subclause (2) is subject to clause 270. This provides, among other things, that (as set out in item 3 under clause 269), a dealing determining the manner in which persons may exercise the rights conferred by an existing title to recover petroleum under cooperative arrangements is of no force until the Designated Authority has approved the dealing and has made an entry in the Register in relation to the dealing. Clauses 271 and 275, referred to in subclauses (3) and (4), detail administrative procedures for seeking and obtaining the approval of a dealing.

 

If parties do not voluntarily conclude a unit development agreement, or do not do so even after being directed to do so by the Joint Authority, this clause enables the Joint Authority to formulate a unit production scheme for the pool after considering any suggestions or schemes put forward by the parties involved. Subclause (7) is intended to deal, for example, with the situation where it is later found that the petroleum pool extends further than previously thought.

 

The mention in subclause (11) of “lands to which the laws of that State or Territory, or of another State or Territory, relating to exploiting petroleum resources apply” could include an onshore area but it is more likely to refer to one or more of a possible 3 different marine zones which are managed under State or Northern Territory petroleum legislation. These are illustrated by the dotted, hatched and black areas in proximity to the coast in the diagram on Map 3 in clause 5 of the Bill.

 

Equivalent provision in PSL Act: section 59

 

 

 

 

Part 2.5—Infrastructure licences

 

DIVISION 1—GENERAL PROVISIONS

 

Clause 164 - Simplified outline

 

This clause gives a summary of Part 2.5 covering infrastructure licences. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Clause 165 - Prohibition of unauthorised construction or operation of an infrastructure facility in an offshore area

 

This clause makes it mandatory for a person or company to have authority under this Act before that person or company can construct, alter or operate infrastructure facilities in areas forming part of the Commonwealth marine jurisdiction. “Infrastructure facilities” are defined in clause 13.

 

This means that it would be an offence for persons without authority under the proposed Act, for example to build, modify or operate a petroleum processing plant in an offshore area. However, if an exploration permit, retention lease or production licence is in force in an area, any infrastructure facilities required for purposes of operations authorised by that particular title may be constructed and operated without the need for an infrastructure licence, but only within the title area. This is referred to in paragraph (2)(b) by the words “otherwise authorised or required by or under this Act.”

 

The notion that construction of infrastructure facilities could be “required” refers, for instance, to the possibility that some construction by way of alteration of a facility could be required under the regulations for reasons of safety. The infrastructure licensee would then be under a requirement imposed by and under the proposed Act.

 

Section 4D of the Crimes Act 1914 provides that the penalty shown is the maximum penalty. Imprisonment penalties may be converted to pecuniary penalties. This is provided for in section 4B of the Crimes Act.

 

Subsection 4B(3) of the Crimes Act provides: “Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence.”

 

The fact that the defendant bears an evidential burden in relation to subclause (2) means that the person or company has the burden of adducing or pointing to evidence that suggests a reasonable possibility that the defendant is authorised to construct or operate infrastructure facilities in the area concerned. The notion that the defendant bears an evidential burden under section 59A of the Petroleum (Submerged Lands) Act has been deduced by legal interpretation of the section, even though it does not explicitly say so.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in PSL Act: section 59A

Policy change : that the construction, reconstruction or alteration activities could be required, and could be required by or under the proposed Act

 

Clause 166 - Rights conferred by an infrastructure licence

 

This clause gives the holder of an infrastructure licence rights to construct and operate infrastructure facilities in the infrastructure licence area, which is defined as a place, ie not covering a whole block or blocks as do exploration permits, retention leases and production licences.

 

An infrastructure licence area could be in a vacant area or in an area in which some other party holds a title under the proposed Act. Most typically, an infrastructure facility would be a plant that is engaged in some way in handling or processing recovered petroleum but which, for technical or economic reasons, is situated outside a production licence area in which the petroleum is being recovered. These technical or economic reasons could include the possibility that the facility is servicing more than one production platform or that it is a recycled structure previously used for some other purpose.

 

Infrastructure licences do not cover pipelines, pumping stations, tank stations or valve stations, as these would all be constructed and operated under pipeline licences.   

 

Conceivably, the rights conferred under an infrastructure licence could go beyond what is permitted under production licences. Construction and operation of a petroleum to methanol conversion plant is one possible example of such a right.

 

The rights are subject to conditions that are entered on the licence. The mention in subclause (2) of these rights also being subject to “this Act and the regulations” refers to a number of processes that need to be gone through before construction or operation of an infrastructure facility may occur, for example the submission of a safety case. It also refers to other provisions such as the fact that an infrastructure licence could be cancelled or surrendered.

 

Equivalent provision in PSL Act: section 59F

 

Clause 167 - Conditions of infrastructure licences

 

The power to insert conditions in infrastructure licences exists to ensure that the individual characteristics of each infrastructure facility are able to be dealt with in a way that satisfies the regulator and is accepted by the licensee.

 

While the Joint Authority may grant a licence subject to whatever conditions the Joint Authority thinks appropriate, the conditions must conform to the general scope and purposes of the Act.

 

Equivalent provision in PSL Act: 59J

Technical change: that the Joint Authority may grant an infrastructure licence “subject to whatever conditions the Joint Authority thinks appropriate” rather than “such conditions as the Joint Authority thinks fit”

 

Clause 168 - Duration of infrastructure licence

 

This clause provides for the indefinite duration of an infrastructure licence, subject to surrender, cancellation or termination.

 

Equivalent provision in PSL Act: section 59G

 

Clause 169 - Termination of infrastructure licence if no operations for 5 years

 

This clause sets out provisions for the possible termination of an infrastructure licence if there has been neither construction work nor use of facilities constructed under the licence for a continuous period of at least 5 years. Even then, the Joint Authority is not required to terminate the licence, and the Joint Authority must in any case discount any part of the period of inactivity during which no construction or operations were carried on because of circumstances beyond the licensee’s control.

 

These circumstances could include events such as the failure by a manufacturer of vital plant or equipment to deliver on time under contract. However, the depletion of recoverable petroleum in a production licence area that the infrastructure facility is linked to is not a factor that could influence the timeframe after which the licence could be terminated.

 

This clause also sets out the consultation procedure, possibly involving other parties as well as the licensee, that the Joint Authority must complete before terminating an infrastructure licence.

 

In this Bill, the word “termination” is used only in relation to production licences, pipeline licences and infrastructure licences and is a considered act of bringing the title to an end on grounds of economic inactivity. Termination does not connote any infringement of the Act or regulations.

 

Equivalent provision in PSL Act: section 59H

Policy changes: conversion of “one month” to “30 days”; addition of a mention of depletion of recoverable petroleum not qualifying as circumstances beyond the licensee’s control; consultation possibly with other parties; invitation for submissions; specification of a time limit for submissions; requirement for Joint Authority to take account of submissions

 

 

DIVISION 2—OBTAINING AN INFRASTRUCTURE LICENCE

 

Clause 170 - Application for infrastructure licence

 

This clause sets out the basic provisions for a person or company to apply for an infrastructure licence. The procedure is complemented by the provisions set out in Part 2.10.

 

Equivalent provisions in PSL Act: subsection 59B(1) and paragraph 59B(2)(b)

 

Clause 171 - Grant of infrastructure licence—offer document

 

This clause provides that the offer of an infrastructure licence is at the discretion of the Joint Authority. If the applicant has given the Designated Authority any additional information that may have been required under clause 222 and the Joint Authority is inclined to offer the applicant the infrastructure licence sought, the next step depends on whether the proposed site of the facility is in an area to which another party has rights under the proposed Act. If so, the Joint Authority may need to consult with that party as set out in clause 174. If no consultation is required, this clause provides that the Joint Authority may offer the applicant an infrastructure licence without further delay and must do so in writing. In the other case, the Joint Authority may give the offer document to the applicant after the consultation has been completed.

 

Equivalent provision in PSL Act: subsection 59C(1)

 

Clause 172 - Refusal to grant infrastructure licence

 

This clause provides for notice of a refusal to grant an infrastructure licence to be conveyed to the applicant in writing. This has not been expressly provided under the Petroleum (Submerged Lands) Act.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Equivalent provision in PSL Act: nil.

Technical change : addition of this clause as an express provision

 

Clause 173 - Grant of infrastructure licence

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the infrastructure licence, provided the applicant requests the licence within 90 to 180 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224). This would even preclude the Joint Authority from attempting to renege on the offer by seeking to reserve, under clause 242, the block within which the infrastructure licence area will be located. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the licence as soon as practicable.

 

Equivalent provision in PSL Act: subsection 59E(3)

 

Clause 174 - Consultation—grant of infrastructure licence

 

This clause sets out the consultation procedure that may apply if the proposed site of the infrastructure facility is in an area to which another party has rights under the proposed Act.

 

No consultation by the Joint Authority is required if the other party has already given written consent for the grant of the proposed infrastructure licence, or if the other party is the holder of a special prospecting authority or an access authority that will have expired before any construction or operations under the infrastructure licence could occur. This is because a special prospecting authority always is, and an access authority usually is, a short-term title.

 

Equivalent provision in PSL Act: section 59D

Policy change : conversion of “one month” to “30 days”

 

DIVISION 3—VARYING AN INFRASTRUCTURE LICENCE

 

Clause 175 - Application for variation of infrastructure licence

 

This clause sets out the procedure by which an infrastructure licensee may seek a variation of the licence. The procedure is complemented by provisions set out in Part 2.10.

 

Equivalent provision in PSL Act: subsection 59K(1) and paragraphs 59K(2)(b) and (c) 

 

Clause 176 - Variation of infrastructure licence

 

This clause provides that the variation of an infrastructure licence is at the discretion of the Joint Authority. It may first require consultation with any other party that has rights under the proposed Act in the area in which the infrastructure facility is situated. The variation, or refusal of it, is to be notified in writing to the licensee. However, a variation does not come into effect on the date of the notice to the licensee but on the date of publication of a notice about it in the Gazette .

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

Equivalent provision in PSL Act: subsections 59K(6) and 95(4)

 

Clause 177 - Consultation—variation of infrastructure licence

 

This clause sets out the consultation procedure that may apply if the site of the infrastructure facility to which the variation application relates is in an area to which another party has rights under the proposed Act.

 

No consultation by the Joint Authority is required if the other party has already given written consent for the variation of the infrastructure licence, or if the other party is the holder of a special prospecting authority or an access authority that will have expired before any new construction or varied operations under the infrastructure licence could occur. This is because a special prospecting authority always is, and an access authority usually is, a short-term title.

 

Equivalent provisions in PSL Act: subsections 59K(4), (5) and (6)

Policy change : conversion of “one month” to “30 days”

 

Part 2.6 Pipeline licences

DIVISION 1 GENERAL PROVISIONS

Clause 178 - Simplified outline

 

This clause gives a summary of Part 2.6 covering pipeline licences. This summary does not form part of the operative text of the proposed Act.

Equivalent provision in PSL Act: nil.

 

Clause 179 - Prohibition of unauthorised construction or operation of a pipeline in an offshore area

 

This clause prohibits unauthorised work on constructing or altering a pipeline in an offshore area and unauthorised operation of a pipeline that has already been constructed. The distinction between starting and continuing the work or operation is made for reasons of clarity, for example so that the clause is not misunderstood to mean that only a pipeline constructed to completion could be evidence of a contravention of this provision.

 

The authorising instruments that would be required include not only a pipeline licence but also a certificate under subclause (4) and, commonly, a consent, as set out in subclause (6). A regulation or a direction under the proposed Act or regulations could also authorise action without the operator contravening this clause. Moreover, a defence is available under subclause (7) for action taken in an emergency in which there is a likelihood of loss or injury or for the purpose of maintaining a pipeline in good order or repair. This defence recognises the potential dangers created by pipeline operation to life, limb and the environment.

 

Section 4D of the Crimes Act 1914 provides that the penalty shown is the maximum penalty. Imprisonment penalties may be converted to pecuniary penalties.  This is provided for in section 4B of the Crimes Act.

 

Subsection 4B(3) of the Crimes Act provides: “Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence.”

 

The fact that the defendant bears an evidential burden in relation to subclauses (2), (4), (6), (7) and (8) means that the person or company has the burden of adducing or pointing to evidence that suggests a reasonable possibility that the defendant is authorised to perform the actions in question. The notion that the defendant bears an evidential burden under section 60 of the Petroleum (Submerged Lands) Act has been deduced by legal interpretation of the section, even though it does not explicitly say so.

 

The offence provisions in this clause do not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provisions in the PSL Act: sections 60 and 61

Technical change : omission from subclause (9) of an equivalent to the phrase: “for reasons that [the Designated Authority] thinks sufficient” that appears in subsection 60(6)   

 

Clause 180 - Rights conferred by pipeline licence

 

This clause provides that the rights conferred by a pipeline licence cover all aspects of the design, construction and operation of the pipeline and installations such as pumping stations that form part of it. Certain details of these matters are to be specified in the pipeline licence. The licence may also be subject to other conditions.

 

A pipeline licence does not specifically have a licence area other than the offshore area in respect of which the licence has been granted. If a pipeline were planned to be constructed so as to pass through more than one offshore area, a separate pipeline

licence granted by the Joint Authority of each of those offshore areas would be required.

 

The fact that the rights are subject to this Act and the regulations refers, for example, to the fact that a pipeline management plan would be required before any construction of a pipeline could occur under the licence. It also refers to other provisions such as the fact that the licence could be terminated, cancelled or surrendered.

 

Equivalent provision in the PSL Act: section 66  

 

Clause 181 - Conditions of pipeline licences

 

The power to insert conditions in pipeline licences exists to ensure that the individual characteristics of each pipeline are able to be dealt with in a way that satisfies the regulator and is accepted by the licensee.

 

While the Joint Authority may grant a pipeline licence subject to whatever conditions the Joint Authority thinks appropriate, the conditions must conform to the general scope and purposes of the Act.

 

Subclause (3) alerts applicants for pipeline licences to the fact that a condition could be imposed requiring the pipeline to be constructed within a specified time. This could be important in relation to, say, minimising the disruption caused by pipeline construction to shipping or other activities.

 

Equivalent provision in the PSL Act: section 70

Technical changes: that the Joint Authority may grant a pipeline licence “subject to whatever conditions the Joint Authority thinks appropriate” rather than “such conditions as the Joint Authority thinks fit”; mention that the specific example of a condition in subclause (3) does not limit the generality of the condition setting power as set out in subclause (1)

 

Clause 182 - Duration of pipeline licence

 

This clause provides for the indefinite duration of a pipeline licence, subject to surrender, cancellation or termination.

 

Equivalent provision in the PSL Act: subsection 67(1)  

 

Clause 183 - Termination of pipeline licence if no operations for 5 years

 

This clause sets out provisions for the possible termination of a pipeline licence if there has been neither construction work nor use of the pipeline, or a given part of the pipeline, for a continuous period of at least 5 years. If only a part of the pipeline has been out of use for this period, then the termination of the licence can relate to only that part of the pipeline. Even then, the Joint Authority is not required to terminate the licence, and the Joint Authority must in any case discount any part of the period of inactivity during which no construction or operations were carried on because of circumstances beyond the licensee’s control.

 

These circumstances could include events such as the failure by a manufacturer of vital plant or equipment to deliver on time under contract, whether to the pipeline construction project itself or to a production facility from which petroleum pumped through the pipeline is drawn. However, the depletion of recoverable petroleum in a production licence area that the pipeline is linked to is not a factor that could influence the timeframe after which the licence could be terminated.

 

This clause also sets out the consultation procedure, possibly involving other parties as well as the licensee, that the Joint Authority must complete before terminating a pipeline licence.

 

In this Bill, the word “termination” is used only in relation to production licences, pipeline licences and infrastructure licences and is a considered act of bringing the title to an end on grounds of economic inactivity. Termination does not connote any infringement of the Act or regulations.

 

Equivalent provision in PSL Act: section 67A

Policy changes: conversion of “one month” to “30 days”; addition of a mention of depletion of recoverable petroleum not qualifying as circumstances beyond the licensee’s control; consultation possibly with other parties; invitation for submissions; specification of a time limit for submissions; requirement for Joint Authority to take account of submissions

 

Clause 184 - Alteration or removal of pipeline constructed in breach of this Act

 

This clause gives powers to the Designated Authority to deal with the situation where the construction of a pipeline is started, continued or completed, or a pipeline is altered or reconstructed, in breach of the proposed Act. This may have occurred with or without there being a pipeline licence in force that was in any way linked to the contravention. This is borne out by the fact that any directions by the Designated Authority under this clause are to be addressed to the owner, or prospective owner, of the pipeline, rather than to anyone identified as the pipeline licensee. The Designated Authority’s use of these powers is also separate from any decision that may be taken to launch a criminal prosecution for an offence against clause 179. The only court action contemplated under clause 184 is a civil action for the recovery of Designated Authority costs. 

 

Equivalent provision in the PSL Act: section 62   

Policy change: that the period for compliance specified in the Designated Authority’s direction must be reasonable

 

DIVISION 2 OBTAINING A PIPELINE LICENCE

Clause 185 - Application for pipeline licence

 

This clause sets out the basic provisions for a person or company to apply for a pipeline licence. The procedure is complemented by the provisions set out in Part 2.10. The applicant is not required to have had any previous involvement with the production operation(s) which is/are the source of the petroleum that is planned to be conveyed through the pipeline.

 

The reference in paragraph (3)(c) to the pumping stations, tank stations or valve stations that the applicant wants to be declared terminal stations is for purposes of defining where the pipeline would start. Declaration of a terminal station means the pipe downstream of the terminal station would be a pipeline requiring a pipeline licence. Upstream of the terminal station, the pipe would be called a secondary line, which would be covered by the production licence provisions.

 

Equivalent provision in the PSL Act: paragraphs 64(1)(c) and (d)    

 

Clause 186 - Rights of production licensees following application for pipeline licences by other persons

 

A production licensee may apply for a pipeline licence in the same way as any other party, but, when it comes obtaining a pipeline licence for conveying petroleum recovered under that production licence, this clause sets out the preferential right of the production licensee to be granted a pipeline licence for that purpose and how that right may be exercised.

 

In every case, under clause 418, information about a pipeline licence application must be published in the Gazette . Where a party other than the production licensee has submitted an application for a pipeline licence under clause 185, this publication initiates the period during which the production licensee may apply for a pipeline licence in preference to the other party and request that the other application be rejected. However, as set out in the next clause, even when the abovementioned situation exists, the production licensee’s right to a pipeline licence is a qualified one.

 

Equivalent provision in the PSL Act: subsection 64(2)   

Policy change: conversion of “3 months” and “6 months” to “90 days” and “180 days” respectively

 

Clause 187 - Grant of pipeline licence—offer document

 

This clause sets out the provisions governing the offer of a pipeline licence to an applicant under 4 different scenarios.

 

The only scenario under which the Joint Authority is obliged to offer a pipeline licence to the applicant is the one set out in subclause (3). This is the case of a production licence holder applying for a pipeline licence for conveying petroleum recovered in that licensee’s production operation and there has been compliance with the production licence conditions and with the proposed Act and regulations to the extent that they place obligations on the licensee as a licensee.

 

If the scenario set out in subclause (4) applies, ie there has not been compliance with the production licence conditions or with the proposed Act and regulations to the extent that they place obligations on the licensee as a licensee but there are sufficient grounds to justify the granting of the pipeline licence, and if there is an application from the another party as well, it will be up to the Joint Authority to decide which applicant should be offered the licence, if either. The Joint Authority would make its decision on the basis of information presented in the competing applications, including details about available financial and technical resources and proposed or concluded commercial agreements.

 

If there has not been compliance with the production licence conditions or with the proposed Act and regulations to the extent that they place obligations on the licensee as a licensee and there are no sufficient grounds to justify the granting of the pipeline licence to the production licensee, then the production licensee is precluded from obtaining the pipeline licence and the competing applicant, if there is one, would be the party who could be offered a pipeline licence at that time.

 

Subclause (5) refers to a pipeline licence for the conveyance of petroleum recovered from another country’s continental shelf, from the Joint Petroleum Development Area between Australia and East Timor, or, conceivably, from the International Seabed Area. Such a case would obviously not involve petroleum recovered by a production licensee operating under the proposed Act and clause 186 would have no application to it.

 

Equivalent provision in the PSL Act: subsections 65(1), (2), (2A), paragraph 65(7)(a) and subsection 65(8) 

Policy change : requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to warrant the granting of a pipeline licence in a situation of non-compliance

 

Clause 188 - Refusal to grant pipeline licence

 

This clause sets out the grounds on which a production licence application must be refused. If the Joint Authority deems those grounds to apply to a particular application, it must enter into a consultation procedure as set out in clause 226, possibly involving other parties as well as the production licensee. This is because the findings of fact will determine the course of action that the Joint Authority is permitted to take and it is therefore important to ensure that the finding is correct, and consultation with the applicant and other parties provides the best opportunity for doing so.

 

If that procedure does not yield information that causes the Joint Authority to come to a different view, the Joint Authority must refuse to grant the production licensee the pipeline licence and advise the applicant in writing of this decision.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Joint Authority (such as this one) may request reasons for it.

 

No consultation procedure applies if the applicant for a pipeline licence is not the production licensee from whose production operation the pipeline is intended to convey petroleum. In that case a refusal decision is not mandatory and, if it is made, it merely has to be conveyed to the applicant in writing. The policy determining the kinds of decisions that require consultation is explained under clause 226.

 

Equivalent provision in the PSL Act: subsection 65(3) and (5)

Policy change : requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to enable the granting of a pipeline licence in a situation of non-compliance

 

Clause 189 - Grant of pipeline licence

 

This clause ensures that once the Joint Authority has given an offer document to the applicant, the Joint Authority cannot renege on granting the pipeline licence, provided the applicant requests the licence within 90 to 180 days after the document was given to the applicant (the detailed rule about the timeframe is set out in clause 224). This would even preclude the Joint Authority from attempting to renege on the offer by seeking to reserve, under clause 242, one or more of the blocks which the proposed route of the pipeline transects. As in every other case where there is a duty to grant a title, the Joint Authority is to grant the licence as soon as practicable. 

 

Equivalent provision in the PSL Act: subsection 65(10) 

 

DIVISION 3 VARYING A PIPELINE LICENCE

Clause 190 - Variation of pipeline licence on application by licensee

 

This clause sets out the procedure for applying for a variation of a pipeline licence. This is complemented by provisions set out in Part 2.10.

 

Subclause (3) is a reference to the Gazette notice referred to in clause 418, which must be published in respect of any application for variation of a pipeline licence. This is to enable other interested parties to make submissions about the proposal.

 

The variation, or refusal of it, is to be notified in writing to the licensee. However, a variation does not come into effect on the date of the notice to the licensee but on the date of publication of a notice about it in the Gazette under clause 418.

 

Equivalent provisions in the PSL Act: subsection 71(1), paragraphs 71(2)(c) and (d) and subsections 71(5) and 95(4)

Technical change: that written notice of the approval or refusal of a variation application is to be given to the applicant

 

Clause 191 - Variation of pipeline licence at the request of a Minister or a statutory body

 

This clause envisages a situation where a Minister of the Commonwealth, a State or the Northern Territory, or a statutory body of the Commonwealth, a State or a Territory, approaches the Joint Authority, seeking changes in the design, construction, route or position of a pipeline for some reason that is unrelated to petroleum production and conveyance operations. This could be to facilitate some other activity which is in the public interest, such as the construction of a wharf or other port facility.

 

Issues of this type would be more likely to arise in the offshore area of an external territory than in the offshore area of a State or the Northern Territory. This is because the Offshore Constitutional Settlement creates a minimum 3 nautical mile buffer zone of coastal waters between an offshore area and the coastline, or any island, of a State or the Northern Territory, whereas, around an external Territory, the offshore area has the low water mark as its landward limit. Nevertheless, this clause covers all contingencies.

 

If a request relating to an external Territory were given at the Ministerial level, it would be given by the Commonwealth Minister responsible for Territories. Otherwise, it could be given by a statutory authority existing in the external Territory, such as a harbour trust.

 

Accordingly, if the Joint Authority is of the opinion that it is in the public interest to make the suggested changes in the design, construction, route or position of a pipeline, it may vary the relevant pipeline licence accordingly and give a direction to the licensee to make the changes in a specified time which must be reasonable.

 

The penalty consequences of non-compliance with the direction are set out in subclause (5). Section 4D of the Crimes Act 1914 provides that the penalty shown is the maximum penalty. Imprisonment penalties may be converted to pecuniary penalties. This is provided for in section 4B of the Crimes Act.

 

Subsection 4B(3) of the Crimes Act provides: “Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence.”

 

Conversely, if there is compliance, the provisions for the pipeline licensee to win cost recovery through court action are set out in clauses (6), (7) and (8). 

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provisions in the PSL Act: section 72 and subsection 95(4)

Policy changes: that the period specified in the direction for compliance must be reasonable; that the Joint Authority must take note of a request from a Northern Territory Minister as much as from a State Minister; that jurisdiction to hear an action for cost recovery is conferred on the Federal Court as much as on a Supreme Court; omission of an equivalent of the power to give directions to “the holder of an instrument of consent under section 60” given that this power is redundant following the removal, in 2000, from sections 60 and 72 the Act, of all mentions of secondary lines, water lines, pumping stations, tank stations and valve stations 

 

DIVISION 4 PIPELINE OPERATION

 

Clause 192 - Common carrier

 

This clause, dealing with establishing a pipeline licensee as a common carrier of petroleum, is one that has equivalents in petroleum legislation in other parts of the world.

 

In law, as it affects pipeline operators, a common carrier is one whose business is to be ready to carry or convey for hire, at a reasonable price, goods for any consignor, irrespective of who the consignor may be. The common carrier is bound to convey the

goods of any person who offers to pay the carrier’s hire rate provided the means of conveyance is not fully committed at the time.

 

The exceptions under subclause (3) to the Joint Authority’s powers to direct a pipeline licensee to be a common carrier of petroleum relate to the possibility that provisions under other Commonwealth legislation may already bring about a similar result.

 

Paragraph (3)(a) refers to one of the alternative regulatory arrangements that could apply, but only if the product being conveyed through the pipeline is natural gas. For the purposes of the proposed Act, natural gas and processed natural gas are regarded as petroleum, and the most likely scenario under which this provision would operate would be one involving an offshore processing plant. The owner or operator of a pipeline, which is covered within the meaning of the Third Party [Gas] Access Code, is required to have an Access Arrangement approved by the relevant regulator.  The Access Arrangement for a covered pipeline determines certain reference tariffs and other terms and conditions under which access will be made available, subject to the requirements of the Code. This Code, while set out in South Australian legislation, has status as Commonwealth law under the Gas Pipelines Access (Commonwealth) Act 1998 .

 

P aragraph (3)(b) refers to another possible situation, viz that of the pipeline being a declared service under section 44H of the Trade Practices Act 1974 . This means that certain requirements attach to the service provided by the pipeline. For instance, the provider or a user of the pipeline must not engage in conduct for the purpose of preventing or hindering a third party's access to the pipeline (section 44ZZ of the Trade Practices Act refers).

 

P aragraph (3)(c) refers to a third possible situation, viz that of the person who is, or expects to be, the provider of a pipeline service giving a written undertaking to the Australian Competition and Consumer Commission under section 44ZZA of the Trade Practices Act in connection with the provision of access to the pipeline . Such an undertaking could includean obligation on the provider not to hinder access to the pipeline.

 

The arrangements referred to in paragraphs (3)(b) and (3)(c) are both set out in Part IIIA of the Trade Practices Act. If the Joint Authority has given a direction to a pipeline licensee to be a common carrier, paragraph (4) provides that none of the alternative arrangements listed in paragraph (3) could then be made to simultaneously apply to the pipeline.

 

Equivalent provision in the PSL Act: section 73   

 

Clause 193 - Ceasing to operate pipeline without consent

 

This clause is to ensure that full use will be made of any pipeline which has been licensed under this legislation. There is no impediment to a pipeline licensee ceasing pipeline operation under an established operating schedule, for repairs or maintenance or in an emergency.

 

However, if a proposed cessation is for another reason, most likely a commercial one, this clause provides that the Joint Authority’s consent must be sought before the step is taken. This is primarily to ensure that the pipeline licensee makes adequate provision for decommissioning the pipeline and takes safety issues properly into account.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in the PSL Act:   section 74

 

Part 2.7 Special prospecting authorities

DIVISION 1 GENERAL PROVISIONS

Clause 194 - Simplified outline

 

This clause gives a summary of Part 2.7 covering special prospecting authorities. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Clause 195 - Rights conferred by special prospecting authority

 

This clause gives the holder of a special prospecting authority rights to do everything required in the authority area to explore for petroleum except drilling a well. A special prospecting authority may be granted where the authority area is not subject to an exploration permit, retention lease or production licence at the time when the special prospecting authority is sought. Normally, a special prospecting authority is granted for carrying out seismic surveys, aerogravity surveys, aeromagnetic surveys, airborne laser fluorimetry surveys or seabed sampling. The rights are to be subject to conditions that are entered on the authority. The making of a well is prohibited by subclause (2).

 

The mention in subclause (3) of these rights also being subject to “this Act and the regulations” refers to other provisions such as the fact that the special prospecting authority could be cancelled, surrendered or simply expire.

 

Equivalent provision in the PSL Act: subsections 111(4) and (5)

 

Clause 196 - Conditions of special prospecting authorities

 

The power to insert conditions in special prospecting authorities exists to ensure that the individual characteristics of each exploration project are able to be dealt with in a way that satisfies the regulator and is accepted by the authority holder.

 

Conditions could include temporal and spatial restrictions to address issues such as avoiding conflict with navigation in a shipping lane or exclusion from a marine park area (see clause 243).

 

Equivalent provision in the PSL Act: paragraph 111(3)(a) 

Technical change: that the Joint Authority may grant a special prospecting authority “subject to whatever conditions the Joint Authority thinks appropriate” rather than “such conditions as the Joint Authority thinks fit”

 



Clause 197 - Duration of special prospecting authority

 

This clause sets out the basic provisions about the term of a special prospecting authority but, in subclause (4), provides that the term could be shorter depending on whether a surrender or cancellation takes place.

 

Equivalent provision in the PSL Act: subsection 111(6) 

Policy change:   conversion of “6 months” to “180 days”

 

Clause 198 - Special prospecting authority cannot be transferred

 

The provision in this clause precluding the transfer of a special prospecting authority is based on the short (maximum 180 day) term of a special prospecting authority. The administrative procedures involved in transferring a title under the proposed Act would be disproportionate to the duration of a special prospecting authority. As there is no enduring title to an area under a special prospecting authority, there is no loss in requiring any new party to apply for an entirely new special prospecting authority.

 

Equivalent provision in the PSL Act: subsection 111(6A)

 

DIVISION 2 OBTAINING A SPECIAL PROSPECTING AUTHORITY

Clause 199 - Application for special prospecting authority

 

This clause provides that a special prospecting authority application may be lodged by any person or company over blocks that are not under an exploration permit, retention lease or production licence.

 

A special prospecting authority could be sought over blocks that are totally vacant, over blocks in which a pipeline or infrastructure facility has been, or may be, constructed under the relevant licence, over blocks covered by access authorities, over blocks covered by one or more other special prospecting authorities or over blocks in respect of which a scientific investigation consent has been given.

 

The main reasons for acquiring a special prospecting authority would be situations where an explorer (permittee) wants to gather data outside the permit area to better understand the regional geological or structural setting or where a seismic contractor wants to undertake a speculative survey with the intention of making the data available for sale to explorers. However, in the first case, permittees, being existing titleholders, could achieve the same end by applying for an access authority. Doing so would have a number of advantages such as the possibility of acquiring access even when the block is under an exploration permit, retention lease or production licence held by another party.

 

The basic application procedure set out in this clause is complemented by provisions in Part 2.10.

 

Equivalent provision in the PSL Act:   subsection 111(1) and paragraph 111(2)(c)

 



Clause 200 - Grant or refusal of special prospecting authority

 

This clause provides that, in line with the division of responsibilities under the Petroleum (Submerged Lands) Act, the Joint Authority is to have no role in decisions to grant or to refuse special prospecting authorities, apart from possibility of the block(s) being reserved under clause 242. The decision on granting a special prospecting authority is in the hands of the Designated Authority and is to be conveyed to the applicant in the form of the approved special prospecting authority document or as a written notice of refusal.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Designated Authority (such as this one) may request reasons for it.

 

Equivalent provision in the PSL Act: subsection 111(3)

 

Clause 201 - Holders to be informed of the grant of another special prospecting authority

 

This clause provides that a special prospecting authority in respect of any particular block is not an exclusive right. In fact, as many special prospecting authorities as the Designated Authority considers appropriate may be granted over the same block. However, each holder of a special prospecting authority would need to be advised of the exploration operations authorised by, and the conditions governing, every other special prospecting authority covering or extending into that block.

 

Equivalent provision in the PSL Act: subsection 111(6B) 

 

Part 2.8 Access authorities

 

DIVISION 1 GENERAL PROVISIONS

Clause 202 - Simplified outline

 

This clause gives a summary of Part 2.8 covering access authorities. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Clause 203 - Rights conferred by access authority

 

This clause gives the holder of an access authority rights to carry out specified operations in the authority area, as long as these do not involve the making of a well. The rights are further defined elsewhere by the fact that the holder must be, in an adjoining area, the holder of an exploration permit, retention lease, production licence, special prospecting authority or a State or Northern Territory equivalent title. The authorised operations must consist of exploration or operations related to the recovery of petroleum in the access authority holder’s other title area.

 

Thus a permittee, lessee or special prospecting authority holder could seek an access authority for obtaining geoscientific information about a block adjoining the permit, lease or authority area to set geoscientific information about the permit, lease or authority area into a broader picture for reasons of improved interpretation. In practice, this could involve the permittee, lessee or authority holder carrying out seismic surveys, aerogravity surveys, aeromagnetic surveys, airborne laser fluorimetry surveys or seabed sampling in the adjoining block.

 

In the same way, a production licensee could seek an access authority for obtaining geoscientific information about a block adjoining the licence area but the precise type of information sought could be slightly different in that it would be of relevance to the recovery of petroleum already known to be present rather than to exploration.

The rights are to be subject to conditions that are entered on the authority. The mention in subclause (3) of these rights also being subject to “this Act and the regulations” refers to other provisions such as the fact that the access authority could be cancelled, surrendered or simply expire.

Equivalent provision in the PSL Act: subsections 112(5) and (6)

 

Clause 204 - Conditions of access authorities

 

The power to insert conditions in access authorities exists to ensure that the individual characteristics of each authorised project are able to be dealt with in a way that satisfies the regulator and is accepted by the authority holder.

 

Conditions could include temporal and spatial restrictions to address issues such as avoiding conflict with navigation in a shipping lane or exclusion from a marine park area (see clause 243).

 

Equivalent provision in the PSL Act: paragraph 112(3)(a) 

Technical change: that the Joint Authority may grant an access authority “subject to whatever conditions the Joint Authority thinks appropriate” rather than “such conditions as the Joint Authority thinks fit”

 

Clause 205 - Duration of access authority

 

This clause sets out provisions for the duration of an access authority. While this could be any period that is specified in the authority, the duration is normally short and would not extend, or be extended, beyond the date when the applicant’s other title would be expected to come to an end through expiry, revocation or termination.

 

Subclause (3) provides that the term could be shorter depending on whether a surrender or cancellation takes place.

 

Equivalent provision in the PSL Act: subsection 112(7) 

 



DIVISION 2 OBTAINING AN ACCESS AUTHORITY

Clause 206 - Application for access authority

 

This clause sets out the prerequisites for applying for an access authority, the purposes for which the authority could be used and the basic information that must be set out in the application. The basic application procedure set out in this clause is complemented by provisions in Part 2.10.

 

The scenario of a State or Northern Territory petroleum title holder seeking an access authority is premised on the State or Northern Territory title area interacting with the boundary between that State or Territory’s coastal waters and the offshore area in question. In that case, the holder of the title would approach the Designated Authority in respect of that offshore area. However, if the titleholder is a Commonwealth permittee, lessee, licensee or holder of a special prospecting authority, the application must be made to the Designated Authority of the offshore area to which the titleholder’s existing title relates. This is irrespective of whether the area to which access is sought under the authority is within the same or another offshore area.

 

Equivalent provisions in the PSL Act: subsections 112(1), (1A), (1B) and (1C) and paragraph 112(2)(c)

 

Clause 207 - Grant or refusal of access authority

 

This clause provides that, in line with the division of responsibilities under the Petroleum (Submerged Lands) Act, the Joint Authority is to have no role in decisions to grant or to refuse access authorities, apart from possibility of the block(s) being reserved under clause 242. The decision on granting an access authority is in the hands of the Designated Authority and is to be conveyed to the applicant in the form of the approved access authority document or as a written notice of refusal.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Designated Authority (such as this one) may request reasons for it.

 

The reference in paragraph (1)(b) to the access authority potentially being necessary for the proper performance of the applicant’s duties refers to situations such as one in which a permittee has a work-bid commitment to drill a well in an area that is close to the boundary of the permit area and the permittee needs to fine-tune the available geophysical information to determine the most prospective site for the well.

 

This clause also provides that, in the case of a Commonwealth titleholder, the grant of the access authority is always made by the Designated Authority who has administrative responsibility for the other title held by the applicant, even if access is sought into an adjoining offshore area. In the latter case, the Designated Authority must obtain approval from the Designated Authority of the other offshore area.

 

Equivalent provision in the PSL Act: paragraph 112(3)(a) and subsection 112(4A). 

 

Clause 208 - Consultation—grant of access authority in same offshore area

 

This clause provides that an access authority is not an exclusive right, and could be granted in respect of an area over which any other title under the Act is in force. This includes areas to which infrastructure licences or pipeline licences apply. Holders of the latter titles are not, however, involved in the consultation procedures set out in this clause.

 

In paragraph (1)(b), the reference to the application area being to any extent the subject of an exploration permit, retention lease, production licence or special prospecting authority is a reference to the possibility that, if, for example, the access authority application relates to 2 blocks, only one of them may be the subject of one of the abovementioned titles.

 

Paragraph (1)(c) indirectly acknowledges that the holder of an exploration permit, retention lease, production licence or special prospecting authority in one block could apply for an access authority over another block despite the fact that the titleholder has a separate exploration permit, retention lease, production licence or special prospecting authority over that other block. Given that the second title would allow the titleholder to do whatever was intended under the access authority, this is at first glance counterintuitive, but it is, in rare cases, plausible. Where the title over that adjoining block is about to expire or be terminated and the titleholder nonetheless wants to continue exploration operations in the block for some time after the expiry or termination, there is the possibility that the Designated Authority may grant an access authority for this purpose. However, it might be undesirable to have a break in operations in the adjoining block for the time it takes the Designated Authority to consider an access authority application from the titleholder. In other words, it could be beneficial for this consideration and granting process to be able to run its course when the other title over the block is still in force.

 

Under the above scenario, any need for a consultation procedure is circumvented for obvious reasons, as it is in all cases where the holder of a title over the block (that is in the same offshore area) to which access is sought has already consented in writing to an access authority being granted.

 

Equivalent provision in the PSL Act: paragraphs 112(4)(a), (b)(i), (c) and (d)   

Policy change: conversion of “one month” to “30 days”

 

Clause 209 - Consultation—approval of grant of access authority in adjoining offshore area

 

This clause sets out a consultation procedure for the situation where the intended access authority area encroaches into an adjoining offshore area. The procedure then is similar to the one set out in clause 208 except that the consultation, including the consideration of any submissions received, must be carried out by the Designated Authority for the offshore area in which the block(s) to which access is sought is/are situated.

 

The points made in relation to paragraph (1)(c) under clause 208 apply equally to paragraph (1)(c) under this clause.

 

However, in this case, the consultation process cannot be circumvented by the access authority applicant obtaining written consent from the titleholder(s) in the other offshore area. This replicates the equivalent provision in the Petroleum (Submerged Lands) Act and is proposed for reasons of administrative tidiness given that two Designated Authorities and two different title registers are involved.

 

Equivalent provision in the PSL Act: paragraphs 112(4B)(a), (c), (d)(i), (e) and (f) 

Policy change conversion of “one month” to “30 days

 

DIVISION 3 VARIATION OF ACCESS AUTHORITIES

 

Clause 210 - Variation of access authority

 

This clause provides for the variation of an access authority. If the area, or proposed new area, of the access authority that is to be varied is situated in a different offshore area than the holder’s other title, the process requires the approval of the Designated Authority for that offshore area.

 

Equivalent provision in the PSL Act: paragraph 112(3)(b) and subsection 112(4A)

 

Clause 211 - Consultation—variation of access authority in same offshore area

 

This clause provides that the provisions that apply under clause 208 to consultation where an access authority application is lodged are replicated with one additional detail where the Designated Authority proposes to vary an existing access authority.

 

The additional requirement is that, in every case, under subparagraph (2)(b)(i), the Designated Authority must give a copy of the notice setting out the proposed variation to the holder of the access authority as well as to the other parties mentioned in the clause. This is because the proposed variation does not necessarily originate from an application by the access authority holder. The variation may be proposed of the Designated Authority’s own volition, because the access authority holder has requested it or because some other party has requested it.

 

Equivalent provision in the PSL Act: paragraphs 112(4)(a), (b), (c) and (d)   

Policy changes: in the case of a proposed variation of an access authority, consultation to be required only if the other titleholder has not given written consent to the variation; conversion of “one month” to “30 days”

 

Clause 212 - Consultation—approval of variation of access authority in adjoining offshore area

 

This clause provides that the provisions that apply under clause 209 to consultation where an access authority application is lodged in respect of an area in an adjoining offshore area are replicated with one additional detail where the Designated Authority proposes to vary an existing access authority of this type.

The additional requirement is that, in every case, under subparagraph (2)(b)(i), the Designated Authority of the adjoining offshore area must give a copy of the notice setting out the proposed variation to the holder of the access authority as well as to the other parties mentioned in the clause. This is because the proposed variation does not necessarily originate from an application by the access authority holder. The variation may be proposed of the Designated Authority’s own volition, because the access authority holder has requested it or because some other party has requested it.

 

Equivalent provision in the PSL Act : paragraphs 112(4B)(b), (c), (d), (e) and (f)     

Policy changes: conversion of “one month” to “30 days”

 

DIVISION 4 REPORTING OBLIGATIONS OF HOLDERS OF ACCESS AUTHORITIES

 

Clause 213 - Reporting obligations of holders of access authorities

 

This clause recognises the generally exclusive right that holders of exploration permits, retention leases and production licences enjoy to explore their title areas for as long as the title is held. Accordingly, any other titleholder who is granted an access authority to the area is placed under a reporting obligation to the principal titleholder so that any useful information gleaned from exploration under the access authority is passed on to the party who could convert that information into economic gain.

 

Section 4D of the Crimes Act 1914 provides that the penalty shown for failure to report information as required is the maximum penalty. However, subsection 4B(3) of the Crimes Act provides: “Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence.”

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in the PSL Act : subsection 112(11)   

Policy changes: conversion of “28 days” to “30 days”

 

DIVISION 5 REVOCATION OF ACCESS AUTHORITIES

Clause 214 - Revocation of access authority

 

In view of the usually short duration of an access authority, and the limits this places on any consultation procedure being able to run its course, this clause gives the Designated Authority the power to revoke an access authority without consultation procedures of the kind that apply, for example, to cancelling titles under clause 239. However, if the authority has covered an area that is under an exploration permit, retention lease or production licence, the holder of that title needs to be informed of the revocation, just as that holder must be advised, under clause 213, of the results of the authority holder’s investigations.

 

Equivalent provision in the PSL Act: paragraph 112(8)(b)

Policy change: that, because the bringing to an end of an access authority does not necessarily imply any infringement of the Act, regulations or conditions, the action be called a “revocation” rather than a “cancellation”

 

Part 2.9 Scientific investigation consents

 

Clause 215 - Simplified outline

 

This clause gives a summary of Part 2.9 covering scientific investigation consents. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Clause 216 - Rights conferred by scientific investigation consent

 

This clause recognises Australia’s obligations under the United Nations Convention on the Law of the Sea (UNCLOS) to allow marine scientific research on its continental shelf. Paragraph 3 to Article 246 of this Convention states:

 

“Coastal States shall, in normal circumstances, grant their consent for marine scientific research projects by other States or competent international organizations in their exclusive economic zone or on their continental shelf to be carried out in accordance with this Convention exclusively for peaceful purposes and in order to increase scientific knowledge of the marine environment for the benefit of all mankind. To this end, coastal States shall establish rules and procedures ensuring that such consent will not be delayed or denied unreasonably.”

 

This obligation is elaborated on in paragraph 6 to the Article, which provides, in part, that coastal States may not exercise their discretion to withhold consent in respect of marine scientific research projects to be undertaken on the continental shelf beyond 200 nautical miles from the territorial sea baseline outside “specific areas which coastal States may at any time publicly designate as areas in which exploitation or detailed exploratory operations focused on those areas are occurring or will occur within a reasonable period of time.”

 

While the provisions governing the grant of a scientific investigation consent under the Petroleum (Submerged Lands) Act were drafted at a time when an earlier international convention was in force, the structure of the provisions is reflective of there being international obligations in existence. While the administration of scientific investigation consents will be reviewed at some stage, the provisions in the Petroleum (Submerged Lands) Act do not create any conflict with the UNCLOS requirements and they are therefore replicated in this Bill with little change.

 

Unless the conditions specify a restricted investigation area, a scientific investigation consent does not have a title area other than the offshore area of the Designated Authority who grants it. If the plan were to carry out a research project requiring access to more than one offshore area, then a separate scientific investigation consent would need to be obtained from the Designated Authority of each offshore area.

 

The rights are to be subject to conditions that are entered on the consent and to compliance with clause 243, which provides, essentially, that the holder must minimise interference with the marine environment and the rights of other users of the marine areas in which the scientific investigation is carried out.

Equivalent provision in the PSL Act: subsections 123(2) and (3)  

 

Clause 217 - Conditions of scientific investigation consents

 

This clause gives the Designated Authority power to set conditions in scientific investigation consents. These conditions could be more wide-ranging in their scope than those applying to other title-holders under the proposed Act because these conditions are in fact the main legal instrument for regulating the consent-holder’s activities.

 

Equivalent provision in the PSL Act: subsection 123(2) 

 

Clause 218 - Grant of scientific investigation consent

 

This clause provides that the Designated Authority of any particular offshore area has power to decide whether to grant a scientific investigation consent for that offshore area. It also provides that the petroleum exploration operations for which consent is sought must form part of a scientific investigation. This means that the Designated Authority, before agreeing to grant a consent, would require a relevant amount of information about the credentials of the proponents and the objectives and plan of the scientific investigation.

 

Equivalent provision in the PSL Act: subsection 123(1) 

 

Part 2.10 Standard procedures

 

Clause 219 - Application to be made in an approved manner

 

This clause provides that various applications that may be made under the proposed Act must be made in an approved manner, which means that they must be made in a manner approved in writing by the Designated Authority (clause 6 refers). Subsection 33(3A) of the Acts Interpretation Act 1901 provides:

 

Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) with respect to particular matters (however the matters are described), the power shall be construed as including a power to make, grant or issue such an instrument with respect to some only of those matters or with respect to a particular class or particular classes of those matters and to make different provision with respect to different matters or different classes of matters.”

 

Thus the Designated Authority might require, for example, some information in some types of applications to be submitted in the form of a statutory declaration and not require it for other types of applications.

 

The Petroleum (Submerged Lands) Act contains no provision for the Designated Authority to stipulate the manner in which a scientific investigation consent application is submitted. As this can be justified, in part, by reference to Australia’s international obligations under the United Nations Convention on the Law of the Sea to allow scientific investigations in its marine jurisdiction, no change to this policy is proposed in this Bill. 

 

Equivalent provisions in PSL Act: paragraphs 21(1)(b), 22A(5)(c), 23(4)(b), 30(2)(b), 38A(2)(b), 38BB(2)(b), 38F(2)(b), 41(1)(b), 47(6)(b), 51(2)(b), 54(2)(b), 59B(2)(a), 59K(2)(a), 64(1)(b), 71(2)(b), 111(2)(b) and 112(2)(b)

 

Clause 220 - Application fee

 

This clause sets out the requirement for applicants for certain titles and renewals under Chapter 2 to submit a prescribed fee with their application. This is merely to recover administrative costs in processing the application. This is provided for in subclause (4), which precludes fees from being set at a level that amounts to taxation.

Under the Petroleum (Submerged Lands) Act, neither access authorities nor scientific investigation consents have been subject to an application fee. This can be justified on the basis that an applicant for an access authority is in most cases already paying an annual fee to cover administration of that applicant’s existing title area and the access authority would be auxiliary to the work done in that area. In the case of a scientific investigation consent, the absence of an application fee may be justified on the grounds that at least some scientific research projects have a non-profit status and that Australia has an obligation under the United Nations Convention on the Law of the Sea to allow scientific investigations in its marine jurisdiction. No change to these exemptions is proposed in this Bill. 

 

Subsection 33(3A) of the Acts Interpretation Act provides as follows:

“Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) with respect to particular matters (however the matters are described), the power shall be construed as including a power to make, grant or issue such an instrument with respect to some only of those matters or with respect to a particular class or particular classes of those matters and to make different provision with respect to different matters or different classes of matters.”

 

Accordingly, subclause (2) acknowledges, by the use of the words “if any”, that fees may not have been prescribed for an application relating to every one of the grants or variations mentioned in subclause (1).

 

Subclause (5) clarifies that moneys offered, required and paid as cash bids under various provision of the Bill are not classed as fees.

 

Equivalent provisions in the PSL Act: paragraphs 21(1)(f), 22A(5)(h), 24(1)(a), 30(2)(c), 38A(2)(e), 38BB(2)(e), 38F(2)(d), 41(1)(e), 48(1)(a), 51(2)(e), 54(2)(d), 59B(2)(d), 59K(2)(d), 64(1)(f), 71(2)(e) and 111(2)(d)

 

Clause 221 - Application may set out additional matters

 

The provision in this clause for an applicant to set out additional information in the application does not cover every type of application, for example the renewal of an exploration permit, retention lease or production licence (where applicable). This is because, in the case of these renewal applications, if the Joint Authority is inclined to refuse the application, the Joint Authority is required to give the applicant the opportunity to make additional submissions at that later stage (clause 226 refers).

 

In other cases, for example an application for a special prospecting authority or for the variation of an infrastructure licence or a pipeline licence, there is no provision for an applicant to set out additional information in the application because, under the relevant clause, the ambit of what may go into the application is wide to the point that it would be superfluous to refer to “additional matters”. In one other case, ie an application under clause 154 for production licences over individual blocks, o nce the Joint Authority has been presented with certain facts as required under the clause, the grant of the production licences must follow as a matter of course and any other information submitted cannot influence the outcome one way or another.

 

Equivalent provision in PSL Act: paragraphs 21(1)(e), 22A(5)(g), 23(4)(e), 38A(2)(d), 38BB(2)(d), 41(1)(d), 47(6)(f), 59B(2)(c), 64(1)(e) and 112(2)(d) 

 

Clause 222 - Designated Authority may require further information

 

The power in this clause for the Designated Authority to require additional information from an applicant does not extend to every type of application, for example to the renewal of an exploration permit or the first renewal of a fixed-term production licence. This is because, in these cases, the Joint Authority is entitled to consider only certain information, which is fully within the Joint Authority’s knowledge, ie whether the applicant has complied as required with the Act, regulations and title conditions. A power to require any other information would be inconsistent with this policy. If the Joint Authority’s finding is a negative one, then the Joint Authority is required to give the applicant an opportunity to make additional submissions to establish sufficient grounds to justify a renewal.

 

In the case of an application under clause 154 for production licences over individual blocks, there is no provision for the Designated Authority to seek further information, and this is for the same reason as indicated under clause 221. In the case of an application for a special prospecting authority, access authority or scientific investigation consent, the Petroleum (Submerged Lands) Act has made no provision for additional information to be required. This can be justified on the grounds of administrative efficiency, given that these are generally titles of short duration. If an application for one of these latter titles were rejected on the basis of the information provided, or lack of it, the applicant could try again, setting out a different case. No change from this policy is proposed in the Bill. 

 

The Designated Authority’s power to require an applicant to provide further information could be used more than once in connection with any particular application.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Designated Authority (such as this one) may request reasons for it.

 

The notice referred to in subclauses (7), (8) and (9) serves a purpose for taxation assessment under the Petroleum Resource Rent Tax Assessment Act 1987 .

 

Equivalent provisions in PSL Act:   subsections 21(4), 22A(6), 23(5), and 38A(3), paragraph 38B(1)(b), subsection 38BB(3), paragraph 38 BC(1)(b), subsection 38F(4), paragraph 38G(1)(b), subsections 41(2), (3), (4) and (5), paragraph 43(3)(a), subsections 47(7), 59B(3), 59C(1), 59K(3), 64(4) and 71(3)

Policy changes: the fact that the consequences of a breach of a requirement as set out in subclause (3) apply to the grant of a permit, the grant of a production licence over surrendered blocks, the variation of a production licence or of an infrastructure licence and the grant or variation of a pipeline licence (whereas currently they do not); that the refusal under subclause (3) is discretionary in all cases (whereas currently it is binding in the case of a retention lease grant or renewal application and an infrastructure grant application); conversion of “28 days” to “30 days”

 

Clause 223 - Offer documents

 

This clause sets out the details that must be included in offer documents under Chapter 2. This is to ensure that the applicant receiving the document is made fully aware of what the applicant must do to secure the grant or renewal of the title concerned.

 

The fact that the conditions need to be summarised in the offer document is a means to ensuring that the company concerned will not be operating under conditions that it finds unacceptable. In the course of preparing the title conditions, in practice there would be consultations between the Designated Authority and the applicant. In the final analysis, if the applicant cannot accept the conditions, the applicant can allow the application to lapse by not taking up the offer.

 

Under the Petroleum (Submerged Lands) Act, there is no provision for the use of offer documents for special prospecting authorities, access authorities or scientific investigation consents. This can be justified on the grounds of administrative efficiency, given that these are generally titles of short duration. No change from this policy is proposed in the Bill.

 

The note under clause 153 provides background about why an offer document under clause 151 is not mentioned under subclause (5).

 

Equivalent provisions in the PSL Act: paragraph 22(1)(a), subsections 22(2), 22B(3), 25(5), 32(4), 38B(3), 38BC(3), 38G(4) and paragraphs 43(2)(a) and (c) and subsections 49(5), 55(7), 59C(2) and 65(7)

 



Clause 224 - Acceptance of offer—request by applicant

 

This clause sets out the time limits for taking up the offer of a title under the proposed Act. The longer acceptance periods generally reflect the higher degree of capital expenditure to which the applicant could be making a commitment if the offer were taken up in relation to a production licence, infrastructure licence or pipeline licence.

 

The Petroleum (Submerged Lands) Act has provided a longer acceptance period for special exploration permit offers than for other permits offers. This can be justified on the grounds that an invitation for bids for a special exploration permit is likely to occur as an unexpected event and the successful applicant may accordingly need more time to find the funds to meet the cash-bid commitment. No change from this provision is proposed in the Bill.

 

Equivalent provisions in the PSL Act: subsections 22(3) and (5), 22B(4) and (6), 26(1) and (2), 32(5) and (7), 38B(4) and (6), 38G(6) and (8), 44(1) and (4), 49(6) and (7), 55(8) and (10), 59E(1), (2) and (4) and 65(9) and (11)

Policy changes:   conversion of “one month” to “30 days”, “3 months” to “90 days” and “6 months” to “180 days”

 

Clause 225 - Acceptance of offer—payment

 

This clause provides that, in those cases where a non-fee payment is required, even if the applicant has requested the grant of the title within the timeframe set out under clause 224, the application will lapse if the payment is not also made within that same timeframe.

 

Equivalent provision in the PSL Act: paragraphs 22B(6)(b), 26(2)(b) and 49(7)(b)

 

Clause 226 - Consultation—adverse decisions

 

This clause replicates and enhances provisions that appear in the Petroleum (Submerged Lands) Act for consultation before the Joint Authority may take adverse decisions in relation to certain types of applications. The scenarios all involve an application either for renewal of a title or a new development in the life of an established operation under a title. Thus all applications covered by this clause would be preceded by some financial investment by the titleholder over a number of years.

 

In all these cases, a finding of the Joint Authority will determine the course of action that the Joint Authority is permitted to take, for instance whether there are sufficient grounds to justify the renewal of a title despite non-compliance with specified requirements. It is therefore important to ensure that the finding is correct, and consultation with the applicant and other parties provides the best opportunity for doing so.

 

Equivalent provisions in the PSL Act: subsections 32(3), 38G(3), 55(4) and 65(4) 

Policy changes: conversion of “one month” to “30 days”; the fact that the consultation procedure applies to an intended refusal of a retention lease to a production licensee; the fact that the consultation procedure applies to an intended refusal of a production licence second renewal in a case where the only ground for contemplating the refusal is failure to produce petroleum within the 5 years preceding the date of the application 

 

Part 2.11 Variation, suspension and exemption

DIVISION 1 VARIATION, SUSPENSION AND EXEMPTION DECISIONS RELATING TO EXPLORATION PERMITS, RETENTION LEASES, PRODUCTION LICENCES, INFRASTRUCTURE LICENCES AND PIPELINE LICENCES

Clause 227 - Variation, suspension and exemption—conditions of titles

 

This clause sets out the rules that apply when it comes to considering a variation to, suspension of, or exemption from, the conditions of a title under the proposed Act. The principle behind this clause is that, in the ordinary course of events, the conditions under which a titleholder operates should not change during the term of the title. Before the conditions may be revisited, either the titleholder needs to apply for a variation, suspension or exemption or something else affecting the title needs to happen. These scenarios are set out in the table under subclause (1). For example, if a pipeline licensee were given a direction under clause 192 to be a common carrier, one could expect the conditions to be varied if the existing conditions tied the pipeline to supporting only one particular production operation.

 

The Petroleum (Submerged Lands) Act requires the variation of a production licence, infrastructure licence or pipeline licence to be notified in the Gazette but not that of an exploration permit or retention lease. This can be justified on the grounds of administrative efficiency, given that permits and leases are more numerous and have a shorter duration than do these licences. This distinction is accordingly retained in the Bill.

 

Equivalent provisions in the PSL Act: subsections 103(1) and 95(4)

 

Clause 228 - Extension of term of exploration permit or retention lease—suspension or exemption

 

This clause refers primarily to conditions imposing some work program on a permittee or lessee. If the work program is suspended, or the permittee or lessee is temporarily exempted from having to meet work program milestones, this would have to be for a reason that the Joint Authority considers valid grounds. The same reason could then justify the Joint Authority extending the term of the permit or lease under this clause so that the permittee or lessee is not forced into non-compliance with the title conditions because the set work program was not achieved by the end of the term of the permit or lease.

 

Equivalent provision in the PSL Act: subsection 103(3) 

 

Clause 229 - Suspension of rights—exploration permit or retention lease

 

This clause provides for a suspension of all rights under an exploration permit or retention lease if it is necessary to do so in the national interest. This could be for reasons such as an emerging defence issue or a newly discovered area of high environmental sensitivity.

 

Under the Petroleum (Submerged Lands) Act, this power to suspend does not apply to rights conferred under production licences, infrastructure licences or pipeline licences. The distinction can be understood in terms of the higher capital investment and the smaller total areas of the seabed that operations under these licences involve. No change to this policy is therefore proposed in this Bill.

 

Equivalent provisions in the PSL Act: subsections 103A(1), (2) and (3)

 

Clause 230 - Extension of term of exploration permit or retention lease—suspension of rights

 

This clause provides for the extension of the term of a permit or lease that has been suspended under clause 229. This would normally be done so that the permittee or lessee is not forced into non-compliance with the title conditions because the set work program was not achieved by the end of the term of the permit or lease.

 

Equivalent provision in the PSL Act: subsection 103A(4) 

 

DIVISION 2 VARIATION, SUSPENSION AND EXEMPTION DECISIONS RELATING TO SPECIAL PROSPECTING AUTHORITIES AND ACCESS AUTHORITIES

Clause 231 - Variation, suspension and exemption—conditions of special prospecting authorities and access authorities

 

This clause sets out the circumstances under which conditions attached to a special prospecting authority or access authority may be varied or suspended or be the subject of an exemption. This clause reflects the more limited rights conferred by special prospecting authorities and access authorities when compared to other titles.

 

Item 1 of the table in subclause (1) envisages an access authority being in effect over a block that is the subject of an exploration permit, retention lease or production licence. Then the very fact of one of these other titles being held in relation to the block means that the conditions of the access authority could be varied or suspended or be the subject of an exemption at any time.

 

Item 2 envisages two or more access authorities being in effect over a block that is the subject of an exploration permit, retention lease or production licence. Then the variation of one of these access authorities opens the way for the Designated Authority to vary the other, or others, as well.  Item 2 points to a variation, suspension or exemption decision being made because such an action has been carried out in relation to another access authority in the same block. That decision may or may not have anything to do with the fact that a permit, lease or licence is also in force over the block.

 

Items 3 and 4 of the table in subclause (1) are identical provisions to those which apply to other titles under clause 227.

 

Equivalent provision in the PSL Act: subsection 103(1A)

 

Part 2.12 Surrender of titles

DIVISION 1 SURRENDER OF EXPLORATION PERMITS, PRODUCTION LICENCES, RETENTION LEASES, INFRASTRUCTURE LICENCES AND PIPELINE LICENCES

Clause 232 - Application for consent to surrender title

 

This clause sets out the rules about making valid applications for consent to surrender a title. The reasons why a consent for surrender is pertinent are discussed under the next clause.

 

As set out in subclause (1), exploration permits, production licences and pipeline licences may be surrendered in whole or in part, but retention leases and infrastructure licences must be surrendered in their entirety. This is because a retention lease area does not normally contain blocks determined to be totally unprospective (which a permit area might have) or blocks that have been exploited to exhaustion (which a production licence area might have). In the case of an infrastructure licence, the characteristics of the title make an application for its variation more apposite than a partial surrender. 

 

Equivalent provision in the PSL Act:   subsection 104(1)

 

Clause 233 - Consent to surrender title

 

This clause sets out the matters that a titleholder must have attended to before the Designated Authority will consent to the surrender of a title, in whole or in part. If the requirements have not been met and are not met, a decision to disallow a surrender does not mean that the company concerned will continue to hold the title for any lengthy period. The Joint Authority can proceed to cancel the title on those grounds, and this is in addition to the possibility of criminal prosecution under clause 311. However, a cancellation, which must be notified in the Gazette , carries a stigma that could affect the company’s reputation and future access prospects to exploration areas, not only in Australia but possibly also overseas. A surrender, on the other hand, maintains the company’s good standing.

 

Some points of explanation about the provisions in paragraphs (3)(c), (d), (e) and (f) and subclause (4) are set out under clause 311. In item 4 under subclause (7), the meaning of the “surrender area” in relation to a pipeline licence is to be understood as including whatever area on either side of the pipeline contains scatterings of construction debris or discarded parts or equipment resulting from the construction or maintenance of the pipeline.

 

An example of a situation to which subclause (6) would apply would be a work-bid exploration permit which has a 6 year term and is subject to:

(a)        a condition that requires the holder, during each year of the term of the permit, to carry out the work specified in the permit for the year concerned; and

(b)        a condition that requires the holder to carry out the work specified for the first 3 years of the term of the permit before the end of the third year.

 

If the permittee applies for consent to surrender the permit during the second year of the term of the permit and the permittee has completed the specified work for the first and second years of the permit but has not completed the work specified for the third year, the permittee has not complied with the condition mentioned in paragraph (b).

 

If the permittee applies for consent to surrender the permit during the fourth year of the term of the permit and the permittee has not completed the work specified for the fourth year, the permittee has not complied with the condition mentioned in paragraph (a).

 

In either case, the permittee’s ability to surrender the permit at the time sought would be in doubt, as all the requirements of paragraph (3)(b) would not have been met. The surrender could be consented to only if, under subclause (5), the Designated Authority were satisfied that there were sufficient grounds to justify it.

 

Under section 13 of the Administrative Decisions (Judicial Review) Act 1977 , a person affected by a decision of the Designated Authority (such as this one) may request reasons for it.

 

Equivalent provisions in the PSL Act: subsections 104(2), (3), (3A) and (5)  

Policy change : requirement that the Joint Authority be satisfied that there are “sufficient grounds” rather than “special circumstances” to warrant giving consent to surrender in a situation of non-compliance

 

Clause 234 - Surrender of title

 

This clause provides that, if the Designated Authority has given a titleholder written notice under subclause 233(2) of the Designated Authority’s consent to a surrender, then the surrender needs to be effected by the titleholder giving a written notice to the Designated Authority, followed by publication of a Gazette notice which will mark the date of effect of the surrender.

 

Equivalent provision in the PSL Act: subsections 95(2), (2A) and (3) and 104(4)  

 

DIVISION 2 SURRENDER OF SPECIAL PROSPECTING AUTHORITIES AND ACCESS AUTHORITIES

Clause 235 - Surrender of special prospecting authority

 

In view of the fact that a special prospecting authority is a short-term title, this clause allows the surrender of a special prospecting authority to be effected by a simple written notice from the holder to the Designated Authority. Any issues related to remedial action in the former authority area may be dealt with under clause 312.

 

Equivalent provision in the PSL Act: paragraph 111(7)(a)

 



Clause 236 - Surrender of access authority

 

In view of the fact that an access authority is generally a short-term title, this clause allows the surrender of a special an access authority to be effected by a simple written notice from the holder to the Designated Authority. Any issues related to remedial action in the former authority area may be dealt with under clause 312.

 

Equivalent provision in the PSL Act: paragraph 112(8)(a)

 

Part 2.13 Cancellation of titles

DIVISION 1 CANCELLATION OF EXPLORATION PERMITS, PRODUCTION LICENCES, RETENTION LEASES, INFRASTRUCTURE LICENCES AND PIPELINE LICENCES

Clause 237 - Grounds for cancellation of title

 

This clause deals only with medium to long term titles (omitting special prospecting authorities, access authorities and scientific investigation consents), and sets out the actions or omissions of titleholders that can lead to cancellation of the title as one of the possible sanctions available to the Joint Authority. Other sanctions could include criminal prosecution, refusal to renew the title if and when it expires and, in some cases, civil action for cost recovery.

 

Essentially, the grounds for cancellation are failure to comply with the title conditions, directions and the proposed Act and regulations, plus the Annual Fees Act and the Royalty Act, to the extent to which they place obligations on the titleholder as a titleholder.

 

Equivalent provision in the PSL Act: subsection 105(1) 

Policy change: conversion of “3 months” to “90 days”

 

Clause 238 - Cancellation of title

 

This clause provides for the Joint Authority to cancel any one of the titles to which clause 237 applies, but only after a consultation procedure as set out in clause 239, possibly involving other parties as well as the titleholder. That procedure may or may not yield information that causes the Joint Authority to come to a different view about the cancellation proposal. 

 

The Petroleum (Submerged Lands) Act provides that a retention lease cannot be cancelled in respect of only a part of the lease area, whereas an exploration permit or a production licence may be partially cancelled in this way. This policy is set to be reviewed in due course. For the purposes of this Bill, it can be justified on the grounds that, with the proposed cancellation of a retention lease, it is implausible that the Joint Authority would be in a situation of conflicting priorities. However, if the cancellation of an exploration permit or production licence were being contemplated, competing priorities might plausibly be involved. This might happen if the permittee in question were thought to be on the verge of a significant discovery, or if the exclusion of the producer from an area would result in some remnant of petroleum in a pool remaining permanently unrecovered. The issue could then possibly be resolved by cancelling the permit or licence in respect of only a part of the permit or licence area.

 

Subclause (2) and the consultation provisions in clause 239 are intended to ensure that a cancellation may be performed only after careful deliberation and if any identified mitigating circumstances have been deemed insufficient to prevent it.

 

Equivalent provision in the PSL Act: paragraphs 105(1)(e), (eaa), (ea) and (f) and 105(2)(d)(i) and subsections 95(2), (2A) and (3)

 

Clause 239 - Consultation

 

This clause sets out the consultation procedure that must be undertaken before a title to which clause 237 applies may be cancelled. The third parties to whom the Joint Authority may give a copy of the notice could include, for example, a contractor of the titleholder who has been involved in operations under the title. Submissions from such parties could, in some cases, cause the Joint Authority to come to a different view of whether the title should be cancelled.

 

Equivalent provision in the PSL Act: paragraphs 105(2)(a), (b), (c) and (d)(ii)

Policy change: conversion of “one month” to “30 days” 

 

Clause 240 - Cancellation of title not affected by other provisions

 

Replicating a provision of the Petroleum (Submerged Lands) Act, this clause provides that the cancellation of a title and conviction for a related offence are not mutually exclusive, nor are the cancellation of a title and the liability of a titleholder to pay overdue moneys to the Commonwealth.

 

Whenever legislation provides more than one set of possible consequences for a default or infringement by a person, a question may arise as to whether the person may be subjected to both sets of consequences or whether the regulator or prosecuting authority must choose between them. In each case, the answer will depend on a consideration of the statutory provisions concerned and the nature of the consequences. The inclusion of this clause eliminates any vestige of uncertainty about the situation that applies to cancellation and the other matters mentioned above.

 

Equivalent provision in the PSL Act: section 106

 

Division 2 Cancellation of special prospecting authorities

 

Clause 241 - Cancellation of special prospecting authority

 

In view of the short duration of a special prospecting authority, and the limits this places on any consultation procedure being able to run its course, this clause gives the Designated Authority the power to cancel a special prospecting authority without consultation procedures of the kind that apply to the titles dealt with under Divisions 1 and 2.

 

Equivalent provision in the PSL Act: paragraph 111(7)(b)  

 

Part 2.14 Other provisions

Clause 242 - Reservation of blocks

 

Replicating the provisions of the Petroleum (Submerged Lands) Act, the power under this clause to reserve blocks is provided to cover a situation where the national interest precludes the block(s) from being the subject of any petroleum title. This could occur, for example, in the case of a defence need or because of an issue of environmental sensitivity.

 

Use of the power is restricted to blocks that are not at the time the subject of an exploration permit, retention lease or production licence, and in which there is no infrastructure licence area and in which no pipeline has been constructed. In addition, vacant blocks that are the subject of a current offer of a title could not be reserved under this clause unless and until the offer lapsed .

 

Reserved blocks could be blocks over which a special prospecting authority or access authority is in force at the time of the declaration. An access authority could be revoked by the Designated Authority once the block had been reserved, but a special prospecting authority would remain in force until its expiry date unless it were surrendered before then or there were grounds for cancelling it, specifically non-compliance with the conditions to which it was subject.

 

Precluding vacant blocks by a declaration under this clause from being the subject of a permit, lease or licence is normally unnecessary because any permit or licence bidding process over a vacant block cannot occur unless the Joint Authority initiates it. Moreover, an exploration permit, retention lease, production licence, infrastructure licence or a pipeline licence cannot be offered except by the Joint Authority.

 

However, a declaration under this clause does preclude the Designated Authority from granting a special prospecting authority or access authority over the block. The Joint Authority does not normally have such a power to override a proposal of the Designated Authority. A declaration would not affect the Designated Authority’s right to grant a scientific investigation consent over the block.

 

If a pipeline licence were in force and no construction had yet occurred under it but the approved route of the pipeline transected a block which was then reserved under this clause, the declaration would not prevent the pipeline from being built in that block. However, the declaration would prevent all other activities under the proposed Act from being carried out in the block, apart from scientific investigations.

 

The Petroleum (Submerged Lands) Act provides no express provision for cancelling a declaration made under the equivalent of this clause, and no such provision is proposed in the Bill. This is because subsection 33(3) of the Acts Interpretation Act provides:

 

“Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.”

 

Equivalent provision in the PSL Act: section 18  

 

Clause 243 - Interference with other rights

 

This clause places any titleholder under the proposed Act under an overriding responsibility to take into account the needs of other users of the marine environment and the protection of the environment itself. Additionally, there exist under the Petroleum (Submerged Lands) Act regulations such as the Management of Environment Regulations, which will be replicated under the proposed Act. Even if some conduct of a titleholder were deemed to be technically not in contravention of those regulations, that titleholder could still be guilty of contravening this clause of the proposed Act.

 

Mention of the Native Title Act was inserted into the equivalent provision of the Petroleum (Submerged Lands) Act in 1995 to include native title rights and interests among the rights and interests which persons undertaking petroleum operations under the Act must respect and not unduly interfere with. This does not mean that native title necessarily extends into any offshore area. Whether it does or not, this provision is still relevant because the location of some offshore petroleum facilities makes it possible that supply vessels steaming from a port to the facility could pass through coastal waters that have significance in terms of native title rights and interests.

 

Section 4D of the Crimes Act 1914 provides that the penalty shown is the maximum penalty. However, subsection 4B(3) of the Crimes Act provides: “Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence.”

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in the PSL Act: section 124

 

Clause 244 - No conditions about payment of money

 

This clause provides that conditions must not be used to impose cost recovery or taxation on titleholders. Separate enactments exist for this purpose, ie the Offshore Petroleum Annual Fees Bill and the Offshore Petroleum Registration Fees Bill, and the level of fees imposed is set under regulations, bringing them under Parliamentary scrutiny.

 

In the Petroleum (Submerged Lands) Act, payments under the Royalty Act have been made an exception to this rule, ie it is a condition of a title to which the Royalty Act applies that royalty payments be made as set out in that Act. This serves a purpose in strengthening the enforcement regime in respect of royalty obligations, as failure to pay royalty will accordingly constitute a breach of title conditions, ie grounds for refusing to renew the title. There is also the possibility of court action to enforce the payment of unpaid royalty under clause 344 or cancellation of the title under clause 237.

 

Equivalent provision in the PSL Act: section 139  

 

Clause 245 - Certain portions of blocks to be blocks

 

This clause has relevance in at least two different situations that may arise under the proposed Act. One of these was described in the 1967 explanatory notes to the Petroleum (Submerged Lands) Act, under which the Commonwealth inherited a number of permit areas that had been previously managed under State legislation. In respect of section 149 of the Act, the explanatory notes made, among other things, the following points:

 

“The majority of existing permits do not conform to any regular pattern and the boundaries in many cases do not follow lines of latitude and longitude. For instance, some permits are expressed as having a boundary so many miles from the general line of the coastline.

 

The result of this is that in these cases existing permit boundaries cut across the graticular system of this Bill. The effect of sub-clause (1) is that where a title boundary cuts a block in two, then each part of the block constitutes a block for the purposes of the Bill.

 

[This provision] deals with the case where parts of graticular blocks revert to the Crown. In this case the Designated Authority is given discretion to amalgamate the parts so as to form whole graticular blocks. The effect is that the Designated Authority may, as it were, graft on a part of a block to an existing permit or licence.”

 

That was the situation in 1967, and, to a point, it is so even now. A small number of current titles cover areas the boundaries of which do not fully conform with the 5 minute x 5 minute grid, and, in each case, these are derived from early exploration permits.

 

If another Commonwealth permit, lease or licence is granted covering the remainder of the clause 16 block in question, subclause 245(3) allows a combining of the blocks in the clause 16 block when one of the titles ceases to have effect. The small policy change that is proposed in paragraph 245(3)(b) is that if the clause 16 block also contains vacant area, referred to in paragraph (2)(b) as “the remaining portion or portions of the section 16 block”, then that area can also be included in the amalgamation of blocks. This is something that section 149 of the Petroleum (Submerged Lands) Act does not appear to allow.

 

The second situation could arise if the scenario postulated under clause 246 eventuates, ie there is a change to, or reassessment of the location of, the baseline of Australia’s territorial sea.  The net result could be that the baseline is determined to lie further landward than previously understood, so that more of the seabed comes under Commonwealth jurisdiction. If a Commonwealth permit, lease or licence area in a particular block is in contact with the former offshore area - coastal waters boundary, then a sliver of area still under a State/Northern Territory title could appear on the Commonwealth side touching the Commonwealth title area in that graticular section. If the State/Northern Territory title were prescribed as a “prescribed instrument”, then that sliver under the State/Northern Territory title would constitute a block and the remainder of the graticular section, forming part of the Commonwealth title, would constitute another block.

 

When the State/Territory title ceased to have effect, if the Commonwealth title were still in force, subclause 245(3) provides that the sliver of area could be combined with the block to which the Commonwealth title applies.

 

Equivalent provision in the PSL Act:   section 149

Technical change : references to “this Act” rather than to “this Part” (recognising that the Schedule 4 content under this Bill is not in a schedule under the Petroleum (Submerged Lands) Act)

Policy change : that any vacant area (not merely area that has just been vacated) in a graticular section may be amalgamated with a title area in that graticular section

 

Clause 246 - Changes to, or reassessment of the location of, the baseline of Australia’s territorial sea

 

This clause refers to the fact that cartographers have determined coordinates for the line representing the 3 nautical mile outer limit of coastal waters off the States and Northern Territory. This is the inner boundary of waters to which this Act applies.

 

The United Nations Convention on the Law of the Sea has set out provisions for defining the position of the territorial sea baseline from which this 3 nautical mile line is measured. In many places, the baseline is the low water mark along the coast. In localities where the coastline is deeply indented and cut into, or if there is a fringe of islands along the coast in its immediate vicinity, Article 7 of the Convention provides that the method of “straight” baselines joining appropriate points may be employed in drawing the baseline.

 

From this one can deduce that the territorial sea baseline can change its position. This could occur because of geological processes, such as the movement of sand on a beach, or because the position of the “straight” baseline is reinterpreted for some reason, such as a new precedent set in an international law case or because new data have been obtained enabling a more precise determination than the previous one. 

 

In that situation, the calculated coordinates of the 3 nautical mile line will also shift, leaving a sliver of area to be added either to what were previously the State or Northern Territory coastal waters or what was previously the Commonwealth offshore area. This clause sets out the way that strip of area will be dealt with if it happens to be the subject of a State or Northern Territory petroleum title or a Commonwealth petroleum title. Among other things, this ensures that, if a pipeline constructed in an offshore area under Commonwealth jurisdiction happens to run for some distance parallel to the 3 nautical mile line in the vicinity of that line, there will be no complications in relation to its status as a licensed pipeline if the position of the baseline changes.  

 

Equivalent provision in the PSL Act: section 5AAA  

 

Clause 247 - Notification of discovery of petroleum

 

This clause requires the immediate reporting of petroleum discoveries in exploration permit or retention lease areas. This will ensure that the Designated Authority has the full range of options open to it, such as instructing the permittee or lessee to collect a specific type of core, cutting or sample from the seabed when the drilling operations are still on-going.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provisions in the PSL Act: sections 34 and 38J  

 

Clause 248 - Property in petroleum

 

This clause gives a permittee, lessee or licensee title to any petroleum recovered under the exploration permit, retention lease or production licence. This establishes, among other things, the identity of the party that is liable for the payment of petroleum related taxation, whether under the proposed Royalty Act or the Petroleum Resource Rent Tax Act, and the point in time when the wealth-producing asset passes into that party’s possession.

 

However, while the quantity of petroleum recovered from a particular pool is an objective fact, the proportion of that petroleum that is deemed to have been recovered in a particular title area and become the property of that titleholder could be determined by the provisions regarding the apportionment of petroleum recovered from adjoining title areas set out in clauses 34 to 37.

 

This clause means that the permittee, lessee or licensee also owns any hydrogen sulphide, nitrogen, helium or carbon dioxide that is recovered with the hydrocarbon product (the definition of “petroleum” in clause 6 refers) and may market any of these gases, if commercially viable. On the other hand, depending on other legislation, ownership of these gases could place the permittee, lessee or licensee under responsibilities, for example in relation to their safe and non-polluting disposal.

 

Equivalent provision in the PSL Act: section 127  

 

Clause 249 - Compensation for acquisition of property

 

This clause refers to paragraph 51(xxxi) of the Australian Constitution, which provides:

 

“The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to … (t)he acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has the power to make laws”.

 

If any of the provisions referred to in paragraph (1)(a) of this clause represents an acquisition of property otherwise than on just terms, then this clause provides that just terms compensation is to be payable to ensure the validity of the provision.

 

This clause provides a safety-net. It ensures that, in the event that any of the provisions referred to in paragraph (1)(a) represent an acquisition of property otherwise than on just terms, the validity of those provisions is not jeopardised.

 

Equivalent provision in the PSL Act: subsection 103A(5)  

Policy changes: inclusion of just terms compensation if subclause 139(1) (duration of production licence), 140(4), 169(4), 183(4) (termination of production, infrastructure and pipeline licences if no activity for 5 years) or 229 (suspension of exploration permittee’s or retention lessee’s rights) represents an acquisition of property otherwise than on just terms; conferral of jurisdiction on the Federal Court

 

Chapter 3 - Registration and dealings

 

Part 3.1—Introduction

 

Clause 250 - Simplified outline

 

This clause gives a summary of Chapter 3 covering registration and dealings.  This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

Clause 251 - Definition

 

This clause defines the use of the term ‘title’ for this Chapter to mean an exploration permit, retention lease, production licence, infrastructure licence, pipeline licence or access authority.

 

Two other authorisations under the proposed Act are not included in the definition of a ‘title’, ie a special prospecting authority and a scientific investigation consent. This is because a special prospecting authority cannot be transferred or be the subject of a dealing and no registration provisions apply to scientific investigation consents in view of their non-commercial character.

 

Although, as set out in Part 3.2, special prospecting authorities do need to be registered, the exclusion of special prospecting authorities from the ambit of the term “title” serves an editorial purpose in that all discussion in this Chapter about transfers and dealings is irrelevant to special prospecting authorities.

 

Equivalent provision in the PSL Act: section 75.

 

Clause 252 - Dealing—series of debentures

For reasons of administrative efficiency, this clause provides for all dealings forming a part of the issue of a series of debentures in relation to a particular title to be treated as one dealing for the purposes of this Chapter.

 

Equivalent provision in the PSL Act: subsection 81(7).

 

Part 3.2—Register of titles and special prospecting authorities

 

Clause 253 - Register to be kept

 

This clause requires that the Designated Authority in respect of an offshore area maintain a Register of titles and special prospecting authorities.

The Register is, and will be, essentially a collection of memorials or entries about specified events and facts. It can include copies of documents rather than memorials or entries detailing information in them. On the other hand, not every document that the Designated Authority is required to retain under this Chapter strictly forms part of the Register.

 

Equivalent provision in the PSL Act: subsection 76(1)

 

Clause 254 - Entries in Register—general

 

This clause requires that the Designated Authority must enter certain details in the Register as prescribed in the table, and in subclause (3), in respect of each title or special prospecting authority. For example, the name of the holder of a title or special prospecting authority must be specified in the Register. Additionally, under subclause (5), the memorial or copy entered in the Register must show a memorandum of the date of that entry in the Register.

 

This clause also rectifies a drafting anomaly in the equivalent provision of the Petroleum (Submerged Lands) Act relating to information about retention leases and special prospecting authorities that may be entered in the Register.

 

Equivalent provision in the PSL Act: subsections 76(2), (3), (4) and (6)

Policy change: that the Designated Authority be permitted to enter in the Register such further matters as the Designated Authority thinks proper and expedient, in the public interest, about the holder and conditions of retention leases and special prospecting authorities

 

Clause 255 - Entry in Register—cessation, revocation or expiry of title

 

This clause requires that information about certain events signifying the coming to an end of a title must be entered in the Register. This clause applies only to events that are not accompanied by the issue of a specific instrument bringing about that result.

 

If a title ceases to have effect because of a surrender, cancellation or termination, each of those events, plus the revocation of a retention lease in the situation envisaged in clause 134, is realised by means of a notice or instrument. The provisions about entering those documents in the Register are set out in subclause 254(3).

 

Equivalent provision in the PSL Act: section 77

 

Part 3.3—Transfer of titles

 

Clause 256 - Approval and registration of transfers

 

This clause requires the registration of the transfer of a title before the transfer can have any effect. This clause enables the Designated Authority to vet any proposed transfer and, given the provisions of the proposed Registration Fees Act, indirectly enables the imposition of a registration fee, which is a payment in the nature of a tax.

 

Equivalent provision in the PSL Act: subsection 78(1)

 

 

 

Clause 257 - Application for approval of transfer

 

This clause sets out the procedure for seeking approval of a transfer. It is sufficient if one of the parties makes the application. The concurrence of the other party is evidenced by the documents that must accompany the application, as set out in clause 258. 

 

Equivalent provision in the PSL Act: subsection 78(2)

 

Clause 258 - Documents to accompany application

 

This clause describes the documents and copies of them that are, or may be, required to accompany a transfer approval and registration application and the information that those documents must contain.

 

The reference in paragraph (a) to using an instrument of transfer in the prescribed form is a reference to the proforma currently set out in Schedule 1 to the Petroleum (Submerged Lands) Regulations 1985, which attaches to Regulation 3 of those Regulations. This proforma includes the wording that the transfer is in respect of “all right, title and interest” in the title. This ensures that the whole title is transferred from all the existing registered titleholders to all the intended titleholders. The requirement will continue to apply under the proposed new Act.

 

Paragraph (b) refers to the possibility that the transferee or one or more of the transferees may not be a registered holder of the title being transferred, in which case the information set out in the rest of the paragraph is required. This paragraph therefore implies that a transferee could be a registered holder of the title. This would be the case if a consortium of, say, three companies held a title and there were a proposal to transfer the title to a consortium consisting of two of those companies. In this scenario, the technical qualifications of the transferees and the technical advice and financial resources available to them would already be known to the Designated Authority and would not need to be the subject of a document setting out this information.

 

Equivalent provision in the PSL Act: subsection 78(3)

Policy change: that, because the Joint Authority is no longer involved in the transfer registration process (as it was before 2001), the number of copies required of all documents submitted for transfer approval be changed from two to one

 

Clause 259 - Time limit for application

 

This clause provides that, unless the Designated Authority allows a longer period in cases where he or she finds sufficient grounds for doing so, an application for approval of a transfer must be lodged within 90 days after the last party to the transfer executed the instrument of transfer.  The time limit is of relevance so as to keep the Register as current as possible and to protect the interests of investors and potential investors.

 

Equivalent provision in the PSL Act: subsection 78(4)

Policy change: conversion of “3 months” to “90 days”; that the Designated Authority must be satisfied that there are “sufficient grounds” rather than “special circumstances” to warrant extending the period

 

Clause 260 - Date of application to be entered in Register

 

This clause provides that the Designated Authority must enter a notation in the Register of the date of lodgement of the application for the approval of a transfer, and other details as it considers appropriate. Among other things, this is to ensure there is no uncertainty about whether there has been compliance with the requirements of clause 259.

 

Equivalent provision in the PSL Act: subsection 78(5)

 

Clause 261 - Approval of transfer

 

This clause provides that the Designated Authority must either approve or refuse to approve a transfer, and in either case, the Designated Authority must provide a written notice to the applicant. This action is to be taken only after the Designated Authority has considered the transfer application. This point does not need to be expressly made in the operative text of the clause as it is legally incorrect under administrative law to apply a policy rigidly. Where the Designated Authority refuses to approve the transfer, a notation of the refusal must be made in the Register.

 

Equivalent provision in the PSL Act: subsections 78(6), (7) and (11)

 

Clause 262 - Registration of transfer

 

This clause requires that, on approval of a transfer of title, the Designated Authority must endorse the approval on the original and copy of the instrument of transfer.

 

This does not yet amount to registration of the transfer. That registration will occur only on payment of the registration fee as per the proposed Offshore Petroleum (Registration Fees) Act. That fee will not normally be forwarded with the application as the applicant cannot be certain that transfer will be approved and, in any case, the level of the fee payable will not always be obvious to the applicant at the time of lodging the application. Accordingly, this clause treats it as the normal procedure for the Designated Authority to advise the applicant of the amount of the registration fee and, after its payment, to register the transfer. 

 

Replicating the provisions of the Petroleum (Submerged Lands) (Registration Fees) Act, the registration fee will be broadly along the lines of State or Northern Territory stamp duty, but will exist specifically in lieu of stamp duty. This is dealt with in more detail in the explanatory memorandum to the Offshore Petroleum (Registration Fees) Bill.

 

The transfer is taken to be registered when an entry to that effect is made in the Register and the transferee then becomes the registered holder of the title. The endorsed copy of the instrument of transfer that is retained by the Designated Authority is not strictly part of the Register but it is to be made available for inspection by the public in the same way as is the Register.

 

Equivalent provisions in the PSL Act: subsections 78 (9), (10) and (12)

 

Clause 263 - Instrument of transfer does not create an interest in the title

 

This clause reinforces the same point as clause 256, ie that the registration of the transfer of a title is necessary before the transfer can have any effect.

 

Equivalent provision in the PSL Act: subsection 78(13)

 

Clause 264 - Limit on effect of approval of transfers

 

This clause clarifies that any transfer that is approved by the Designated Authority is not given any force, effect or validity that it would not have had if this Chapter had not been enacted.  The onus is on the applicant to ensure the legality of the transfer and its effect in law, for example, in contract law.

 

Equivalent provision in the PSL Act: section 83

 

Part 3.4—Devolution of title

 

Clause 265 - Application to have name entered on the Register as the holder of a title

 

This clause is based on similar clauses found in Real Property Acts. Under this clause, a party upon whom the rights of the registered holder of a title have devolved by operation of law may apply in writing to have its name entered in the Register in place of the original registered holder.

 

Equivalent provision in the PSL Act: subsection 79(1)

 

Clause 266 - Entry of name in the Register

 

This clause sets out the procedure that the Designated Authority must follow when an application has been made under clause 265. The fee that is payable for registering rights to a title that have devolved on the applicant by operation of law is to be prescribed in regulations under the proposed Act (rather than the proposed Registration Fees Act) and will serve only to recover costs.

 

Equivalent provision in the PSL Act: subsection 79(2)

 

Part 3.5—Change in name of company

 

Clause 267 - Application to have new name entered on the Register

 

This clause provides that, where a company is the registered holder of a title and it has changed its name, it may apply in writing to have its new name registered in the Register in relation that title.

 

This means that, if the one company is the registered holder of two or more titles, separate applications would need to be lodged (possibly on the same document) for the name change to be registered in relation to all of them.

 

Equivalent provision in the PSL Act: subsection 79(3)

 

Clause 268 - Alteration in the Register

 

This clause sets out the procedure that the Designated Authority must follow when an application has been made under clause 267. The fee that is payable for registering the new name of a company in relation to a title is to be prescribed in regulations under the proposed Act (rather than the proposed Registration Fees Act) and will serve only to recover costs.

 

Equivalent provision in the PSL Act: subsection 79(3)

 

Part 3.6—Dealings relating to existing titles

 

Clause 269 - Dealings to which this Part applies

 

This clause defines the various types of commercial dealings and agreements to which this Part applies.

 

Equivalent provision in the PSL Act: subsection 81(1)

 

Clause 270 - Approval and registration of dealings

 

This clause requires the registration of a dealing before it can have any force. This clause enables the Designated Authority to vet any proposed dealing and, given the provisions of the proposed Registration Fees Act, indirectly enables the imposition of a registration fee, which is a payment in the nature of a tax.

 

Equivalent provision in the PSL Act: subsection 81(2)

 

Clause 271 - Application for approval of dealing

 

This clause sets out the procedure for seeking approval of a dealing. It is sufficient if one of the parties to the dealing makes the application. The concurrence of the other party or parties is evidenced by the documents that must accompany the application, as set out in clause 272.

 

If a dealing relates to two or more titles, separate applications are required if approval of the dealing is sought in relation to each title. 

 

Equivalent provision in the PSL Act: subsection 81(3)

 

Clause 272 - Documents to accompany application

 

This clause describes the documents that must or could accompany an application for the approval and registration of a dealing. 

 

The purpose of the supplementary instrument that may be lodged by the applicant is to provide certain prescribed details about the dealing so that, if the dealing is approved, a member of the public may access this instrument instead of seeing a copy of the actual instrument evidencing the dealing. Usually, the applicant would draw up a supplementary instrument if the instrument evidencing the dealing contained information that the applicant wanted to keep confidential, ie information that would not need to be revealed in the supplementary instrument. 

 

Under the Petroleum (Submerged Lands) Act, the details that must appear in a supplementary instrument are prescribed in Regulation 4 of the Petroleum (Submerged Lands) Regulations 1985 . These requirements include specification of the effect, upon registration, of the dealing in the same terms as set out under clause 269, and the provision of details about the interests in the title of all parties to the dealing before and after registration, assuming the dealing is approved. The same requirements are expected to be prescribed under the proposed new Act.

 

Subclause (5) refers to section 263 of the Corporations Act 2001. In summary, this section provides that, where a company creates a charge, the company must, within 45 days, lodge with the Australian Securities and Investments Commission a notice in the prescribed form setting out certain particulars, and, depending on the type of charge, various originals or copies of instruments. For convenience, this subclause provides that a copy of the set of documents lodged under that Act can be lodged for registration purposes under the proposed Act and will have the same standing as an instrument evidencing the dealing would have in any other case. The copy of this set of documents may likewise be accompanied by a supplementary instrument if the company deems that not all the information provided to the Australian Securities and Investments Commission should be made publicly accessible.

 

Equivalent provisions in the PSL Act: subsections 81(4), (4A) and (8).

Policy change: that, because the Joint Authority is no longer involved in the dealing registration process (as it was before 2001), the number of copies required of documents submitted for dealing approval be changed from two to one, or, in the case of documents required to be lodged with the Australian Securities and Investments Commission, from three to two

 

Clause 273 - Timing of application

 

This clause provides that, unless the Designated Authority allows a longer period in cases where he or she finds sufficient grounds for doing so, an application for approval of a dealing must be lodged within 90 days after the last party to the dealing executed the instrument evidencing the dealing. The time limit is of relevance so as to keep the Register as current as possible and to protect the interests of investors and potential investors.

 

Equivalent provision in the PSL Act: subsection 81(5)

Policy change: conversion of “3 months” to “90 days”; that the Designated Authority must be satisfied that there are “sufficient grounds” rather than “special circumstances” to warrant extending the period

 

Clause 274 - Application date to be entered in Register

 

This clause provides that the Designated Authority must enter a notation in the Register of the date of lodgement of the application for the approval of a dealing, and other details as it considers appropriate. Among other things, this is to ensure there is no uncertainty about whether there has been compliance with the requirements of clause 273.

 

Equivalent provision in the PSL Act: subsection 81(9).

 

Clause 275 - Approval of dealing

 

This clause provides that the Designated Authority must either approve or refuse to approve a dealing, and in either case, the Designated Authority must provide a written notice to the applicant. Where the Designated Authority refuses to approve the dealing, a notation of the refusal must be made in the Register. These provisions are consistent with administrative law principles.

 

An application to approve a dealing would have to be refused if there were non-compliance with clause 284. This refers to the fact that parties can negotiate a dealing over a title that is not yet in existence. If and when the title does come into existence and approval is sought to register the dealing, whether it can be approved depends on compliance with the requirements indicated in clause 284. 

 

Equivalent provision in the PSL Act: subsections 81(6), (10), (11) and (14)

Policy change : that, having received an application for approval of a dealing, the Designated Authority must (rather than may) approve or refuse to approve the dealing

 

Clause 276 - Entry of dealing in Register

 

This clause requires that, immediately upon approval of a dealing, the Designated Authority must endorse the approval on the original and copy of the instrument evidencing the dealing, or on two copies, if that was what was lodged.

 

This does not yet amount to registration of the dealing. That registration will occur only on payment of the registration fee as per the proposed Registration Fees Act. That fee will not normally be forwarded with the application as the applicant cannot be certain that the dealing will be approved and, in any case, the applicant will not always know the level of the fee at the time of lodging the application. Accordingly, this clause treats it as the normal procedure for the Designated Authority to advise the applicant of the amount of the registration fee and, after its payment, to register the dealing.   

 

The dealing is taken to be registered when an entry to that effect is made in the Register. Replicating the provisions of the Petroleum (Submerged Lands) (Registration Fees) Act, the registration fee will be broadly along the lines of State or Northern Territory stamp duty, but will exist specifically in lieu of stamp duty. This is dealt with in more detail in the explanatory memorandum to the Offshore Petroleum (Registration Fees) Bill.

 

Equivalent provision in the PSL Act: subsection 81(12)

Policy change: that the Designated Authority must endorse a memorandum of approval on the instruments lodged immediately upon approval of the dealing

 

Clause 277 - Retention, inspection and return of instruments

 

This clause prescribes the procedure that the Designated Authority must adopt after he/she makes an entry in the Register of the approval of a dealing. 

 

The significance of a supplementary instrument and, if used, why a copy of it, instead of the copy of the instrument evidencing the dealing, must be made available for public inspection, are explained in the note to clause 272.

 

The purpose of returning to the applicant, with an appropriate endorsement, the instrument evidencing the dealing and, where provided, the supplementary instrument, is to provide certification to the applicant that the dealing has been approved and registered.

 

Equivalent provision in the PSL Act: subsection 81(13)

 

Clause 278 - Strict compliance with application provisions not required

 

This clause ensures that, if the Designated Authority fails to comply with any of the requirements of this Part, the approval and registration of a dealing is not rendered ineffective.

 

Equivalent provision in the PSL Act: subsection 81(13A)

 

Clause 279 - Limit on effect of approval of dealing

 

This clause clarifies that any dealing that is approved by the Designated Authority is not given any force, effect or validity that it would not have had if this Chapter had not been enacted.  The onus is on the applicant to ensure the legality of the dealing and its effect in law, for example, in contract law.

 

Equivalent provision in the PSL Act: section 83

 

Part 3.7—Dealings in future interests

 

Clause 280 - Provisional application for approval of dealing

 

This clause refers to the possibility that if, for example, a party holding an exploration permit has applied for a production licence which has not yet been granted, that party may, in the meantime, conclude a dealing  with another party about equity in the licence in anticipation that the licence will be granted. For this clause to apply, the dealing would have to be of a type that, in other circumstances, would be covered by Part 3.6.

 

In such cases, but subject to timing conditions set out clause 282, this clause enables a party to the dealing to make a provisional application for approval of the dealing in the same way as clause 271 enables an application to be lodged for the approval of a dealing in relation to a title that already exists.

 

The main benefit of lodging a provisional application for approval of a dealing is that, if and when the title is granted, the applicant can expect an earlier decision from the Designated Authority about the dealing than would otherwise have been possible.

 

Equivalent provision in the PSL Act: subsection 81A(1)

 

Clause 281 - Documents to accompany provisional application

 

This clause requires or permits the same documents and copies to accompany a provisional application for approval of a dealing as would be required under clause 272 if the dealing were in relation to a title that already exists.

 

Equivalent section in the PSL Act: subsection 81A(2)

Policy change : that, because the Joint Authority is no longer involved in the dealing registration process (as it was before 2001), only one additional copy (rather than two copies) is required of the provisional application, the instrument evidencing the dealing and any supplementary instrument, or, in the case of documents required to be lodged with the Australian Securities and Investments Commission, two copies (rather than three)

 

Clause 282 - Timing of provisional application

 

This clause sets out the timeframe within which a provisional application for approval of a dealing may be made.  In no case except that of an access authority may a provisional application be made unless and until an offer document has been given to the applicant. In the case of an access authority, the provisional application may be lodged any time after the application for the authority is submitted. This is because, for reasons of administrative efficiency, the process for obtaining an access authority does not include an offer document stage. In all cases, the provisional application for approval of a dealing must be made before the day on which the title is granted.

 

This clause makes no stipulations about the date on which the dealing might have been concluded between the parties. That commercial transaction could have occurred before the title application was lodged, or after it was lodged but before an offer document for the title is issued, or could occur after the offer document is issued.

 

Equivalent section in the PSL Act: subsections 81A(1) and (4)

 

Clause 283 - Provisional application to be treated as an application under section 271 when the title comes into existence

 

This clause provides that a provisional application for approval of a dealing, lodged in accordance with the abovementioned requirements, will become, from the date of grant of the title, an actual application for approval of the dealing under clause 271.

 

Equivalent provision in the PSL Act: subsection 81A(3)

 

Clause 284 - Limit on approval of dealing

 

This clause provides an alternative to lodging a provisional application for approval of a dealing, assuming the dealing was concluded before the title came into effect (otherwise, the approval procedure would be as set out in Part 3.6).

 

If no provisional application has been made, then, unless the Designated Authority allows a longer period in special circumstances, an application for approval of the dealing must be lodged within 90 days of the title coming into effect. This differs from the arrangement noted under clause 273 in that the date when the instrument evidencing the dealing was last executed by a party to the dealing is not relevant to the timeframe within which the registration application must be lodged.

 

On the other hand, if a provisional application has been lodged, the parties to the dealing need do nothing more when the title comes into effect than await advice of the Designated Authority’s decision. If the decision is affirmative, the parties will then need to remit the required registration fee in order to bring the registration of the dealing into effect.

 

Equivalent provision in the PSL Act: subsection 81(6).

Policy change: conversion of “3 months” to “90 days”

 

Part 3.8—Correction and rectification of register

 

Clause 285 - Corrections of clerical errors or obvious defects

 

To protect the interests of investors and potential investors, changing any existing record in the Register is an action that must not be taken lightly. This clause is the only provision that allows the Designated Authority to make alterations to the Register without first publishing the intention or as a result of the matter having been heard by a court. This clause applies only in the event that there is a clerical error or an obvious defect in the Register.

 

Equivalent provision in the PSL Act: subsection 87A(1).

 

Clause 286 - General power of correction of Register

 

This clause provides that the Designated Authority may make correcting entries that ensure the accurate representation of interests and rights in relation to a title. In all cases, even if there is a written application from a titleholder for this to occur, the Designated Authority must publish in the Gazette a notice setting out the proposed alteration and inviting submissions from members of the public.

 

If one or more persons make submissions within the specified period (at least 45 days), the Designated Authority must consider them. If the Designated Authority decides to make an alteration to the Register, whether or not submissions have been received and whether or not the alteration is identical to the one earlier proposed, another Gazette notice must be published setting out the final form of the alteration.

 

These procedures are proposed to protect the interests of investors and potential investors.

 

Equivalent provisions in the PSL Act: subsections 87A(2), (3) and (4)

Policy change: that gazettal of the final form of the alteration is required even when no submissions have been received

 

Clause 287 - Rectification of Register

 

This clause refers to the kinds of grievances that a person may have in relation to the Register and provides that the person may seek an order for rectification of the Register by an application to the Federal Court or the Supreme Court of the State or Territory to which the relevant offshore area relates.

 

Territory Supreme Courts would include the Northern Territory Supreme Court and the Norfolk Island Supreme Court. Under section 12 of the Ashmore and Cartier Islands Acceptance Act 1933 , the Northern Territory Supreme Court would have jurisdiction in relation to a Register entry pertaining to a title relating to the offshore area of the Territory of Ashmore and Cartier Islands.

 

Equivalent provision in the PSL Act: section 88

Policy change: conferral of jurisdiction on the Federal Court, in addition to the Supreme Courts

 

Part 3.9—Information-gathering powers

 

Clause 288 - Designated Authority may obtain information from applicants

 

This clause refers to all types of applications that companies or individuals can make under this Chapter in relation to the Register and allows the Designated Authority, when assessing the application in question, to require the applicant to provide such additional information as seems necessary or advisable.

 

Among other things, this provision, and the penalties prescribed under it, are intended to maximise the ability of the Designated Authority to properly vet the credentials of parties seeking to register an interest in a title and, where applicable, to correctly calculate the payable registration fee.

 

Current Commonwealth legal policy stipulates that, where a law empowers a regulator to give to a person an instrument requiring compliance with an instruction, the regulator should specify in the instrument a minimum 14 day period for that compliance and the penalty or penalties that apply to non-compliance.  Subclauses (3) and (6) have been inserted to reflect this policy.

 

Section 137.1 of the Criminal Code refers to information given to a Commonwealth entity, given to a person who is exercising powers or performing functions under, or in connection with, a law of the Commonwealth or given in compliance or purported compliance with a law of the Commonwealth. In these situations, a person is guilty of an offence punishable by 12 months imprisonment if the person gives the information knowing that it is false or misleading or knowing that it omits any matter or thing without which the information is misleading.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code, if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provisions in the PSL Act: subsections 84(1), (1B), (1C) and (2)

Technical change: that the Designated Authority may require the applicant to give information to the Designated Authority “within the period and in the manner specified” in the notice

Policy changes: that the Designated Authority may require information to be produced within a period no shorter than 14 days after the date of the written notice; that the Designated Authority must set out in the notice given to the person or company the penalties that could follow from failure to provide information as required, or from knowingly giving false or misleading information

 

Clause 289 - Designated Authority may obtain information from a party to an approved dealing

 

This clause enables the Designated Authority to seek such information as seems necessary or advisable from a person who is party to a registered dealing. Among other things, this provision is proposed so that the Register is kept up to date, reflecting alterations in relevant interests or rights over time.

 

Current Commonwealth legal policy stipulates that, where a law empowers a regulator to give to a person an instrument requiring compliance with an instruction, the regulator should specify in the instrument a minimum 14 day period for that compliance and the penalty or penalties that apply to non-compliance.  Subclauses (3) and (6) have been inserted to reflect this policy.

 

The significance of section 137.1 of the Criminal Code to matters such as this is set out under clause 288.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code, if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provisions in the PSL Act: subsections 84(1A), (1C) and (2)

Technical change: that the Designated Authority may require the person to give information to the Designated Authority “within the period and in the manner specified” in the notice

Policy changes: that the Designated Authority may require information to be produced within a period no shorter than 14 days after the date of the written notice; that the Designated Authority must set out in the notice given to the person or company the penalties that could follow from failure to provide information as required, or from knowingly giving false or misleading information

 

Clause 290 - Production and inspection of documents

 

This clause, like clause 288, refers to all types of applications that companies or individuals can make under this Chapter in relation to the Register. This clause enables the Designated Authority, when assessing the application in question, to require the applicant to produce to the Designated Authority any documents held by the applicant that may be relevant to the application.

 

The reasons why the Designated Authority might use this power are essentially the same as the reasons why the Designated Authority might use the power set out under clause 288.

 

Current Commonwealth legal policy stipulates that, where a law empowers a regulator to give to a person an instrument requiring compliance with an instruction, the regulator should specify in the instrument a minimum 14 day period for that compliance and the penalty or penalties that apply to non-compliance.  Subclauses (3) and (7) have been inserted to reflect this policy.

 

Section 137.2 of the Criminal Code refers to documents produced in compliance or purported compliance with a law of the Commonwealth. In this situation, a person is guilty of an offence punishable by 12 months imprisonment if the person produces a document knowing that the document is false or misleading in a material particular.

 

Under subclause (4), failure by a person to produce or make available a document as required under subclause (2) is an offence of strict liability. This means the prosecution does not have to prove intention. The offence created by the statutory obligation in this subclause could be difficult to establish if the prosecution were required to prove intention with respect to an omission to do the things required. Accordingly, an obligation of this type is usually imposed by the legislature with the intention that strict liability should apply. Further details about strict liability are set out in the note about clause 307.

 

The offence provision in  subclause (6) does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this subclause, the prosecution would have to prove intention.

 

Equivalent provisions in the PSL Act: subsections 85(1), (1A), (2) and (4)

Technical change: that the Designated Authority may require the person to produce or make documents available to the Designated Authority “within the period and in the manner specified” in the notice

Policy changes: that the Designated Authority may require a document to be produced within a period no shorter than 14 days after the date of the written notice; that the Designated Authority must set out in the notice given to the person or company the penalties that could follow from failure to provide a document as required, or from providing a false or misleading document

 

Clause 291 - Designated Authority may retain documents

 

This clause, like clause 414, adds to the proposed Act some provisions related to information-gathering involving documents. These provisions do not appear in the Petroleum (Submerged Lands) Act but are normal in more recently drafted Commonwealth Acts.

 

Equivalent provision in the PSL Act: nil.

Policy changes: that the Designated Authority may take possession of a produced original document for as long as necessary but must provide the person or company to whom it belongs a certified true copy which will have the same status as the original in all courts and tribunals, and, until that copy is provided, must give the person or company reasonable access to the original document

 

Part 3.10—Other provisions

 

Clause 292 - Designated Authority etc. not concerned with the effect of instrument lodged under this Chapter

 

This clause complements clauses 264 and 279 by clarifying that any instrument lodged with the Designated Authority for any purpose under this Chapter takes effect according to its own terms.

 

This provision is intended to relieve the Designated Authority of responsibility for verifying that the instrument has the effect in law that it purports to have. Of course, it may be necessary for the Designated Authority to make some inquiry into the legal effect of an instrument in order to determine its effect in relation to the object and purposes of the Act. Subject to this, the legal effect of an instrument is a matter for the courts and not for the Designated Authority or Joint Authority to determine.

 

The Joint Authority could be indirectly involved with issues arising from documents lodged for registration, for example if an application for a title renewal is lodged and some question is raised about the identity of the applicant.

 

Equivalent provision in the PSL Act: section 83

 

Clause 293 - True consideration to be shown

 

This clause refers to the fact that the amount of the registration fee payable on a transfer or dealing depends on the value of the consideration involved. This clause is intended to ensure that an instrument of transfer or an instrument evidencing a dealing will set out the true consideration for the transfer or dealing and any other factors that may affect the level of the registration fee.

 

The substance of section 137.2 of the Criminal Code is set out under clause 290.

 

Equivalent provision in the PSL Act: subsection 82(1)

Policy change: that there be no equivalent of subsection 82(1A) of the Petroleum (Submerged Lands) Act establishing strict liability as that provision is related to the former paragraph 9.3(2)(b) of the Criminal Code , which has been repealed 

 

Clause 294 - Making a false entry in a Register

 

This clause sets out the offence that applies to knowing involvement in making a false entry in the Register. The offence applies equally to an official working with the Register, a member of the public examining the Register who interferes with the Register and an applicant under this Chapter who communicates false information to the Designated Authority for entry in the Register.

 

Section 145.4 of the Criminal Code provides, in summary, a 7 year imprisonment penalty if a person dishonestly damages, destroys, alters, conceals or falsifies a document that is kept, retained or issued for the purposes of a law of the Commonwealth and the person does so with the intention of obtaining a gain or causing a loss.

 

The present day trend under Australian Government legislative principles is to insert, in offence provisions of this type, a knowledge element. This is so, for example, in section 137.1 of the Criminal Code . This provides, among other things, that, in certain circumstances, a person is guilty of an offence against that section if the person gives information to another person knowing that the information is false or misleading.

 

Accordingly, this clause proposes to rewrite the offence provision that appears in section 90 of the Petroleum (Submerged Lands) Act on the premise that the person involved knows that the entry is false or knows that the information given is false or misleading in a material particular.

 

Equivalent provision in the PSL Act: paragraph 90(a)

Policy change: that the offence applies to making, or involvement in making, of a false entry in the Register with knowledge that the entry is false

 

Clause 295 - Falsified documents

 

This clause sets out the offence that applies to producing a document in evidence that falsely purports to be an extract from, or copy of, an entry in the Register or some other document given to the Designated Authority under the provisions of this Chapter. In other words, this offence relates to the use in evidence of forged or counterfeit documents.

 

The substance of section 137.2 of the Criminal Code is set out under clause 290.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in the PSL Act: paragraph 90(b)

 

Clause 296 - Inspection of register and instruments

 

This clause provides public access to the Register and to copies held of instruments of transfer, instruments evidencing a dealing and supplementary instruments. The applicable fee is to be prescribed under this proposed Act rather than under the proposed Registration Fees Act and will serve only to recover costs.

 

Equivalent provision in the PSL Act: section 86

 

Clause 297 - Evidentiary provisions

 

This clause confers status on the Register and certified copies or extracts from it as prima facie evidence in all courts and proceedings. The proceedings referred to could be, for example, Administrative Appeals Tribunal hearings about a taxation matter. For practical purposes, copies would normally be photocopies. Extracts could be manual transcripts from a hard copy volume which is inconvenient to photocopy or they could be printouts of segments of text in a database kept in electronic form.

 

This clause also enables evidentiary certificates to be prepared, particularly for confirming facts that may not be obvious from a single entry in the Register or a single document held by the Designated Authority. Such certificates will likewise have the status of prima facie evidence.

 

The applicable fees are to be prescribed under this proposed Act rather than under the proposed Registration Fees Act and will serve only to recover costs.

 

Subclauses (6) to (9) have no equivalent in the Petroleum (Submerged Lands) Act but have been added as procedural safeguards consistent with Commonwealth criminal law principles about the use of evidentiary certificates in view of the fact that their use may affect the fairness of proceedings.

 

Equivalent provision in the PSL Act: section 87

Policy changes: that the Register is to have the status of prima facie evidence in non-court proceedings as well as in courts; that, in the event of criminal proceedings, an evidentiary certificate may be admitted as evidence in court or other proceedings only if a copy of the certificate has been provided to the person charged, or a barrister or solicitor acting on this person’s behalf, at least 14 days in advance, with notice of the intention to produce the certificate as evidence in the proceedings; that the person charged may require the person providing the evidentiary certificate to be called as a witness for the prosecution and cross-examined if the prosecutor has been given at least 4 days notice or, where this notice has not been given, if the court, by order, allows this to occur; that any evidence given in support or rebuttal of the matters presented in the certificate must be considered on it merits and the credibility and probative value of such evidence must not be affected by anything in this clause

 

Clause 298 - Assessment of fee

 

This clause allows the Designated Authority to determine the amount of fee payable under the proposed Registration Fees Act in relation to an entry in the Register. Such a determination must, of course, be in compliance with the provisions of that Act. Other fees, for example the fee applicable to obtaining an evidentiary certificate, will not in any way be determined by the Designated Authority as they will be specifically set in the regulations under the proposed Offshore Petroleum Act.  

 

Subclause (2) is intended to ensure that if a person who applies for approval of a transfer or dealing is convicted of an offence under clause 293 in relation to submitting an instrument containing a false or misleading statement, that conviction will not nullify the entry in the Register nor the person’s liability to pay the amount of registration fee that the person temporarily avoided paying by submitting that instrument.

 

Subclause (3) provides appeal rights to any person who has been served with a registration fee determination, including a person of the abovementioned category whose liability has been redetermined. The points made about Supreme Courts in the note to clause 287 apply equally to this clause.

 

The statement about the rights and obligations of the Designated Authority set out in subclause (5) has no equivalent in the Petroleum (Submerged Lands) Act but it is considered prudent to expressly include it in this clause.

 

Equivalent provisions in the PSL Act: subsections 82(2) and (3) and section 91

Policy changes: that the Designated Authority’s power to determine the registration fee extends to all types of entries in the Register (not just the ones that are described in the Petroleum (Submerged Lands) Act as a “memorandum”); that jurisdiction to hear appeals relating to registration fee determinations be conferred on the Federal Court as well as the Supreme Courts; that the Designated Authority must be informed of any appeal action launched in respect of a registration fee determination and is to have the right to appear at the court hearing and is obligated to appear if the court so directs

 

Chapter 4 Administration

 

Part 4.1 Operations

 

Clause 299 - Simplified outline
 

This clause gives a summary of Part 4.1 covering operations. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

Clause 300 - Commencement of works or operations

 

This clause refers to the possibility that certain titles may be granted subject to a condition that specified works or operations are to be carried out under the title. This clause provides for a commencement date for those works or operations. 

 

The provision that the Designated Authority has discretion under subclause (2) to set a commencement date later than 180 days after the grant of the title derives from the fact that, in offshore operations, the unexpected will sometimes occur. A rig may be damaged in transit or there may be delays in obtaining some particular equipment, the damage or delay being beyond the titleholder’s control. Then it would be reasonable for the Designated Authority to vary the commencement date.

 

A work-bid exploration permit is not included among the titles to which this clause applies. This is because the policy governing the assessment of work program bids needs to be flexible enough to allow a commencement at some later point in time than 180 days from the grant of the permit, particularly if the commitments made for the rest of the term of the permit make up for it. By contrast, a special exploration permit is granted under clause 95 on the basis that there is a threshold work commitment but, beyond that, the decision on awarding the title is taken on the basis of cash bids. Accordingly, in the case of a special exploration permit, the Joint Authority exercises less control over the permittee’s work program than in the case of a work-bid exploration permit, and it is appropriate for the commencement date provisions in this clause to apply.

 

Since, under subclause 79(8), a cash-bid exploration permit must not be granted subject to conditions requiring the permittee to carry out work in, or in relation to, the permit area or to spend amounts on the carrying out of work in, or in relation to, the permit area, the commencement date provisions in this clause do not apply to cash-bid exploration permits.

 

Likewise, since, under clause 138, a production licence may not be granted subject to conditions requiring the licensee to carry out a specific work program, or to spend specific amounts on the carrying out of work in, or in relation to, the licence area, the commencement date provisions in this clause do not apply to production licences.

 

The maximum 100 unit penalty imposed by section 96 of the Petroleum (Submerged Lands) Act on failure by a titleholder to commence to carry out works or operations within a certain timeframe is now considered inappropriate (the penalty applied by virtue of the fact that section 4D of the Crimes Act 1914 provides that a penalty at the foot of a section indicates that a breach of the section is an offence)..  It is now felt that sufficient administrative remedies, such as title cancellation, exist for failure to comply with the requirement. This clause therefore carries no criminal penalty. Schedule 3 of the Offshore Petroleum (Repeals and Consequential Amendments) Bill sets out a provision deeming a penalty to have never existed under section 96. The effect of this deeming is that a breach of section 96 will be taken to never have been an offence.

 

Equivalent provision in the PSL Act: section 96

Technical changes:  deletion of the provision that use of the Designated Authority’s discretion is to be for reasons that the Designated Authority “thinks sufficient”; deletion of the provision that the Designated Authority’s deferral of the commencement date is to be by instrument in writing served on the titleholder.

Policy changes: that the commencement date provisions in this clause do not apply to production licences; conversion of “6 months” to “180 days”; deletion of criminal penalty

 

Clause 301 - Work practices
 

This clause imposes a series of general and specific requirements on titleholders. More extensive requirements are imposed under item 1 of the subclause (1) table on titleholders who are entitled to perform operations involving the drilling of one or more wells. The requirements in item 1 are to ensure that good reservoir engineering practices are followed at all times, enabling the conservation not only of petroleum resources but also of water resources. The term “good oilfield practice” is defined in clause 6.

 

Subclause (2) recognises that there could be circumstances where permission might be given for doing something that overrides a specific requirement of the table, for example flaring small amounts of petroleum, which would override sub-item 1(c) of the table.

 

Subclauses (3), (4) and (5) are intended to provide that, in items 1, 2 and 3 under subclause (1), paragraph (a) takes precedence in each case. For example, subclause (3) ensures that the titleholder is not permitted to take steps to prevent damage to petroleum-bearing strata in ways that go beyond doing things in a proper and workmanlike manner and in accordance with good oilfield practice.

 

Under subclause (7), one point of significance of the defendant bearing the legal burden of proof is that the proof must be discharged on the balance of probabilities.

 

The purpose of subclause (8) is to ensure that the operator is not able to avoid any specific duties imposed elsewhere. For example, if the Designated Authority gives an operator a direction, the operator must not fail to comply with it on the grounds that the operator’s understanding of good oilfield practice might suggest some different action should be taken. The mention of “any other law” refers to scenarios such as the possibility that the relevant State or the Northern Territory has laws covering the construction and operation of an industrial plant, for example setting out minimum design specifications. This subclause means that, if work of that type is being performed on a petroleum platform in the offshore area of that State or Territory, then performing it in a proper and workmanlike manner includes compliance with those laws.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention .

 

Equivalent provisions in PSL Act: sections 97 and 99

 
Clause 302 - Insurance

 

This clause is inserted to ensure that a titleholder takes out adequate insurance to cover eventualities such as blowouts, pollution damage and clean-up costs. The requirement is mandatory under the letter of the Act in the case of exploration permittees, retention lessees and production, pipeline and infrastructure licensees but is at the discretion of the Designated Authority in the case of holders of special prospecting authorities and access authorities.

 

The difference is due to the fact that neither of the latter titles allows the drilling of a well or the laying of pipelines, meaning the operations are, on average, less risky. A scenario where the holder of a special prospecting authority or an access authority could be given a direction relating to clean-up or remedying the effects of an escape of petroleum could involve a seismic vessel used by the holder of a special prospecting authority or access authority colliding with a petroleum production platform.

 

In the case of every title, the phrase “as directed by the Designated Authority from time to time” means that the Designated Authority may issue directions about the comprehensiveness and level of cover of the insurance that is to be held.

 

Equivalent provision in PSL Act: subsections 97A(1) and (2)

Policy change: that the Designated Authority’s direction is to be in writing

 

Clause 303 - Maintenance and removal of property etc. by titleholder

 

This clause is one of the provisions by which Australia seeks to meet its obligations under Articles 60, 192 and 210 of the United Nations Convention on the Law of the Sea to maintain the safety of offshore installations and structures, to remove disused installations and structures and to protect and preserve the marine environment.

 

In subclause (1) item 5, “the part of the offshore area in which the pipeline is constructed” is intended to cover construction debris or discarded equipment scattered on either side of the pipeline.

 

Under subclause (6), if the titleholder did not authorise the bringing into the area of any particular item of property, its removal will not involve the titleholder. Assuming the other party is or was involved in a legal petroleum or processing operation under the Act, clauses 312, 313 and 314 set out the procedures that the Designated Authority may resort to in order to secure the removal of that property. 

 

One of the situations to which subclause (7) refers would be a situation envisaged in sub-paragraph 311(2)(a)(ii), where the Designated Authority is prepared to make arrangements “that are satisfactory to the Designated Authority” in relation to a particular item of property. For example, the property could be a production platform in respect of which another party has expressed an interest with a view to converting it into an infrastructure facility. In that case, subclause 311(2) empowers the Designated Authority to allow the platform to be left in situ. There is also an International Maritime Organisation guideline (October 1989) which allows an operator to leave or partially remove certain items if the complete removal involves significant cost or safety implications.

 

The fact that the offence set out in subclause (4) is one of strict liability means the prosecution does not have to prove intention. The offence created by the statutory obligation in this clause could be difficult to establish if the prosecution were required to prove intention with respect to an omission to do the things required. Accordingly, an obligation of this type is usually imposed by the legislature with the intention that strict liability should apply. Further details about strict liability are set out in the note about clause 307.

 

Equivalent provisions in PSL Act: sections 98 and 99

Technical change: that a titleholder must remove from the title area all structures equipment and other items of property that are neither used nor to be used in connection with not only the operations in which the titleholder is currently engaged but also the operations in which the titleholder will be engaged

 

Part 4.2 Directions

 

Division 1 Simplified outline

 
Clause 304 - Simplified outline

 

This clause gives a summary of Part 4.2 covering directions. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in PSL Act: nil.

 

Division 2 General power to give directions

 

Clause 305 - General power to give directions

 

This clause replicates, with no policy change, the provisions in section 101 of the Act establishing the Designated Authority’s power to issue directions with a status equivalent to regulations in relation to all matters about which regulations may be made. Such directions are served individually on each titleholder to whom the Designated Authority wants them to apply.

 

In administrative practice, the variety of technical issues in relation to which directions are given to petroleum operators has narrowed from the days when the original Petroleum (Submerged Lands) Act was passed. For example, requirements related to safety management and environment protection are now set out in objective-based regulations under the Act. The process of transposing subordinate legislation from the directions to regulations is expected to continue until all detailed technical requirements with general, standing or permanent application are placed in objective-based regulations. At that time, it will be appropriate to review the need to retain the power to issue directions of a general, standing or permanent nature that could apply to all titleholders engaged in a particular activity.

 

However, the case for the Designated Authority being able to issue ad hoc directions to individual operators or classes of operators will remain strong. For instance, there is the possibility that, on a particular offshore facility, an emergency situation may arise which the regulations address inadequately or not at all. The option of promulgating a new regulation to cover the situation could be ruled out by the length of time that would be required to go through the Executive Council processes. It could also be ruled out by the consideration that any new regulation might be an indiscriminate instrument applying to all operators, which might not be the desired result.

 

Section 15AC of the Acts Interpretation Act 1901 provides that, where an Act has expressed an idea in a particular form of words and a later Act appears to have expressed the same idea in a different form of words for the purpose of using a clearer style, the ideas shall not be taken to be different merely because different forms of words were used. Thus the statement in clause (5) that “the validity of a direction is not affected by a breach of this subsection” has the same meaning as the equivalent statement in subsection 101(4) of the Act, ie: “the validity of a direction of the Designated Authority shall not be called in question by reason of this subsection.”

 

In accordance with current drafting practice, subclauses (10) and (11) set out the status of directions under this clause in terms of the Legislative Instruments Act 2003 .  Only a direction that is expressed to apply to the class of persons specified in paragraph (3)(b) is a legislative instrument. This is because the direction can then be regarded as determining the law or altering the content of the law (as it affects members of the public having no contractual relationship with the titleholder), rather than applying the law in a particular case.

 

Equivalent provisions in PSL Act: subsections 101(1), (2), (3), (4), (5) and (6)

 

Clause 306 - Notification of a direction that has an extended application

 

This clause places on a titleholder to whom a direction is given the responsibility for ensuring that all relevant persons are aware of the direction. Nevertheless, subclause (3) leaves the way open for the Designated Authority to specify how and where copies of the direction are to be displayed. The latter power would more likely be used if the Designated Authority were of the opinion that persons at a number of separate locations needed to be aware of the substance of the direction.

 

The requirement in subclause (3) is supplementary to that in subclause (2). In other words, if the Designated Authority has given the registered holder a notice under subclause (3) and the registered holder complies with that notice, the registered holder must still display another copy of the direction at a prominent place, or another prominent place, in the offshore area.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provisions in the PSL Act: subsections 101(2A), (2B) and (2C)  

Technical change : that the word “display” is used through the clause instead of the mixture of “display” and “exhibit” that appears in the equivalent provisions in the Petroleum (Submerged Lands) Act

 

 

 

 

Clause 307 - Compliance with direction

 

This clause provides for a penalty for breaching a direction given under clause 305. The infringement could be by omission or commission since, under clause 6, engaging in conduct includes doing an act or omitting to perform an act.

 

Subsection 4B(3) of the Crimes Act provides: “Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence.”

 

The offence created by the statutory obligation in this clause could be difficult to establish if the prosecution were required to prove intention with respect to the failure to comply with a direction.  An obligation of this type is usually imposed by the legislature with the intention that strict liability should apply. 

 

Section 6.1 of the Criminal Code provides, in part:

 

“If a law that creates an offence provides that the offence is an offence of strict liability:

(a) there are no fault elements for any of the physical elements of the offence; and

(b) the defence of mistake of fact under section 9.2 is available.”

The section also provides that the existence of strict liability does not make any other defence unavailable.

 

A physical element of an offence may be:

(a)        conduct; or

(b)        a result of conduct; or

(c)        a circumstance in which conduct, or a result of conduct, occurs.

 

A fault element for a particular physical element may be intention, knowledge, recklessness or negligence.

 

Section 9.2 of the Criminal Code provides:

 

“(1) A person is not criminally responsible for an offence that has a physical element for which there is no fault element if:

 

(a)        at or before the time of the conduct constituting the physical element, the person considered whether or not facts existed, and is under a mistaken but reasonable belief about those facts; and

 

(b)        had those facts existed, the conduct would not have constituted an offence.

 

(2) A person may be regarded as having considered whether or not facts existed if:

(a)        he or she had considered, on a previous occasion, whether those facts existed in the circumstances surrounding that occasion; and

(b)        he or she honestly and reasonably believed that the circumstances surrounding the present occasion were the same, or substantially the same, as those surrounding the previous occasion.”

In view of the fact that it is possible that a person other than the registered holder of a title may not be aware of a direction served on that holder, subclause (3) provides a defence that may be used by that person if he or she is bound by the direction and inadvertently infringes it.

 

Equivalent provisions in the PSL Act: subsections 101(7), (7A) and (8)
Policy change : conversion of $10 000 penalty to 100 penalty units  

 

Division 3 Designated Authority may take action if there is a breach of a direction

 
Clause 308 - Designated Authority may take action if there is a breach of a direction

 

This clause refers not only to directions given under clause 305 but also to directions that may be given to a titleholder under a number of other provisions of the proposed Act and the regulations. This clause provides the necessary machinery for ensuring that things directed to be done are done even if the titleholder or another party who is bound by the direction does not comply with it.

 

Paragraph (1)(a) mentions Part 5.1 despite the fact that directions given under Part 5.1 generally do not relate to actions that could be taken by the Designated Authority if a party bound by the direction fails to comply. One exception is a direction that the Designated Authority may give under paragraph 407(2)(b) to a person to collect and retain cores, cuttings and samples in connection with operations under a title. If the titleholder does not comply with the direction, the law needs to provide that such a collection is able to be arranged by the Designated Authority.

 

Subclause (2) refers to directions by the Joint Authority. These would include directions by the Joint Authority to a production licensee under clause 161 or 162 to recover petroleum or increase or reduce the petroleum recovery rate, directions under subclause 163(5), (6) or (7) for the purpose of securing the more effective recovery of petroleum from a petroleum pool and directions under subclause 191(1) about changes in the design, construction, route or position of a pipeline. 

 

In the same way that subclause 307(3) provides a defence that may be used by a person other than the titleholder who is subject to a criminal prosecution because he or she was bound by a direction under clause 305 and inadvertently infringed it, subclause 308(4) provides a defence that may be used by such a person if he or she is subject to a civil action for cost recovery after the Designated Authority has performed the action required by the direction.

 

Subclause (5) provides another defence, one that is equally available to the titleholder and any other person bound by the direction. This defence is similar to the one set out in clause 309 except that, in this case, the defence is made available against a civil action rather than a criminal prosecution.

 

Equivalent provision in the PSL Act: section 102

 

Division 4 Defence of taking reasonable steps to comply with a direction

 

Clause 309 - Defence of taking reasonable steps to comply with a direction

 

This clause inserts provision for a defence in a case of prosecution for failure to comply with a direction that may be given to a titleholder by the Designated Authority or the Joint Authority under a number of provisions of the proposed Act and the regulations.

 

For example, if the Designated Authority, under clause  305, directs a production licensee to carry out, within a limited time, a procedure that involves the hiring of a specialist contractor and the licensee is does not fulfil the requirements of the direction, clause 309 could provide the licensee with a defence to a prosecution under clause 307 if the licensee were able to prove that, despite the licensee’s best endeavours, no  contractor ready, willing and able to carry out the work could be found within the specified time. 

 

One point of significance of the defendant bearing the legal burden is that the proof must be discharged on the balance of probabilities.

 

Equivalent provision in the PSL Act: subsection 102(3)

 

Part 4.3 Restoration of the environment

Clause 310 - Simplified outline
 

This clause gives a summary of Part 4.3 covering restoration of the environment. This summary does not form part of the operative text of the proposed Act.

 
Equivalent provision in the PSL Act: nil.
 
Clause 311 - Remedial directions to current holders of permits, leases and licences
 

This clause is another of the provisions by which Australia seeks to meet its obligations under Articles 60, 192 and 210 of the United Nations Convention on the Law of the Sea to remove disused installations and structures and to protect and preserve the marine environment.

 

This clause sets out similar provisions to those in clause 233 but, whereas the latter clause envisages a forthcoming surrender of a title, this clause is written to deal with restoring the environment during the term of a title, or some time before the expiry or termination of the title.

 

One of the situations to which subparagraph (2)(a)(ii) refers would be a situation in which the property is, for example, a production platform in respect of which another party has expressed an interest with a view to converting it into an infrastructure facility. In that case, subparagraph (2)(a)(ii) empowers the Designated Authority to allow the platform to be left in situ. However, such an arrangement would most likely include a requirement for the titleholder to remove the platform if the proposal to convert it into an infrastructure facility later came to nothing.

 

Paragraph (2)(c) is broader in its scope than paragraphs (2)(a), (b) or (d). It could refer to actions such as the regular monitoring of plugged wells by the titleholder to ensure there is no leakage of remnants of petroleum or drilling muds into the marine environment.

 

Subclause (3) makes paragraph (2)(c) subject to Chapters 2 and 4 of the proposed Act and the regulations. This means that providing for the conservation and protection of natural resources in the operations area to the satisfaction of the Designated Authority will not necessarily be relevant, or be relevant for all aspects of the issue, or be relevant under this particular provision. If, as is currently the case, there are Management of Environment Regulations under the Act, there may be no need for the Designated Authority to come to a view about what is satisfactory to ensure the conservation and protection of natural resources in the operations area. Alternatively, the Designated Authority may need to form an opinion about these matters but it could occur under the provisions of the Regulations rather than under this paragraph.

 

Paragraph (2)(c) is also subordinate to the general scope of subclause 243(2), which precludes interference with the activities of other persons to a greater extent than necessary for the reasonable exercise and performance of a titleholder’s rights and duties.

 

In relation to items 4, 5 and 6 under subclause (5), the first date on which a production, infrastructure or pipeline licence could be terminated depends on the holder’s action or inaction and on whether the situation is impacted by factors beyond the titleholder’s control (clauses 140, 169 and 183 refer). For this reason, the applicable date for licences should be understood with reference to subclause (6). In other words, a written notice under subclause (2) could literally direct the licensee to take the specified actions “by the first date on which the licence could be terminated”, and not indicate a day, month and year. If, in a notice under subclause (2), a day, month and year were actually specified on the basis of assumptions made by the Designated Authority and, because of subsequent developments or facts coming to light, it later emerged that the date did not accurately indicate the first date on which the licence could be terminated, then the Designated Authority would need to vary or rescind the notice. This is provided for under subsection 33(3) of the Acts Interpretation Act, which reads: 

 

“Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.”

 

In item 6 under subclause (5), the meaning of the “title area” in relation to a pipeline licence is to be understood as including whatever area on either side of the pipeline contains scatterings of construction debris or discarded parts or equipment resulting from the construction or maintenance of the pipeline.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention .

 

Equivalent provisions in the PSL Act: subsection 107(2) and paragraphs 107(3)(b) and (c)
 
Clause 312 - Remedial directions to former holders of permits, leases, licences and authorities etc

 

This clause empowers the Designated Authority to issue directions to the former holder of a title (or, if a title has been revoked, cancelled or terminated only in part, the holder of the remaining portion of the title) in similar terms to the directions provided for under clause 311 for current titleholders. 

 

This clause is proposed to deal with situations where a title may have come to an end at relatively short notice, ie because of a revocation or cancellation, in which case it would not be highly likely that remedial action would have been completed before the title ceased to have effect. Secondly, this clause is proposed to deal with situations where a direction under clause 311 was not given, or was given but did not cover all issues of remedial action that were pertinent, or was given but was not fully complied with by the titleholder during the term of the title. Thirdly, this clause is proposed to deal with remedial action after a special prospecting authority or access authority has come to an end. As explained under clauses 235 and 236, the shortness of term of these titles precludes remedial directions being given during their period of effect.

 

Whereas a direction under clause 311 would require action to be taken before the expiry date of the title, or the first date on which it could be terminated, a direction under this clause would require action to be taken within a period specified in the direction. This period must be reasonable.

 

The grounds for the offence in subclause (5) being proposed to be one of strict liability are basically the same as those discussed under clause 307, ie the offence created by the statutory obligation in this clause could be difficult to establish if the prosecution were required to prove intention with respect to the failure to comply with a direction.

 

Equivalent provision in the PSL Act: subsection 107(1), paragraph 107(3)(a) and subsections 111(8) and (9) and 112(9) and (10)

Technical change: omission of a redundant reference to the revocation of a pipeline licence

Policy changes: that the period for compliance specified in the notice must be reasonable; the requirement that a compliance period be specified in a direction given to the former holder of a special prospecting authority and access authority, as it is with a direction given to the holder of any other title

 

 

 

Clause 313 - Designated Authority may take action if a direction has been breached

 

This clause sets out the steps that the Designated Authority may take if there has not been compliance with a direction under clause 312 within the period specified in the direction.

 

Subclause (2) deals with all breaches of a direction other than failure to remove property from the vacated area. Thus, for example, if a well has been left unplugged despite a direction given under clause 312, subclause (2) authorises the Designated Authority to plug the well.

 

Subclause (3) addresses the question of property not removed from the vacated area despite a direction given under clause 312. This clause enables the Designated Authority to then direct the owner or owners of the property, who may not be the same party as the former titleholder, to remove it and dispose of it to the Designated Authority’s satisfaction. If the owner or owners did remove the property, the ability of the owner or owners to recover costs through civil action against the former titleholder would depend on the nature of the contractual arrangements the owner or owners had with the former titleholder.

 

Even if the Designated Authority knows that the former titleholder is the owner of the property, the Designated Authority would still need to gazette the notice and complete the other action set out in this clause, and the specified period would need to elapse, before the Designated Authority could carry out the removal and disposal of the property as set out in the following clause.

 

Equivalent provisions in the PSL Act: section 108 and subsections 111(10) and 112(12)

Policy change : that the period for compliance specified in the notice must be reasonable  

 

Clause 314 - Removal, disposal or sale of property by Designated Authority—breach of direction

 

This clause sets out the Designated Authority’s right to remove, dispose of or sell any property that has not been removed within the specified time following the gazettal of a notice under clause 313.

 

Paragraphs (2)(b), (c), (d) and (e) are relevant only if the owner of the property was also the titleholder in whose title area the property was located or if the owner has at some point held some other title under the Act as a result of which there is an outstanding debt. Otherwise, regardless of the level of debt to the Commonwealth of the former titleholder who received the notice under clause 312, the Designated Authority may deduct from the proceeds of sale only the costs or expenses incurred by the Designated Authority in removing and selling the property and must remit the rest of the moneys to the owner. However, if these costs and expenses exceed the proceeds of the sale, or if there is no sale at all, subclause (4) enables the Designated Authority to recover the outstanding amount from the owner of the property through legal action in a court of competent jurisdiction.

 

If the owner of the property was also the titleholder, and the titleholder owed money to the Commonwealth under the provisions of paragraph (2)(b), (c), (d) or (e), then subclause (3) would still entitle the owner to receive any remnant of moneys from the proceeds of sale after all deductions under subclause (2) had been made.

 

Subclause (5) refers to costs or expenses incurred by the Designated Authority in performing actions other than removing and disposing of property, such as the example cited under clause 313 of the Designated Authority plugging a well that the titleholder had left unplugged. This subclause provides that, if these costs or expenses are not recovered at all, or are only partially recovered, from the proceeds of a sale of property, the Designated Authority may recover the outstanding amount from the former titleholder through legal action in a court of competent jurisdiction.

 

Equivalent provisions in the PSL Act: subsections 113(1), (2) and (3)  

Policy changes: clarification that the proceeds of sale, net of any deductions, are to be paid to the owner of the property; the drafting of subclause 314(5) so that it does not refer to subclause 314(1), correcting an anomaly in the Petroleum (Submerged Lands) Act where subsection 113(3) applies the words “under subsection (1)” to paragraph 113(3)(b)

 
Clause 315 - Removal, disposal or sale of property - limitation of action etc.

 

This clause refers to property that is removed, disposed of or sold by the Designated Authority under the powers set out in clause 314 where the owner has failed to meet the owner’s obligations to remove the property. This clause is intended to enable the removal of such property from the offshore area and to protect the Designated Authority from legal action for removing the property and other things done in conjunction with it. This provision is one that commonly appears in legislation relating to the functioning of a statutory authority.

 

For this reason, subclause (1) generally precludes the owner of the property from taking legal action for damages against the Designated Authority because of the removal, disposal or sale, for example on the basis of an allegation that a technical breach of clause 314 was committed in the process of carrying out that action. This is conveyed by the use the wording “purported removal, disposal or sale” in subclause (1). The subclause also precludes the owner from taking legal action if, despite the removal being lawful, there is damage caused by negligence to the property in the process of removing it.

 

Subclause (1), which is a special provision, is intended to prevail to the exclusion of the general provisions of clause 436, which deals with the liability of various office-holders for acts and omissions. Subclause (2) gives effect to this intention, making explicit what is already implied in the Petroleum (Submerged Lands) Act. This is linked to clause 316 in that subclause (2) ensures the limitation of action is exclusively under clause 315 and therefore attracts the provision for compensation for acquisition of property set out in clause 316.

 

Clause 315 would not affect the rights of the owner of property that has been removed to take action against the titleholder, assuming the two parties had a contractual arrangement such that the titleholder was meant to remove the property. In such a case, the action would occur in respect of a breach of contract, not in relation to the Designated Authority’s removal, disposal or sale of the property.

 

Subclause (3) preserves rights to administrative review of decisions. This means that if, for example, the owner of the property had information that the Designated Authority were preparing to remove and sell the property, the owner could seek review of that decision under the Administrative Decisions (Judicial Review) Act 1977. Under section 16 of that Act, the Federal Court or the Federal Magistrates Court could make various orders about the case, for example an order to the Designated Authority to reconsider the matter. Assuming the Designated Authority opted to remake the decision in identical terms, such an order would delay, but ultimately not prevent, the removal and sale of the property.

 

Equivalent provision in the PSL Act: subsection 113(4)

Policy changes: that the provision in subclause (1) is subject to the compensation for acquisition of property provision in clause 316; the expansion of the provision in subclause (1) to include a suit or proceeding as well as an action; that this clause prevails to the exclusion of the general provisions of clause 436 dealing with liability by various office holders for acts and omissions; that this clause does not affect the rights of a person to seek review by a court or tribunal, for example under the Administrative Decisions (Judicial Review) Act 1977.

 

Clause 316 - Removal, disposal or sale of property—compensation for acquisition of property

 

This clause inserts a compensation provision to safeguard the provisions of clauses 314 and 315 from the risk of constitutional challenge. This will provide compensation to a person whose property has been disposed of otherwise than on just terms and ensure that the sale of property provisions would not be struck down as contrary to paragraph 51(xxxi) of the Constitution. In provisions of this type, the current policy of the Commonwealth is to restrict compensation proceedings to the Federal Court.

 

Equivalent provision in the PSL Act: nil.

Policy changes: the inclusion of this compensation constitutional safety net provision in respect of property acquisition under clauses 314 and 315; conferral of jurisdiction on the Federal Court

 

Part 4.4 Offences and enforcement

Clause 317 - Simplified outline

 

This clause gives a summary of Part 4.4 covering offences and enforcement. This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

Clause 318 - Appointment of project inspectors

 

This clause sets out provisions about the appointment and identity cards of project inspectors (as distinct from OHS inspectors, who are provided for in Part 4.8). A project inspector may perform functions such as examining or observing engineering or well operations on offshore facilities, but the most usual duties of a project inspector would relate to examining documentation held by the operators of those facilities.

 

Under present day legislative principles, it is normal to require persons holding inspectorial powers under a Commonwealth Act to be officers or employees of the Australian Public Service, a State or Territory Public Service or a statutory authority. It is also normal for inspectors to be issued with photo-identity cards to confirm their credentials. Subclauses (1) and (2) adopt these policies in the proposed Act.

The identity card would include on it details such as the name of the Act under which it is issued and the name and photograph of the holder. It is normal practice to also include on a card a mention of the relevant section of the Act and the name of the issuing officer. The fact that an ex-inspector who has lost or destroyed his or her identity card bears an evidential burden in relation to that matter means that he or she has the burden of adducing or pointing to evidence that suggests a reasonable possibility that the card was lost or destroyed.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in the PSL Act: section 125

Technical change : relabelling of “inspector” as “project inspector”

Policy changes: the requirement that inspectors must be officers or employees of the Commonwealth, a State or a Territory or of a statutory authority; the replacement of the current system of certificates by identity cards; a defence to prosecution if the card is lost or destroyed; the requirement that the identity card be carried at all times when exercising the powers or functions of a project inspector

 

Clause 319 - Monitoring powers of project inspectors

 

This clause confers on project inspectors all the monitoring powers that are usually conferred on mining inspectors. The powers include wide-ranging access, inspection and testing rights offshore. For purposes of examining documents, a project inspector is intended to have access rights offshore and onshore, but the rights are to be circumscribed onshore by restrictions on access to residential premises. The powers of project inspectors do not extend to the seizure of documents or other items or the detention of persons, vessels or aircraft. 

 

Separate powers exist under clauses 409 and 414 for project inspectors to do things such as obtaining, and possibly retaining, documents from persons with knowledge about petroleum operations, but these powers must be exercised with the use of a written instrument and require a minimum 14 days notice for compliance.

 

The fact that the defendant bears an evidential burden in relation to obstructing or hindering a project inspector performing monitoring duties means that he or she has the burden of adducing or pointing to evidence that suggests a reasonable possibility that the person has a reasonable excuse for that obstruction or hindrance. A reasonable excuse could be, for example, an issue related to safety.

 

Part 2.3 of the Criminal Code is also relevant to conduct obstructing or hindering a project inspector. Part 2.3 deals with circumstances involving lack of capacity, intoxication, circumstances involving mistake or ignorance and circumstances involving external factors.

 

Section 149.1 of the Criminal Code provides, in part, that a person is guilty of an offence if:

(a)     the person knows that another person is a public official; and

(b)     the first-mentioned person obstructs, hinders, intimidates or resists the official in the performance of the official's functions; and

(c)     the official is a Commonwealth public official; and

(d)    the functions are functions as a Commonwealth public official.

 

The offence provisions in this clause do not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in the PSL Act: section 126

Policy changes: that a project inspector may enter a structure, vessel, aircraft, building or place onshore in any external Territory as well as in the States and Northern Territory; change of mentions of “ship” to “vessel”; that the powers of an inspector that, under section 126 of the Petroleum (Submerged Lands) Act, rely on the inspector’s opinion that a structure, vessel, equipment etc has been, is being or is to be used in connection with specified operations, or that the structure, vessel etc contains documents relevant to those operations, are now to be exercised by the project inspector only if he or she has reasonable grounds to believe that one of those possibilities holds true; that a project inspector may enter residential premises only with a warrant or the occupier’s consent; that a copy of the warrant must be made available to the occupier; that information about the occupier’s right to refuse consent must be given to the occupier; that consent has to be voluntary

 
Clause 320 - Warrants to enter residential premises

 

This clause sets out the procedures and requirements that apply to a project inspector seeking a warrant to enter residential premises and the conditions subject to which the warrant may be granted. These provisions are similar to those that apply to authorising official entry into residential premises in other Commonwealth legislation.

 

For purposes of this clause, under subsections 16C(2) and (3) of the Acts Interpretation Act, a “Magistrate” means a Chief, Police, Stipendiary, Resident or Special Magistrate of a State or Territory, or any other magistrate in respect of whose office an annual salary is payable, but does not include a Federal Magistrate.

 

Equivalent provision in the PSL Act: no equivalent provision, but, in a different context, see section 140F

Policy changes: all the procedures, requirements and conditions applicable to the obtaining of a warrant by a project inspector that are set out in this clause

 

Clause 321 - Interfering with offshore petroleum installations or operations
 

This clause recognises the isolation of offshore petroleum facilities and the potentially serious consequences of damage to, or interference with, facilities or operations. The 10 year imprisonment penalty that could be imposed under this clause is equal to the severest penalty provided for under the Petroleum (Submerged Lands) Act. This clause is complemented by clauses 329 and 331, which deal with the dangers posed by vessels navigating too close to offshore petroleum facilities.

 

The various State and Northern Territory Criminal Code provisions, which also apply in offshore areas, have not necessarily been drafted having regard to security issues on board offshore petroleum facilities. A strong case can therefore be made that the proposed Act should maintain a conspicuous deterrent, as set out in this clause, to persons committing acts of terrorism, reckless navigation or otherwise dangerous conduct which could place at risk the lives of scores of people on board offshore petroleum facilities.

 

Under section 5.6 of the Criminal Code , for a prosecution under this clause to succeed, there would have to be proof of intention to engage in the conduct, plus recklessness as to the result of the conduct that results in the damage or interference. Thus if an employee of an operator on a petroleum facility causes damage to the facility or interference with the operations merely as a result of negligence, this clause would have no application to that situation.

 

Equivalent provision in the PSL Act: section 124A

Policy change : that this clause applies also to damage to, or interference with, equipment on, or attached to, a vessel or a structure

 

Clause 322 - Forfeiture orders etc.

 

This clause refers to convictions of persons for unauthorised petroleum exploration or recovery, unauthorised construction or operation of an infrastructure facility or pipeline or being an accessory after the fact in any such a case (section 6 of the Crimes Act 1914 refers).

 

Section 11.6 of the Criminal Code provides, in summary, that a reference in a Commonwealth law to an offence against a Commonwealth law includes a reference to an attempt, incitement or conspiracy that relates to such an offence.

 

The power of a court to make the forfeiture and other orders provided for in this clause is qualified by subclause (3) because, following the conveyance of petroleum through a pipeline, the precise consignment of petroleum to which the offence relates may have come into blending with other petroleum, making forfeiture impossible. 

 

Equivalent provision in the PSL Act: section 133

Policy changes: that the forfeiture and other orders may be made, not only by the Supreme Court, but by any court that convicts a defendant for one of the offences set out in this clause 

 
Clause 323 - Time for bringing proceedings for offences

 

This clause refers to all provisions in the proposed Act (other than Schedule 3) that contain offence provisions and also to regulations that contain offence provisions. Replicating the equivalent provision in the Petroleum (Submerged Lands) Act, this clause provides that proceedings against any of these offences may be brought at any time.

 

Section 6 of the Crimes Act 1914 makes it a crime to be an accessory after the fact in relation to any offence against a Commonwealth law. Section 11.6 of the Criminal Code provides, in summary, that a reference in a Commonwealth law to an offence against a Commonwealth law includes a reference to an attempt, incitement or conspiracy that relates to such an offence. Therefore, a prosecution may likewise be launched at any time for any alleged attempt, incitement, conspiracy or act of being an accessory after the fact in relation to an infringement of any of the provisions of the proposed Act or regulations referred to above.

 

Without this clause, prosecutions in relation to some offences would need to be commenced within one year of the commission of the offence. In summary, under section 15B of the Crimes Act, this would be the case if the maximum imprisonment penalty applicable to an individual for a first offence or the maximum pecuniary penalty applicable to a body corporate for a first offence were respectively 6 months or less or 150 penalty units or less.

 

Equivalent provision in the PSL Act: section 135

 

Part 4.5 Safety zones and the area to be avoided

Division 1 Introduction

Clause 324 - Simplified outline
 

This clause gives a summary of Part 4.5 covering safety zones and the area to be avoided. This summary does not form part of the operative text of the proposed Act.

Equivalent provision in the PSL Act: nil.
 
Clause 325 - Simplified map of the area to which Schedule 2 applies

 

This clause provides a map of the area described in Schedule 2 to the proposed Act, which contains the area to be avoided. The Schedule 2 area extends approximately 40 nautical miles seaward of the coast of Victoria. The map is simplified and its scale interpretation should not be relied on as an accurate guide to the precise location or extent of the Schedule 2 area.

 

Equivalent provision in the PSL Act: nil.

 

Clause 326 - Definitions
 
This clause sets out definitions of terms that have relevance only for Part 4.5 of the proposed Act. Two of the definitions, those for “authorised person” and “safety zone”, refer to other clauses in the Part.

 

Equivalent provisions in the PSL Act:   subsections 140A(1), (2), (5) and (6) and 140B(6)
 
Clause 327 - Emergency periods—modification of definition of relevant vessel

 

This clause gives the Commonwealth Minister special powers to deal with a situation of terrorist threat, but only in the area to be avoided which lies off the coast of Victoria. Even so, the Commonwealth Minister must consult the Victorian Designated Authority before issuing a Gazette notice declaring a state of emergency under this clause.

 

Normally, as provided under the definition of “relevant vessel” and clause 331, there is a threshold tonnage or tonnage length above which most Australian registered vessels and potentially Australian registered vessels are barred from entering the area to be avoided unless they are authorised by the Designated Authority. Under subclause (6), the significance of a declaration of emergency is that the tonnage and length considerations no longer apply, meaning that many more vessels are then barred from entering the area to be avoided. 

 

The proposed Act replicates the provision in the Petroleum (Submerged Lands) Act that, whether or not an emergency period is declared, foreign flag vessels are generally permitted to navigate through the area to be avoided provided they do not transgress safety zones. This is provided for in the definition of “relevant vessel” and has the benefit of minimising complications in view of the fact that Articles 24 and 58 of the United Nations Convention on the Law of the Sea confer certain rights of innocent passage and free navigation on the operators of foreign flag vessels in Australia’s territorial sea and exclusive economic zone.

 

However, as provided under paragraph (c) of the definition of “relevant vessel”, even a foreign flag vessel would be precluded from entering the area to be avoided without an authorisation if it were in the offshore area for the purpose of exploring the seabed or subsoil of the offshore area for petroleum or minerals or for the purpose of exploiting the petroleum or minerals which occur as natural resources of that seabed or subsoil.

 

The significance of subclause (7) is that the Commonwealth Minister is to publish any declaration of emergency under this clause in the Commonwealth Gazette rather than in the State Gazette .

 

Equivalent provisions in the PSL Act: subsections 140B(1), (2), (3), (4) and (5)  

Policy change: that a declaration of emergency is to be published in the Commonwealth Gazette

 

 

Clause 328 - Authorised persons

 

This clause defines “authorised persons”, whose function is to enforce the provisions governing safety zones and the area to be avoided. Authorised persons carry out duties which project inspectors and OHS inspectors are not empowered to perform, namely policing general navigation in the proximity of offshore petroleum facilities.

 

Subclause (2) applies only in a case where the Designated Authority chooses to add to the personnel who already have the designation of authorised persons. Officers of the Federal, State or Territory police, personnel of the Australian Defence Force and Customs officers are to have that designation by virtue of this clause and their status does not need to be confirmed by the publication of any Gazette notice to that effect.

 

In accordance with current drafting practice, subclause (3) makes clear that a declaration appointing authorised persons is not a legislative instrument in terms of the Legislative Instruments Act 2003 .

 

Equivalent provisions in the PSL Act: subsections 140A(1) and (4)

Policy change: inclusion of Customs officers as authorised persons

 

Division 2 Safety zones

Clause 329 - Safety zones

 

This clause sets out the safety zone provision, applicable in all offshore areas, which is designed to ensure the protection of offshore petroleum facilities from impact by a vessel or unauthorised boarding. Replicating, with updating amendments, the heavy penalties that can be imposed under section 119 of the Petroleum (Submerged Lands) Act, this provision recognises the isolation of offshore petroleum facilities and the potentially serious consequences of damage to, or interference with, facilities or operations.

 

The various State and Northern Territory Criminal Code provisions, which also apply in offshore areas, have not necessarily been drafted having regard to the safety of offshore petroleum facilities. A strong case can therefore be made that the proposed Act should maintain a conspicuous deterrent, as set out in this clause, to persons committing acts of negligent or reckless navigation or otherwise dangerous conduct which could place at risk the lives of scores of people on board offshore petroleum facilities.

 

Criminal law policy has evolved since the 10 year maximum imprisonment penalty was inserted into section 119 of the Petroleum (Submerged Lands) Act in 1980. Accordingly, in subclauses (3) to (10), this clause includes amendments in the form of a tiered penalty schedule for infringements of safety zones. If intention is the required fault element for the vessel entering or being present in the safety zone, the maximum penalty is to be 15 years imprisonment. If recklessness is the required fault element for the vessel entering or being present in the safety zone, the maximum penalty is to be 12.5 years imprisonment. If negligence is the required fault element for the vessel entering or being present in the safety zone, the maximum penalty is to be 10 years imprisonment. The lowest tier offence will be an offence of strict liability with a maximum penalty of 5 years imprisonment. This represents a reduction of the maximum penalty where strict liability applies. There are no fault elements for the strict liability offence. Further details about strict liability are set out in the note about clause 307. 

 

While imprisonment penalties of any term are not consistent with criminal law policy in its general application to strict liability offences, the use of imprisonment with strict liability is justified in this instance because of the potentially serious consequences of a breach of the provision. The strict liability is designed to maximise legal protection for offshore petroleum facilities from impact by a vessel or unauthorised boarding. The provision recognises the isolation, vulnerability and physical defencelessness of offshore petroleum facilities, their possible attractiveness as terrorist targets and the potentially serious consequences of damage to, or interference with, facilities or operations.

 

The proposed Act should maintain a conspicuous deterrent, as set out in this clause, to persons committing acts of negligent or reckless navigation or otherwise dangerous conduct which could place at risk the lives of scores of people on board offshore petroleum facilities and threaten the marine environment. When legislators are considering alleged offences that may occur in an offshore area, they need to be realistic about the viability of conducting a successful prosecution with proof of intention, recklessness or negligence. Therefore, an imprisonment penalty with strict liability is warranted under this provision.

 

As a modification from the Petroleum (Submerged Lands) Act, subclauses (3), (5), (7) and (9), read in conjunction with the definition of “owner” in clause 326, make the person who owns a vessel potentially guilty of an offence under this clause only if that person is on board the vessel operating the vessel or, whether or not on board the vessel, is partially or wholly in control of the vessel. This means, in effect, that, if a vessel is leased, the person who owns the vessel does not bear responsibility for any violation of a safety zone by the lessee.

 

In any case, if subclause (3) (5), (7) or (9) is infringed and the master of the vessel is a different party from the owner or the lessee, this subclause provides that the master will also be subject to prosecution for an offence.

 

This clause does not provide for a safety zone to be declared around a pipeline. This is because Article 60 of the United Nations Convention on the Law of the Sea which deals, among other things, with a State’s right to declare safety zones in its exclusive economic zone, has been interpreted as not including in its ambit the declaration of safety zones around pipelines.

 

This clause does not specify a pecuniary penalty because pecuniary penalty is automatically linked to the term of imprisonment in accordance with the formula set out in section 4B of the Crimes Act 1914 . In the case of an imprisonment term of 15 years, the period converts to 15 x 12 = 180 months. Then 180 x 5 = 900 gives the maximum number of penalty units of pecuniary penalty that would apply in the case of an offence by an individual. In the case of an offence by a body corporate, the maximum penalty would be 900 x 5 = 4500 penalty units. In the case of an imprisonment term of 12.5 years, the period converts to 12.5 x 12 = 150 months, giving maximum pecuniary penalties of 150 x 5 = 750 penalty units in the case of an individual and 750 x 5 = 3750 penalty units in the case of a body corporate. In the case of an imprisonment term of 10 years, the period converts to 10 x 12 = 120 months, giving maximum pecuniary penalties of 120 x 5 = 600 penalty units in the case of an individual and 600 x 5 = 3000 penalty units in the case of a body corporate. In the case of an imprisonment term of 5 years, the period converts to 5 x 12 = 60 months, giving maximum pecuniary penalties of 60 x 5 = 300 penalty units in the case of an individual and 300 x 5 = 1500 penalty units in the case of a body corporate. 

 

In accordance with current drafting practice, subclause (11) makes clear that the declaration of a safety zone is not a legislative instrument in terms of the Legislative Instruments Act 2003 .

 

Equivalent provision in the PSL Act: section 119

Technical changes: change from mentions of a vessel “remaining in” a safety zone to “being present in” a safety zone

Policy changes: the tiered penalty schedule for infringement of the clause, with penalties ranging from a maximum 15 years imprisonment with proved intention to a maximum 5 years imprisonment with strict liability; that the person who owns a vessel can be guilty of an offence of transgressing a safety zone only if the person, whether or not on board the vessel, is partially or wholly in control of the vessel

 

Division 3 Unauthorised vessel not to enter area to be avoided

Clause 330 - Designated Authority may authorise entry into area to be avoided

 

This clause allows the Designated Authority to permit entry into the area to be avoided by a vessel upon application by its owner, which is to be interpreted as set out in clause 326. In other words, the application must be lodged by the person who owns the vessel or, if the vessel has been leased, by the lessee of the vessel.

 

Equivalent provision in the PSL Act: section 140C

Technical change: that the Designated Authority’s authorisation allows the owner to both enter and “be present in” the area to be avoided

 

Clause 331 - Unauthorised vessel not to enter area to be avoided

 

This clause sets out the circumstances in which an offence is committed if a vessel enters or is present in the area to be avoided. The circumstances are modified in part by whether a state of emergency has been declared under clause 327. In any case, no offence is committed if an authorisation issued by the Designated Authority under clause 330 is in force in respect of the vessel.

 

Whether or not a state of emergency has been declared, an authorisation is required for entry into the area by a vessel which is at sea for the purpose of exploring the seabed or subsoil of the offshore area for petroleum or minerals or for the purpose of exploiting the petroleum or minerals which occur as natural resources of that seabed or subsoil. In this case the size, tonnage and nationality status of the vessel make no difference. Only a Government vessel, defined in clause 326, is excepted from this requirement. The exemption also applies to a Government vessel that is not engaged in the abovementioned activities. 

 

Whether or not a state of emergency has been declared, assuming one or more safety zones have been declared in the area to be avoided (in this case referred to as “prescribed safety zones”), any vessel exempted under subclause 329(1) from the prohibition relating to the safety zone is likewise permitted to enter the area to be avoided. This follows from use of the term “exempt vessel” (defined in clause 326) in paragraph 331(1)(b). These vessels would generally be work boats or supply vessels servicing a petroleum facility.

 

If no state of emergency has been declared, and if one is talking about general navigation, no authorisation is required in respect of a vessel the tonnage or length characteristics of which do not exceed the thresholds specified in paragraphs (a) and (b) of the definition of “relevant vessel” in clause 326, nor is an authorisation required if the vessel, of whatever size or tonnage, is a foreign flag vessel, likewise defined in clause 326.

 

If a state of emergency has been declared, general navigation will be more broadly affected, as all non-foreign flag vessels, of whatever tonnage or length characteristics, will require an authorisation under clause 330 to enter or be present in the area to be avoided.

 

Criminal law policy has evolved since the 5 year maximum imprisonment penalty was inserted into section 140D of the Petroleum (Submerged Lands) Act in 1984. Accordingly, in subclauses (1) to (8), this clause includes amendments in the form of a tiered penalty schedule for infringements of the area to be avoided. If intention is the required fault element for the vessel entering or being present in the area to be avoided, the maximum penalty is to be 7.5 years imprisonment. If recklessness is the required fault element for the vessel entering or being present in the area to be avoided, the maximum penalty is to be 6.25 years imprisonment. If negligence is the required fault element for the vessel entering or being present in the area to be avoided, the maximum penalty is to be 5 years imprisonment. The lowest tier offence will be an offence of strict liability with a maximum penalty of 2.5 years imprisonment. This represents a reduction of the maximum penalty where strict liability applies. There are no fault elements for the strict liability offence. Further details about strict liability are set out in the note about clause 307. 

 

While imprisonment penalties of any term are not consistent with criminal law policy in its general application to strict liability offences, the use of imprisonment with strict liability is justified in this instance because of the potentially serious consequences of a breach of the provision. The strict liability is designed to maximise legal protection for offshore petroleum facilities from impact by a vessel or unauthorised boarding. The provision recognises the isolation, vulnerability and physical defencelessness of offshore petroleum facilities, their possible attractiveness as terrorist targets and the potentially serious consequences of damage to, or interference with, facilities or operations.

 

The proposed Act should maintain a conspicuous deterrent, as set out in this clause, to persons committing acts of negligent or reckless navigation or otherwise dangerous conduct which could place at risk the lives of scores of people on board offshore petroleum facilities and threaten the marine environment. When legislators are considering alleged offences that may occur in an offshore area, they need to be realistic about the viability of conducting a successful prosecution with proof of intention, recklessness or negligence. Therefore, an imprisonment penalty with strict liability is warranted under this provision.

 

In every case, whether or not a state of emergency has been declared, subclause (9) provides a defence to prosecution for an offence under this clause. One point of significance of the defendant bearing a legal burden of proof is that the proof must be discharged on the balance of probabilities.

 

This clause does not specify a pecuniary penalty because pecuniary penalty is automatically linked to the term of imprisonment in accordance with the formula set out in section 4B of the Crimes Act 1914 . In the case of an imprisonment term of 7.5 years, the period converts to 7.5 x 12 = 90 months. Then 90 x 5 = 450 gives the maximum number of penalty units of pecuniary penalty that would apply in the case of an offence by an individual. In the case of an offence by a body corporate, the maximum penalty would be 450 x 5 = 2250 penalty units. In the case of an imprisonment term of 6.25 years, the period converts to 6.25 x 12 = 75 months, giving maximum pecuniary penalties of 75 x 5 = 375 penalty units in the case of an individual and 375 x 5 = 1875 penalty units in the case of a body corporate. In the case of an imprisonment term of 5 years, the period converts to 5 x 12 = 60 months, giving maximum pecuniary penalties of 60 x 5 = 300 penalty units in the case of an individual and 300 x 5 = 1500 penalty units in the case of a body corporate.  In the case of an imprisonment term of 2.5 years, the period converts to 2.5 x 12 = 30 months, giving maximum pecuniary penalties of 30 x 5 = 150 penalty units in the case of an individual and 150 x 5 = 750 penalty units in the case of a body corporate. 

 

Equivalent provision in the PSL Act: section 140D

Technical change: substitution of “is present in” for “remains in”

Policy changes: the tiered penalty schedule for infringement of the clause, with penalties ranging from a maximum 7.5 years imprisonment with proved intention to a maximum 2.5 years imprisonment with strict liability; omission of reference to $50,000 penalty

 

Division 4 Powers of authorised persons

Clause 332 - Requirement to move vessel etc.

 

This clause sets out the powers that an authorised person may exercise in all cases without a warrant. The powers all relate to moving a vessel out of, or away from the vicinity of, the area to be avoided or a safety zone. Unless the master of the vessel voluntarily allows the authorised person to board the vessel, these powers would normally be exercised using radio communication or a loudspeaker.

 

Accordingly, the acts of hindrance or obstruction referred to in subclause (3) would not normally be acts of physical hindrance or obstruction of an authorised person on board the vessel that is being ordered to leave the area to be avoided or the safety zone. An offence against subclause (3) would more likely be constituted by actions such as switching off a radio connection between the authorised person and the master of the vessel. 

 

While paragraph (1)(c)(iii) refers to the possibility of a vessel inflicting damage on a pipeline, this does not mean a safety zone would be declared around a pipeline per se (the note to clause 329 refers). Paragraph (1)(c)(iii) refers primarily to a segment of a pipeline that may lie in the water column in proximity of a terminal station around which a safety zone has been declared.

 

Section 149.1 of the Criminal Code provides, in part, that a person is guilty of an offence if:

(a)     the person knows that another person is a public official; and

(b)     the first-mentioned person obstructs, hinders, intimidates or resists the official in the performance of the official's functions; and

(c)     the official is a Commonwealth public official; and

(d)    the functions are functions as a Commonwealth public official.

 

The offence provisions in this clause do not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provisions in the PSL Act: paragraphs 140E(1)(c), (d) and (f) and (2)(c) and (e)  

 

Clause 333 - Other powers of authorised persons

 

This clause sets out the powers that an authorised person may normally exercise only with a warrant or after obtaining the permission of the master of the vessel in question. This reflects the fact that these powers are of a more intrusive nature than the ones set out in clause 332 and relate to laying the grounds for a prosecution. Clause 335 sets out the circumstances under which an authorised person may exercise these powers without a warrant or the master’s consent.

 

The offence set out in subclause (3) refers to situations such as a person on board the vessel declining to answer a question asked by the authorised person. The offence set out in subclause (5) refers to situations such as a person failing to provide the physical means by which the authorised person may board the vessel from a dinghy. The offence set out in subclause (8) refers to situations such as the master declining to open a combination safe for the authorised person. Subclause (9) refers to persons who do not necessarily have any position of authority on board the vessel, for example junior crew-members, but who nevertheless hinder or obstruct the authorised person in some way.

 

The grounds for the offence against subclause (5) being proposed to be one of strict liability are basically the same as those discussed under clause 307, ie the offence created by the statutory obligation in this clause could be difficult to establish if the prosecution were required to prove intention with respect to the alleged offence. Further details about strict liability are set out in the note about clause 307.

 

Section 137.1 of the Criminal Code refers to information given to a Commonwealth entity, given to a person who is exercising powers or performing functions under, or in connection with, a law of the Commonwealth or given in compliance or purported compliance with a law of the Commonwealth. In these situations, a person is guilty of an offence punishable by 12 months imprisonment if the person gives the information knowing that it is false or misleading or knowing that it omits any matter or thing without which the information is misleading.

 

Some of the offence provisions in this clause do not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening subclause (3), (8) or (9), the prosecution would have to prove intention .

 

Equivalent provisions in the PSL Act: paragraphs 140E(1)(a), (b), (e) and (g) and subsections 140E(2), (2A) and (3)

 

Clause 334 - Warrants

 

This clause sets out the procedures and requirements that apply to seeking and obtaining a warrant to exercise any or all of the powers referred to in clause 333 and the conditions subject to which the warrant may be granted. Since the authorised person may be on assignment well away from land, this clause does not require the warrant to be sought by the authorised person himself or herself.

 

For purposes of this clause, under subsections 16C(2) and (3) of the Acts Interpretation Act, a “Magistrate” means a Chief, Police, Stipendiary, Resident or Special Magistrate of a State or Territory, or any other magistrate in respect of whose office an annual salary is payable, but does not include a Federal Magistrate.

 

Equivalent provisions in the PSL Act: subsections 140F(1), (2) and (3)

Policy changes: that the information laid before the magistrate may equally well be on affirmation as on oath; that a Justice of the Peace no longer has authority to issue a warrant

 

Clause 335 - Exercise of powers in serious circumstances

 

This clause provides that, in serious circumstances of a kind that justify immediate action, an authorised person may exercise without a warrant the powers set out in clause 333. For example, if an authorised person on assignment in the area to be avoided makes observations which suggest that a vessel is about to be used in an act of terrorist sabotage against a petroleum facility and the master fails to respond to an instruction from the authorised person to take the vessel outside the area to be avoided, the authorised person could justifiably board the vessel and detain it without obtaining a warrant. 

 

Equivalent provision in the PSL Act: section 140G

 

 

 

Part 4.6 Collection of fees and royalties

 

Division 1 Fees payable under the Annual Fees Act

Clause 336 - When fee due for payment

 

The background to this clause, and to all the other clauses in Part 4.6, is that section 55 of the Constitution states, in part: "Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect."

 

If an amount collected from industry is a tax, then the Act imposing that tax may deal with the creation of the liability and discuss the tax base but provisions about collection of the tax, including penalty and interest for late payment, must be placed in another Act.

 

Based on the current interpretation of the Constitution, annual fees payable under the Petroleum (Submerged Lands) (Fees) Act 1994 are not taxes. Nevertheless, it is considered prudent, in the rewrite of this Fees Act, to exclude from the equivalent Offshore Petroleum (Annual Fees) Bill all collection and penalty provisions and to place them in this Bill. This will ensure that, in the event that a new interpretation of section 55 of the Constitution were at some future time accepted by courts, annual fees could continue to be collected.

 

Replicating provisions in the Petroleum (Submerged Lands) (Fees) Act, this clause provides a due payment date for annual fees.

 

Equivalent provisions in the Petroleum (Submerged Lands) (Fees) Act : subsections 4(3) and (4)

Policy change: conversion of “one month” to “30 days”

 
Clause 337 - Late payment penalty

 

This clause provides for late payment penalty of 0.333333% per day in respect of annual fees that are in arrears after the 30 day period specified in clause 336. Thus if, say, a $1,500 annual fee payment for an exploration permit is late by one day, the total payable becomes $1,505. If the fee is late by 7 days, the total payable becomes $1,535.

 

Equivalent provision in the Petroleum (Submerged Lands) (Fees) Act : section 5

 

Clause 338 - Recovery of annual fee debts

 

This clause provides that annual fee debts, including late payment penalty, are recoverable by the Commonwealth through legal action. This is quite separate from the fact that, after 90 days, failure to pay an amount owed under the Annual Fees Act would also constitute grounds for cancelling the title under clause 237.

 

Equivalent provisions in the Petroleum (Submerged Lands) (Fees) Act : subsections 6(1) and (2)

 

Clause 339 - Amounts payable to the Designated Authority

 

This clause provides that a titleholder is to make annual fee and any penalty amount payments to the Designated Authority in respect of the offshore area in which the title area is located.

 

Equivalent provision in the Petroleum (Submerged Lands) (Fees) Act : subsection 6(3)

 

Division 2 Fees payable under the Registration Fees Act

Clause 340 - Fees payable to the Designated Authority

 

The points made in the note on clause 336 about section 55 of the Constitution are even more applicable to the Petroleum (Submerged Lands) (Registration Fees) Act 1967, rewritten as the Offshore Petroleum (Registration Fees) Bill. Registration fees under that Act are in fact a tax. The content of the Offshore Petroleum (Registration Fees) Bill should therefore be limited to creation of the liability and discussion of the tax base.

 

In rewriting the Petroleum (Submerged Lands) (Registration Fees) Act, only one detail has been identified that should more appropriately go into this Bill rather than into the Offshore Petroleum (Registration Fees) Bill. This is the provision set out in this clause specifying that a titleholder is to make registration fee payments to the Designated Authority in respect of the offshore area in which the title area is located.

 
Equivalent provision in the Petroleum (Submerged Lands) (Registration Fees) Act : subsections 4(2) and (7)

 

Division 3 Royalties payable under the Royalty Act

Clause 341 - When royalty due for payment

 

The points made in the note on clause 336 about section 55 of the Constitution are also applicable to the Petroleum (Submerged Lands) (Royalty) Act 1967, rewritten as the Offshore Petroleum (Royalty) Bill.

 

Like annual fees, based on the current interpretation of the Constitution, royalty payable under the Petroleum (Submerged Lands) (Royalty) Act is not a tax.

Nevertheless, it is considered prudent, in the rewrite of this Royalty Act, to exclude from the equivalent Offshore Petroleum (Royalty) Bill all collection and penalty provisions and to place them in this Bill.

 

Accordingly, this clause provides that royalty payable in respect of petroleum recovered during a particular calendar month is payable at the end of the following calendar month. This follows from the meaning of “royalty period” in the Offshore Petroleum (Royalty) Bill.

 
Equivalent provision in the Petroleum (Submerged Lands) (Royalty) Act : subsection 11(2)
 
Clause 342 - When adjusted amount due for payment

 

This clause refers to the situation envisaged in clauses 15 and 16 of the Offshore Petroleum (Royalty) Bill where the Designated Authority determines a provisional value in respect of a given amount of petroleum followed by the payment of provisional royalty on it and the amount of the finally determined royalty is greater than the amount of the provisional royalty. This clause also refers to the situation envisaged in paragraph 16(1)(b) of that Bill where an error has been made and the amount of the correctly determined royalty is greater than the amount of erroneously calculated royalty.

 

In either case, an adjustment is payable by the royalty payer and this clause sets out the timeframe for that payment, specifically the end of the calendar month following the month when the determination occurs or the error is notified to the royalty payer.

 

Equivalent provisions in the Petroleum (Submerged Lands) (Royalty) Act : subsection 11B(1) and paragraph 11B(2)(a)

Policy change: that payment of the adjustment amount is to occur by the end of the following royalty period, ie calendar month, rather than within 28 days of the determination or the corrected determination

 
Clause 343 - Late payment penalty

 

This clause provides for late payment penalty of 0.333333% per day in respect of royalty payments that are in arrears after the end of the calendar month referred to in clauses 341 and 342 . Thus if, say, a $1m. royalty payment is late by one day, the total payable becomes $1,003,333.33. If the fee is late by 7 days, the total payable becomes $1,023,333.31.

 

Subclause (4) envisages a situation where the Designated Authority chooses not to determine a provisional value for petroleum recovered during a particular calendar month and the titleholder and the Designated Authority are still negotiating about the value of the recovered petroleum a few days before the end of the following calendar month. If the value were agreed, say, a couple of days before the end of the month, it would be unfair to expect the titleholder to complete payment action within that short timeframe. Accordingly, this clause provides for a 7 day period of grace before penalty accrual is triggered. 

 

Subclause (6) makes explicit a point that is merely implied in the Petroleum (Submerged Lands) (Royalty) Act, namely that, if an adjustment amount remains unpaid after the end of the next calendar month after it is identified, penalty is levied on that amount at the same rate as it would be levied on unpaid determined royalty amounts and unpaid provisional royalty amounts. 

 

Equivalent provision in the Petroleum (Submerged Lands) (Royalty) Act : section 11

Technical change: that royalty is specified to include adjustment amounts 

 
Clause 344 - Recovery of royalty debts

 

This clause provides that royalty debts, including adjustment amounts and late payment penalty, are recoverable by the Commonwealth through legal action. This is quite separate from the fact that, after 90 days, failure to pay an amount owed under the Royalty Act would also constitute grounds for cancelling the title under clause 237.

 

Equivalent provision in the Petroleum (Submerged Lands) (Royalty) Act : section 13

 

Clause 345 - Amounts payable to the Designated Authority

 

This clause provides that a titleholder is to make royalty, adjustment and any penalty amount payments to the Designated Authority, which, in relation to the Royalty Act, means the Designated Authority in respect of the Western Australian offshore area. 

 

Equivalent provisions in the Petroleum (Submerged Lands) (Royalty) Act : subsections 5(1) and (1B) and section 13

Technical change: explicit mention of late penalty payments as amounts that are to be included among payments to the Designated Authority

 

Division 4 -Fees payable under this Act

 

Clause 346 - Fees payable under this Act

 

This clause refers to fees that are permitted to be prescribed under the proposed Act for the grant, renewal or variation of titles, entry of a new name in the Register, access to the Register or other instruments, the issue of certified copies of extracts from the Register and of evidentiary certificates and access to cores, cuttings and samples (under regulations) or to technical data (under regulations or Schedule 5).

 

This clause makes clear that the fees are to be paid by the member of the public to the Designated Authority on behalf of the Commonwealth. The Designated Authority is subsequently to pay the fees into Commonwealth Consolidated Revenue, from which the moneys are later directed back to the Designated Authority.

 

Equivalent provisions in the PSL Act: no exact equivalent but implied in paragraphs 21(1)(f), 22A(5)(h), 24(1)(a), 30(2)(c), 38A(2)(e), 38BB(2)(e), 38F(2)(d), 41(1)(e), 48(1)(a), 51(2)(e), 54(2)(d), 59B(2)(d), 59K(2)(d), 64(1)(f), 71(2)(e),  111(2)(d), 118(1B)(b), 118(2)(b), 118(5)(c) and 118(5A)(b) [provisions under section 118 are still in force only under a transitional provision]

Technical change : the explicit recognition that these fees are payable to the Designated Authority on behalf of the Commonwealth

 

 

 

 

Part 4.7 - Occupational health and safety

Clause 347 - Occupational Health and Safety

 

This clause gives effect to Schedule 3.  However, since Schedule 3 applies only in relation to ‘facilities’ and a facility as defined in Schedule 3 is located in Commonwealth waters, the effect of clause 347 is to apply Schedule 3 only to ‘facilities’ that are engaged in relevant petroleum activities in Commonwealth waters.

 

Equivalent provision in the PSL Act: subsection 140H(1).

 

Clause 348 - Listed OHS Laws

 

This clause itemises the ‘listed OHS laws’.  However, this clause does not operate to apply these laws; it merely provides a convenient means by which to refer to this group of laws within other provisions of the Bill.  The ‘listed OHS laws’ are the substantive occupational health and safety laws for which the regulatory responsibility lies with the National Offshore Petroleum Safety Authority.  The ‘listed OHS laws’ are Commonwealth laws, but the States and Northern Territory have agreed to ‘mirror’ these laws, thus maintaining a consistent set of OHS laws for offshore petroleum activities, all of which will be administered by the National Offshore Petroleum Safety Authority.

 

Equivalent provision in the PSL Act: subsection 140H(2)

Technical change:  that i f the listed regulations made under the Petroleum (Submerged Lands) Act are renamed, this provision is amended by omitting the old name of the regulations and substituting the new name

Policy changes: addition of clause 321, which relates to unlawful interference with offshore petroleum activities, to the extent that this may affect occupational health and safety; addition of regulations made for the purposes of Schedule 3 to the listed OHS laws

 

Clause 349 - Regulations relating to occupational health and safety

 

Subclause (1) provides that regulations may be made in relation to the health and safety of persons at regulated operations sites, where those persons are under the control of a person who is carrying out a regulated operation.  Subclause (2) provides that these regulations may require persons who are carrying out regulated operations to establish and maintain systems for managing health and safety of persons under their control. Subclause (3) clarifies that subclause (2) does not exhaustively specify what the regulations made under this clause may cover.

 

Equivalent provision in the PSL Act: subsection 140I

 

Clause 350 - Commonwealth maritime legislation does not apply in relation to facilities located in offshore areas

 

This clause provides that the ‘Maritime legislation’ does not apply in relation to a facility in the adjacent area of a State or Territory, while it is a facility (subclause (1)). In the clause, ‘Maritime legislation’ means the Navigation Act 1912 , the Occupational Health and Safety (Maritime Industry) Act 1993 (the OHS(MI) Act), and subordinate legislation under those Acts (subclause (3)).

 

In general terms, the Navigation Act regulates ships. For instance, Part II of the Navigation Act relates to masters and seamen, while Part IV is about ships and shipping. The Navigation Act includes some special provisions relating to vessels and other things involved in petroleum exploration and exploitation (see, for example, sections 8, 8A and Part VB). Subordinate legislation under the Navigation Act includes regulations, and also Marine Orders made by the Australian Maritime Safety Authority (see subsection 425(1AA)). Presently, some Marine Orders also deal with vessels involved in petroleum exploration and exploitation (see, for example, Marine Orders Part 47, ‘Mobile Offshore Drilling Units’, and Marine Orders Part 60 ‘Floating Offshore Facilities’).

 

The OHS(MI) Act establishes an occupational health and safety regime for the maritime industry which applies in addition to the Navigation Act (see OHS(MI) Act, section 7. Broadly, the application of Part II of the Navigation Act to ships is the starting point for the application of the OHS(MI) Act (see the OHS(MI) Act definition of ‘prescribed ship’ in sections 4 and 6). There are also special provisions in the OHS(MI) Act applying to certain off-shore industry mobile units (see the definition of ‘prescribed unit’ in sections 4 and 6).

 

For the purposes of Schedule 3 of this Bill, a ‘facility’ includes some vessels which would ordinarily be covered by the Maritime legislation. For instance, a vessel used for processing, storage and offloading of petroleum, a drill ship, and a pipe lay barge, will all generally be a ‘facility’ covered by the occupational health and safety regime established by Schedule 3.

 

Clause 350 makes it clear that, despite the terms of the Maritime legislation, , the Maritime legislation will generally not apply in relation to a facility in an adjacent area. Instead, Schedule 3 of this Bill will regulate those facilities. Because new subclause (1) provides that the Maritime legislation does not apply ‘in relation to’ a facility in the adjacent area, the Maritime legislation will not apply to, for example, a vessel, or people on that vessel, while the vessel is a facility in an adjacent area. However, when a vessel ceases to be a facility, clause 350 will no longer apply, and the Maritime legislation will immediately apply to the vessel, according to its terms. This may occur, for instance, if a vessel being used for petroleum activities ceases those operations, and resumes normal navigation.

 

Subclause (2) will provide an exception to the general disapplication of the Maritime legislation. That provision will ensure that the Maritime legislation is not disapplied by subclause (1) to the extent that it relates to the transfer of persons or goods between a ship and a facility. In general, in such a situation, there will be an overlap of applicable laws. That is, provisions of both Schedule 3 of this Bill and the Maritime legislation may apply to the transfer of persons or goods between a ship and a facility. In any particular case, all of the relevant provisions of this Bill and the Maritime legislation will have to be considered. The transfer of persons or goods involves the potentially hazardous interaction of a facility and a ship. It is important that in such a situation, both the facility and the ship be subject to appropriate safety regulation.

 

Equivalent provision in the PSL Act: subsection 11A

Policy changes : that Commonwealth maritime legislation does not apply to a person at a facility in an offshore area or near the facility (to the extent to which the person is affected by the facility or activities that take place at the facility), and that the Commonwealth maritime legislation does not apply to activities that take place at the facility

 

Clause 351 - Commonwealth maritime legislation does not apply in relation to facilities located in designated coastal waters

 

This clause essentially provides for the disapplication of the Maritime legislation in certain designated costal waters in the same way as it is disapplied in an adjacent area.

 

The provision applies to designated coastal waters of a State or the Northern Territory if the State or Territory PSLA and regulations substantially correspond to the ‘listed OHS laws’ defined in clause 348 of this Bill in their application to the designated coastal waters (subclause 351(1)). In such a situation, subclause 351(2) disapplies the Maritime legislation in the designated coastal waters to the same extent as clause 350 disapplies the Maritime legislation in the offshore area. That is, generally, the Maritime legislation will not apply in relation to a facility in the designated coastal waters, while it is a facility, but it will apply in relation to the transfer of persons or goods between a ship and a facility.

 

This clause will operate when the State or Territory PSLA and regulations applying in the designated coastal waters substantially correspond to the ‘listed OHS laws’. This is because, in those circumstances, disapplication of the Maritime legislation is appropriate so that the interaction of occupational health and safety laws and the Maritime legislation in the designated coastal waters is similar to that in the offshore area.

 

For the purposes of this clause, the terms ‘designated coastal waters’, ‘State PSLA’ and ‘Territory PSLA’ have the meanings they have for the purposes of Part 4.8 of this Bill. The term ‘Commonwealth maritime legislation’ has the meaning it has in clause 350.

 

Equivalent provision in the PSL Act: subsection 11B

 

Part 4.8 - National Offshore Petroleum Safety Authority

 

DIVISION 1 - INTRODUCTION

 

Clause 352 - Simplified outline

 

This clause gives a summary of Part 4.8.  This summary does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: section 150XA

 

Clause 353 - Definitions

 

This clause defines terms used in Part 4.8 that are relevant to the establishment, administration and functions of the Safety Authority.

 

The terms “Board”, “Board member” and “CEO” all relate to the National Offshore Petroleum Safety Authority.

 

“Commonwealth waters” means the waters of the sea that comprise the offshore areas of each State and of each Territory that are established by this Bill and together make up the jurisdictional area to which the proposed Act would apply.

 

The term designated coastal waters” in relation to a State or the Northern Territory has the meaning given by clause 354.  These are the waters to which the State and Northern Territory Petroleum (Submerged Lands) Acts apply - i.e. the waters within 3 nautical miles of the territorial sea baseline, together with some areas landward of the territorial sea baseline related to pre-1982 exploration permits issued under the Commonwealth Petroleum (Submerged Lands) Act, which formerly extended into these waters.

 

The term “facility” has the meaning that it has Schedule 3 and in the State and Northern Territory ‘mirror’ provisions.  A ‘facility’ therefore means a ‘facility’ located in Commonwealth waters, or in the designated coastal waters of a State/Territory that has enacted provisions that ‘mirror’ Schedule 3.   The term ‘facility’ is fundamental to the occupational health and safety regime in Schedule 3 that is established by this Bill, and also to the safety case regime established by the Petroleum (Submerged Lands) (Management of Safety on Offshore Facilities) Regulations 1996 (‘MSOF Regulations’).  Schedule 3 and the MSOF Regulations are concerned primarily with ensuring the occupational health and safety of persons at or near a ‘facility’.  Clause 4 of Schedule 3 to the proposed Act sets out the categories of vessel or structure that are taken to be ‘facilities’. 

 

The term “Northern Territory Petroleum Minister” means the Minister of the Northern Territory who is responsible for the Territory Petroleum (Submerged Lands) Act, which applies within 3 nautical miles of the territorial sea baseline around the Northern Territory. The term could also refer to an acting Minister.

 

The term “offshore petroleum operations” describes the scope of the petroleum operations in respect of which the Safety Authority will exercise safety regulatory functions under the Commonwealth and State/Northern Territory laws.  The operations covered by the definition are all operations at a facility, and all diving operations (whether at a facility or not), that relate to exploration for petroleum, or the recovery, processing, storage, offloading or transportation by pipeline of petroleum, and that take place in Commonwealth waters or designated coastal waters.  “Offshore petroleum operations” do not equate to all offshore petroleum-related activities carried on under a title issued under the proposed Act.  This is because, apart from petroleum-related diving, the Safety Authority’s functions are confined to operations at a facility.  The vessels and structures that are facilities have been selected on the basis that they present a safety risk to a significant number of people.

 

The term “OHS inspector” means an inspector appointed by the Chief Executive Officer under clause 390.  Schedule 3 and the occupational health and safety regulations confer monitoring and enforcement powers directly on OHS inspectors that are exercisable in Commonwealth waters.  The same powers will be conferred on OHS inspectors by the ‘mirror’ legislation of the States and the Northern Territory, to be exercised in the designated coastal waters of the relevant State or Territory.  The appointment of an OHS inspector is made only under the Commonwealth Act, but the powers will be conferred by or under the Commonwealth, State and Northern Territory Acts.

 

The term “regulated operation” includes an activity to which the core regulator provisions of a State or Northern Territory PSLA apply, corresponding to Chapter 2 of the Bill. 

 

The term “Safety Authority waters” means Commonwealth waters together with the designated coastal waters of each State and of the Northern Territory. 

 

The Safety Levies Act is the Offshore Petroleum (Safety Levies) Act 2003 .   That Act imposes levies, which, together with the fees to be collected under this Bill, will fund the safety regulatory activities of the Safety Authority under the Commonwealth, State and Northern Territory PSLAs.

 

The term “State Petroleum Minister” means the Minister of a State who is responsible for the State Petroleum (Submerged Lands) Act, which applies within 3 nautical miles of the territorial sea baseline around the State in question. The term could also refer to an acting Minister.

 

The Acts are specifically named in the definition of “State PSLA”, and the Northern Territory Act is named in the definition of Territory PSLA”.

 

Equivalent provision in the PSL Act: section 150XB

Policy changes:  minor amendments to paragraph (b) in definition of “facility”, ie  mention that the facility would have been a facility if it had been located in Commonwealth waters; that the Northern Territory Petroleum Minister and State Petroleum Minister could be an acting Minister.

 

Clause 354 - Designated coastal waters

 

The purpose of this section is to ensure that the area comprising the designated coastal waters in relation to a State or the Northern Territory for the purposes of Part 4.8 corresponds exactly to the area to which the relevant State or Northern Territory PSLA applies from time to time.  While the area described in Schedule 1 to this Bill in relation to the States and the Northern Territory commences at the coastline, the State and Northern Territory PSLAs generally apply only to the first 3 nautical miles of the territorial sea, which commences at the territorial sea baseline. In many localities, this baseline follows the coastline, but in other localities, for example between the “jaws” of some bays, it follows a course some distance out to sea.  Landward of the baseline, State or Northern Territory onshore petroleum legislation generally applies to any seabed petroleum exploration or recovery activities.

 

However, the Northern Territory PSLA and most State PSLAs allow for the fact that permits may have been issued under the Commonwealth Petroleum (Submerged Lands) Act prior to the commencement of the State or Territory PSLA, in respect of title areas situated in an area landward of the territorial sea baseline but seaward of the coastline of the State or Territory.  Upon commencement of the State or Territory PSLA, those titles were continued in force under the State or Territory PSLA.  To the extent that those titles, or titles derived from those titles, are still in force, the title areas are still covered by the State or Territory PSLA. Paragraph (1)(b) therefore includes those title areas in the term “designated coastal waters” in relation to the relevant State or Territory.

 

The effect of subclauses (2) and (3) is that, if such a title area has at any time ceased, or in future ceases, to be covered by a title under the relevant State or Territory PSLA (so that the continuity of the titles is broken), the area is taken to have ceased to be part of the designated coastal waters of that State or Territory for the purposes of Part 4.8.  This mirrors the effect of the State and Territory PSLAs, which deem such an area no longer to be covered by the Act.

 

Equivalent provision in the PSL Act: section 150XC

 

DIVISION 2 - ESTABLISHMENT, FUNCTIONS AND POWERS OF THE SAFETY AUTHORITY

 

Clause 355 - Establishment of the National Offshore Petroleum Safety Authority

 

This clause continues the existence of the National Offshore Petroleum Safety Authority, which was established by amendments to the Petroleum (Submerged Lands) Act that came into effect on 1 January 2005.

 

Equivalent provision in the PSL Act: section 150XD

 

Clause 356 - Safety Authority’s functions

 

This clause confers general functions on the Safety Authority.  Schedule 3, and the Commonwealth regulations listed in, or prescribed under, clause 348 confer more specific regulatory functions on the Safety Authority and on its OHS inspectors, in Commonwealth waters.  The State and Northern Territory ‘mirror’ provisions will confer equivalent functions within State and Northern Territory coastal waters.

 

The functions of the Safety Authority are all concerned with the occupational health and safety of persons engaged in “offshore petroleum operations”, which are a large subset of the activities that make up the offshore petroleum industry.  The term as defined in clause 353 comprises offshore petroleum-related diving activities and other offshore petroleum activities that take place at a facility.  The Safety Authority will therefore not regulate the safety of every petroleum-related activity.  For example, seismic survey vessels are not facilities, and operations carried out on those vessels, except for diving activities, will not be within the Safety Authority’s regulatory functions and powers.  The activities that will be regulated by the Safety Authority are, generally speaking, those activities that pose a health and safety risk to a significant number of people because of the presence of hydrocarbons (oil and gas).

 

Clause 356, together with clause 360, sets out the basis of the cooperative legislative scheme enacted by the Commonwealth, the States and the Northern Territory. 

 

Clause 356 provides for the offshore functions of the Safety Authority, under the Commonwealth, State and Northern Territory PSLAs.

 

Paragraph 356(a) provides that the Safety Authority has the functions conferred on it by or under ‘this Act’ in relation to offshore petroleum operations in Commonwealth waters.  As far as ‘this Act’ is concerned, Part 4.8 and Schedule 3 confer the Safety Authority’s functions.  The reference to functions conferred under this Act is a reference to functions conferred by or under the other laws referred to in clause 348.  These other laws, together with Schedule 3, make up the “listed OHS laws”, which are to be ‘mirrored’ by the States and Northern Territory.  In the event that there were other regulations under the Commonwealth PSLA that conferred Commonwealth functions on the Safety Authority in relation to offshore petroleum operations in Commonwealth waters, paragraph 356(a) would pick these up also.

 

Paragraph 356(b) provides that the Safety Authority has the functions conferred on it by or under a State PSLA or the Northern Territory PSLA in relation to offshore petroleum operations in the designated coastal waters of that State or Territory.  This paragraph enables the States and the Northern Territory to confer functions on the Safety Authority.  This provision is necessary because the Safety Authority is a Commonwealth statutory authority.  The intended effect of paragraphs (a) and (b) in combination, is that the Safety Authority will be able to exercise its safety regulatory functions, in a seamless manner, in all offshore waters.  This will occur, however, only to the extent that States and the Northern Territory enact the necessary amendments to their PSLAs and enact the ‘mirror’ substantive occupational health and safety laws (“the listed OHS laws”).

 

In order to implement the cooperative legislative scheme, it is intended that the States and the Northern Territory will ‘mirror’ paragraphs 356(b), (c), (d), (e), (f), (g) and (h) in their PSLAs.

 

Paragraph 150XE(d) confers functions in relation to Commonwealth waters, specifically the function of developing and implementing effective monitoring and enforcement strategies to secure compliance by persons with their occupational health and safety obligations under this Act (i.e. the Commonwealth  Petroleum (Submerged Lands) Act) and the regulations. 

 

Paragraphs 356(c), (e), (f), (g) and (h) confer a range of promotional and reporting functions on the Safety Authority in relation both to Commonwealth and State/Northern Territory waters.

 

Paragraph (e) confers a broad investigatory and reporting function that goes well beyond the categories of accidents and events that an operator of a facility is required to notify to the Safety Authority under Schedule 3.  It enables the Safety Authority to enquire into anything that has, or may have, consequences for the occupational health and safety aspects of offshore petroleum operations.

 

This paragraph and paragraph (f) give the Safety Authority broad powers to gather and disseminate information and advice on occupational health and safety issues to persons engaged in relevant operations, whether on a general or individual basis.  The Safety Authority does not have any function or power to provide consultancy services on a fee-paying basis.

 

The function conferred by paragraph 356(h) of cooperating with other Commonwealth, State and Northern Territory agencies having functions relating to offshore petroleum operations is seen as an important aspect of the Safety Authority’s role.  The functions and powers conferred on the Safety Authority by or under this Bill, and by or under the State/Northern Territory PSLAs, will overlap to a significant extent with the functions conferred by these same Acts on other agencies.

 

Equivalent provision in the PSL Act: section 150XE

Policy change:  deletion of a reference to Commonwealth waters in paragraph (e)(i) given that the Safety Authority will have the function to investigate accidents etc both in Commonwealth waters and in the designated coastal waters of the States and of the Northern Territory

 

Clause 357 - Policy principles

 

This clause sets out the arrangements under which policy principles relevant to the performance of the Safety Authority’s functions are to be determined. The Ministerial Council on Mineral and Petroleum Resources, ie the Council consisting of the Commonwealth, State and Territory Ministers responsible for mineral and petroleum resources, has agreed that decisions as to the broad policy framework within which the Safety Authority is to operate should be made at governmental level, but that operational policy and strategy should be decided at CEO/Board level.  This section implements that agreement.

 

The clause also establishes the role of State and Northern Territory Ministers in the giving of policy principles to the Authority.  This is one of the key provisions of the Bill that establishes the accountability of the Safety Authority to Commonwealth, State and Northern Territory Ministers.  This is important, as policy principles that relate to operations in the waters of one jurisdiction have the ability to affect operations in the waters of other jurisdictions.  In particular, policy principles that relate to operations in Commonwealth waters have the ability to affect operations in State and Northern Territory coastal waters. 

 

The provisions set out in subclauses (1) to (4) require at least consultation with, and, in the case of designated coastal waters, agreement by, State and Northern Territory Petroleum Ministers. In all cases, the policy principles are to be tabled in each House of the Australian Parliament.

 

Subclause (5) requires the Safety Authority to comply with any policy principles when performing its functions.

 

In accordance with current drafting practice, subclause (6) makes clear that a policy principle is a legislative instrument in terms of the Legislative Instruments Act 2003 as it can be regarded as determining the law or altering the content of the law, rather than applying the law in a particular case.

 

Equivalent provision in the PSL Act: section 150XF

 

Clause 358 -Safety Authority’s ordinary powers

 

Subclause 358(1) provides that the Safety Authority has power to do all things necessary or convenient to be done for or in connection with the performance of its functions. Subclause (2) specifies some of the more important examples of what this means, but does not attempt to exhaustively list everything the Authority is empowered to do.

 

Under paragraph (2)(b), the Safety Authority will have the ordinary powers of an incorporated statutory authority to enter into contracts.  This would include, for example, a power to enter into a contract with a State or Territory, or a State or Territory body for the provision of services to the Safety Authority.  However, a person could not, under such a contract, exercise any statutory powers on behalf of the Safety Authority unless the person were properly authorised under this legislation to exercise such powers, eg by the holding of a delegation or by appointment as an OHS inspector.

 

Subclauses (3) and (4) provide that any property held by the Safety Authority is taken to be the property of the Commonwealth and that any money received by the Safety Authority is taken to be received by the Authority on behalf of the Commonwealth.  These provisions reflect the status of the Authority as a body to which the Financial Management and Accountability Act 1997 applies.  The Safety Authority therefore does not hold money or property on its own behalf.

 

Equivalent provision in the PSL Act: section 150XG

 

Clause 359 - References to functions and powers of the Safety Authority

 

Subclause 359(1) makes clear that any reference in Part 4.8 (other than in clause 360) to the functions or powers of the Safety Authority includes a reference to the functions or powers conferred on the Safety Authority by or under a State or Territory PSLA, as well as to the functions or powers conferred by or under the proposed Commonwealth Act.  This is one of the intended effects of paragraph 356(b), but clause 359 is included for the avoidance of doubt.  As a consequence, all of the provisions of Part 4.8 relating to the corporate governance of the Safety Authority (for example, policy principles, advice and recommendations by the Board to the CEO, corporate plans, ministerial directions), and any other provisions that relate to the functions and powers of the Safety Authority (except clause 360) apply to all of the Safety Authority’s offshore operations, whether in Commonwealth waters or in State/Northern Territory coastal waters. 

 

Subclause 359(2) makes clear that this is not the case in relation to powers exercised by the Safety Authority or its OHS inspectors under State or Northern Territory onshore legislation (see clause 360).  Provisions of Part 4.8 (other than clause 360) do not apply to the exercise of powers under onshore legislation, unless the provision refers expressly to clause 360.

 

Equivalent provision in the PSL Act: section 150XH

Technical change: explicit mention that a reference in Part 4.8 (other than in clause 360) to the powers of the Safety Authority does not include a reference to the powers conferred on the Safety Authority by or under a law of a State or the Northern Territory as permitted by clause 360

 

Clause 360 - Safety Authority may be given additional powers in certain circumstances

 

This clause enables the States or the Northern Territory to confer powers on the Safety Authority or its staff, including OHS inspectors, under onshore State or Territory legislation.  The powers that may be conferred under this onshore legislation must be powers in relation to the occupational health and safety of persons who do work in connection with petroleum exploration, recovery, processing, storage or offloading, or petroleum pipelines.  The geographical areas in which these onshore powers may be exercisable may be:

 

-         an area or areas of land or water within the territorial limits of the State or Territory (including internal waters, ie submerged areas within the limits of the State or Territory) or

-         an area or areas of sea between the territorial sea baseline and the coastline that is/are not covered by the State or Territory PSLA.

 

Subclause (1) provides that where a State or the Northern Territory confers such powers, the Safety Authority and its staff (including OHS inspectors) may exercise those powers but are not obliged to do so.

 

The governance regime established by Part 4.8 for the carrying out by the Safety Authority of its functions and the exercise of its powers does not apply to the exercise of powers by the Safety Authority and its inspectors under State or Territory onshore legislation.  For example, the power of the Commonwealth Minister to give directions in clause 402 does not apply.  The governance regime established by the State or Territory onshore legislation would apply in full to the exercise of these powers.

 

Subclause (2) provides that onshore powers may be conferred only on the Safety Authority or on its staff/inspectors in relation to a vessel or structure (that need not be a “facility” within the meaning of Schedule 7) that is owned or controlled, or that is being constructed, operated or decommissioned, by a corporation to which paragraph 51(xx) of the Constitution applies. This paragraph is about the Australian Parliament having power to make laws for the peace, order, and good government of the Commonwealth with respect to foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.

 

Subclause (3) requires that there be an agreement between the Commonwealth and the State or Territory concerned as to the fees payable by the State or Territory for the exercise of powers by the Safety Authority or its staff/inspectors under onshore legislation.  It is intended that there will be service level agreements, between the Commonwealth and the State or Territory concerned, providing for the Authority’s services to be made available.

 

Equivalent provision in the PSL Act: section 150XI

 

Clause 361 - Power to refer certain matters to NOGSAC

 

This clause provides that the Safety Authority may refer a matter to the body that is known as the National Oil and Gas Safety Advisory Committee (an industry-government committee), or, if that body is disbanded, any successor body with similar membership and function.  Such matters must be of a general nature, and not related to a particular case.

 

Equivalent provision in the PSL Act: section 150XJ

 

Clause 362 -Safety Authority is a body corporate

 

Clause 362 provides that the Safety Authority is a body corporate, that it must have a seal and that it may sue and be sued.  The clause includes standard provisions with respect to the seal.

 

Equivalent provision in the PSL Act: section 150XK

 

DIVISION 3 - NATIONAL OFFSHORE PETROLEUM SAFETY AUTHORITY BOARD

Division 3 of Part 4.8 provides for the establishment, functions and membership of the National Offshore Petroleum Safety Authority Board, the Board’s procedures and the terms and conditions of Board members.

 

Subdivision A - Establishment, functions and membership

 

Clause 363 - Establishment of the Board

 

This clause continues the existence of the National Offshore Petroleum Safety Authority Board which was established by amendments to the Petroleum (Submerged Lands) Act that came into effect on 1 January 2005.

 

Equivalent provision in the PSL Act: section 150XL

 

Clause 364 - Functions of the Board

 

This section confers functions on the Board in respect of advising and making recommendations to various persons and bodies and enables the Commonwealth Minister to add further functions. However, this power of the Commonwealth Minister is circumscribed in that the notice by which it is exercised is a legislative instrument which is disallowable by Parliament. 

 

Subclause (3) affirms the Commonwealth Minister’s oversight role in relation to the Authority’s actions by virtue of the requirement that the Minister must be given a copy of every item of advice or recommendation that the Authority gives to the specified parties other than the Minister.

 

Equivalent provision in the PSL Act: section 150XM

 

Clause 365 - Powers of the Board

 

This clause confers powers on the Board by reference to its functions as set out in clause 364.  The Board has power to do all things necessary or convenient to be done for, or in connection with, the performance of its functions.

 

Equivalent provision in the PSL Act: section 150XN

 

Clause 366 - Membership

 

This clause relates to the membership of the Board.  Board members are appointed in writing by the Commonwealth Minister on the recommendation of the Ministerial Council on Mineral and Petroleum Resources (see the note to clause 357), which gives the State and Northern Territory governments a say in who is appointed.

 

Subclause (1) provides that the Board will consist of the Chair and four or six other members. Assuming there are no vacancies, this means that the Board will have an uneven number of members, which carries an obvious benefit if there is a vote.  Nevertheless, subclause (2) provides that the performance of functions or exercise of powers by the Board will not be affected by a vacancy on the Board. The Commonwealth Minister, or the Board itself, may determine procedures for Board meetings, including procedures for resolving a deadlock in the case of a vacancy or an absence (clause 367 refers).

 

Equivalent provision in the PSL Act: section 150XO

 

Subdivision B - Board procedures

 

Clause 367 - Board procedures

 

Subclause 367(1) provides that the Commonwealth Minister may determine, in writing, certain matters relating to the operation of the Board.  A non-exhaustive list of matters which the Minister may determine is set out in paragraphs (1)(a) to (f).  These matters include disclosure of interests. 

 

It is not envisaged that the holding by a Board member of a financial or other interest in an entity whose activities are regulated by the Safety Authority would necessarily preclude a person from holding office as a Board member.  A Board member may in fact be appointed because of his or her knowledge of, or experience in, the petroleum industry.  A person with such knowledge or experience may well have interests that could raise a conflict of interest.  It is envisaged that the Minister’s determination would set conditions relating to disclosure of such interests and impose rules to be followed in the case of an actual conflict arising.

 

Subclause (2) enables the Board to determine the manner of its procedural operation if no relevant Ministerial determination is in force.

 

Subclause (3) provides that any Ministerial determination made pursuant to subclause (1) or any determination will be a legislative instrument in terms of the Legislative Instruments Act 2003 and will thereby be subject to the requirements of that Act, for instance those contained in Parts 5 and 6 relating to tabling in Parliament, disallowance and sunsetting. In accordance with current drafting practice, subclause (4) makes clear that a determination by Board members themselves is not a legislative instrument.

 

Equivalent provision in the PSL Act: section 150XP

 

Subdivision C - Terms and conditions for Board members

 

Clause 368 - Terms of appointment and related matters for Board members

 

This clause provides that Board members are to be appointed on a part-time basis for the period, not exceeding three years, as specified in the instrument of appointment.  In accordance with section 33(4A) of the Acts Interpretation Act 1901 , the power to appoint members of the Board in subclause 366(3) includes the power to re-appoint.  Board members may therefore hold office for successive terms.

 

Equivalent provision in the PSL Act: section 150XQ

 

Clause 369 - Remuneration and allowances of Board members

 

This clause sets out the means by which the remuneration and allowances of Board members are to be determined.

 

Subclause (1) provides that the remuneration of Board members is to be determined by the Remuneration Tribunal.  However, if no determination by the Tribunal is in operation, a Board member’s remuneration will be paid pursuant to a determination by the Commonwealth Minister.

 

Subclause (2) provides that, notwithstanding subclause (1), remuneration will not be paid to Board members who are full-time employees of a State or the Northern Territory or an instrumentality of a State or the Northern Territory.  There is no need to make equivalent provision in relation to full-time employees of the Commonwealth or a Commonwealth instrumentality, as subsection 7(11) of the Remuneration Tribunal Act 1973 already does so.

 

Subclause (3) provides that a Board member is to be paid the allowances prescribed in the regulations.

 

Subclause (4) provides that the operation of this section is subject to the Remuneration Tribunal Act 1973. Among other things, this means that, from time to time, the Remuneration Tribunal will be required to inquire into, and determine, or redetermine, the remuneration of Safety Authority Board members (subsection 7(3) of that Act refers).

 

Equivalent provision in the PSL Act: section 150XR

 

Clause 370 - Leave of absence of Board members

 

This clause provides that the Commonwealth Minister may grant leave of absence to the Chair and determine the terms and conditions of such leave. Subclause (2) provides that responsibility for granting leave to other Board members, and determining the terms and conditions of such leave, falls on the Chair rather than on the Minister.

 

Equivalent provision in the PSL Act: section 150XS

 

Clause 371 - Resignation of Board members

 

This clause requires written notice to be provided by a Board member wishing to resign his or her position and specifies that the notice must be given to the Commonwealth Minister.

 

Equivalent provision in the PSL Act: section 150XT

 

Clause 372 - Termination of appointment of Board members

 

This clause sets out the circumstances under which the Commonwealth Minster may terminate the appointment of a Board member, including the Chair.  The grounds are:

 

-         misbehaviour or physical or mental incapacity;

-         various circumstances relating to bankruptcy and insolvency ;

-         absence from three consecutive Board meetings unless the member is on approved leave of absence;

-         failure to disclose, without reasonable excuse, interests in accordance with requirements determined under clause 367; or

-         unsatisfactory performance for a significant period, as judged by the Commonwealth Minister.

 

Subclause (3) requires the Commonwealth Minister to consult with all responsible State and Northern Territory Ministers before terminating the appointment of a Board member.

 

Equivalent provision in the PSL Act: section 150XU

 

Clause 373 - Other terms and conditions of Board members

 

This clause enables the Commonwealth Minister to determine, for Board members, terms and conditions of service that are not covered in this Bill. These could encompass, for example, terms and conditions related to any additional functions that the Commonwealth Minister has conferred on the Board under paragraph 364(1)(c).

                                                                                                                 

Equivalent provision in the PSL Act: section 150XV

 



Clause 374 - Acting Board members

 

This clause sets out arrangements in respect of the appointment of acting Board members.  Section 33A of the Acts Interpretation Act 1901 contains further provisions with respect to acting appointments. This section deals with issues such as:

 

-         the fact that the appointment may be expressed to have effect only in the circumstances specified in the instrument of appointment;

-         the appointer’s right to determine the terms and conditions of the appointment, including remuneration and allowances and terminate the appointment at any time; and

-         a limit of 12 months on the length of acting appointments in cases where the appointee is to act in a vacant office .

 

Equivalent provision in the PSL Act: section 150XW

 

DIVISION 4 - CHIEF EXECUTIVE OFFICER AND STAFF OF THE SAFETY AUTHORITY

 

Clause 375 - Appointment of the CEO

 

This clause sets out provisions for the appointment of the CEO of the Safety Authority.

 

Subclause (1) establishes the office of the CEO.  Subclause (2) provides for the CEO to be appointed by written instrument issued by the Commonwealth Minister.  Subclause (3) requires that any person appointed to the office of CEO by the Commonwealth Minister must first be recommended to the Commonwealth Minister by the Ministerial Council on Mineral and Petroleum Resources (see the note to clause 357). Subclause (4) provides that the CEO is to be appointed on a full-time basis.  Subclause (5) provides that the appointment of a CEO will be for a term, not exceeding five years, as specified by the Commonwealth Minister in the instrument of appointment.  However, the CEO can be re-appointed, as section 33(4A) of the Acts Interpretation Act 1901 makes it clear that any power to appoint includes a power to re-appoint.

 

Equivalent provision in the PSL Act: section 150XX

 

Clause 376 - Duties of the CEO

 

This clause establishes the duties of the CEO of the Safety Authority.

 

Subclause (1) provides that the CEO is responsible for managing the Safety Authority.  This confers on the CEO the ordinary management responsibilities of a CEO.  It is proposed that the Safety Authority will be prescribed by regulation under the Financial Management and Accountability Act 1997 (‘FMA Act’) as a ‘prescribed Agency’ for the purposes of the FMA Act and that the CEO will be identified as the ‘Chief Executive’ of the Safety Authority for the purposes of that Act.  The outcome will be that the CEO has responsibility under the FMA Act for the management of the financial resources of the Authority.

 

Subclause (2) provides that anything done by the CEO in the name of the Safety Authority or on the Safety Authority’s behalf is taken to have been done by the Safety Authority.  Since the Safety Authority is a body corporate without members, this is the means by which the Safety Authority will perform its functions and exercise its powers.  The subclause confers power on the CEO to act in the name of the Safety Authority or on its behalf.  This power can be delegated by the CEO under clause 385.

 

Equivalent provision in the PSL Act: section 150XY

 

Clause 377 - Working with the Board

 

This clause establishes the working relationship between the CEO and the Board.

 

Subclause (1) requires the CEO to request the Board’s advice on strategic matters relating to the performance of the functions of the Safety Authority.  Subclause (2) requires the CEO to have regard to that advice, but does not require the CEO to follow it.  Subclause (3) requires the CEO to keep the Board informed about the Safety Authority’s operations and to give the Board such reports, documents and information as the Chair requires. Subclause (4) confers a right on the CEO to be an observer at Board meetings. Given the CEO’s other responsibilities, this right may be exercised without the CEO being physically present at the meeting, for example via a teleconference link.

 

Equivalent provision in the PSL Act: section 150XZ

 

Clause 378 - Remuneration and allowances of the CEO

 

This clause sets out the means by which the remuneration and allowances of the CEO are to be determined.

 

Subclause (1) provides that the remuneration of the CEO is to be determined by the Remuneration Tribunal.  However, if no determination by the Tribunal is in operation, the CEO’s remuneration will be paid pursuant to a determination by the Commonwealth Minister.  Subclause (2) provides that the CEO is to be paid those allowances which are prescribed.  Subclause (3) provides that the operation of this section is subject to the Remuneration Tribunal Act 1973 . Among other things, this means that, from time to time, the Remuneration Tribunal will be required to inquire into, and determine, or redetermine, the remuneration of the CEO (subsection 7(3) of that Act refers).

 

Equivalent provision in the PSL Act: section 150Y

 

Clause 379 - Leave of absence of the CEO

 

This clause establishes provisions for leave of absence by the CEO.

 

Subclause (1) provides that the CEO will have recreation leave entitlements as determined by the Remuneration Tribunal.  Subclause (2) provides that the Commonwealth Minister may grant the CEO a leave of absence other than recreation leave on the terms and conditions determined by the Commonwealth Minister. This could include, for example, leave on medical grounds.

 

Equivalent provision in the PSL Act: section 150YA

 

Clause 380 - Resignation of the CEO

 

This clause provides for the CEO to resign by giving the Commonwealth Minister a written resignation.

 

Equivalent provision in the PSL Act: section 150YB

 

Clause 381 - Notification of possible conflict of interest by CEO

 

This clause sets out the requirements for the CEO to notify the Commonwealth Minister of any conflict or potential conflict of interest he or she may have.  While it is recognised that a Board member may be appointed who has financial or other connections with entities that carry on activities that are regulated by the Safety Authority, the CEO must not have any interest that poses a significant risk of a conflict of interest.

 

Under the provisions of this clause, the CEO must notify the Commonwealth Minister in writing immediately if he or she:

-         acquires; or

-         becomes aware that he or she has already acquired; or

-         becomes aware that he or she is likely to acquire

a pecuniary or other interest which could conflict with the proper performance of the duties of the CEO.

 

Equivalent provision in the PSL Act: section 150YC

 

Clause 382 - Termination of CEO’s appointment

 

This clause sets out the circumstances under which the Commonwealth Minster may terminate the appointment of the CEO.  These are:

 

-         misbehaviour or physical or mental incapacity;

-         a number of circumstances relating to bankruptcy and insolvency which are listed in subparagraphs (2)(a)(i) to (iv);

-         absence from duty for 14 consecutive days or 28 days in any 12 month  period except on approved leave of absence;

-         engaging in paid employment outside the duties of the office without the approval of the Commonwealth Minister;

-         failure to comply, without a reasonable excuse, with the notification requirement in clause 381 in relation to conflicts of interest ;

-         unsatisfactory performance for a significant period, as judged by the Commonwealth Minister.

 

Subclauses (3) to (5) set out procedures for handling potential conflicts of interest in respect of the CEO.

 

Subclause (3) provides that if the Commonwealth Minister becomes aware, by means of the operation of clause 381 or otherwise, that the CEO has an interest which could conflict with the proper performance of his or her duties, the Commonwealth Minister must make a written determination as to whether the interest poses a significant risk of a conflict of interest.  The Commonwealth Minister is not required to make any such determination in respect of any possible future interests of the CEO.

 

Subclause (4) provides that if the Commonwealth Minister determines that the CEO holds an interest which poses a significant risk of conflict with the proper performance of the CEO’s duties, the Commonwealth Minister must require the CEO to dispose of the interest within a specified period.

 

Subclause (5) provides that if the Commonwealth Minister requires the CEO to dispose of an interest pursuant to subclause (4), and the CEO refuses or fails to comply with the requirement, the Commonwealth Minister must terminate the appointment of the CEO.

 

Equivalent provision in the PSL Act: section 150YD

 

Clause 383 - Other terms and conditions

 

This clause enables the Commonwealth Minister to determine terms and conditions not covered by this Bill in relation to the CEO. These could encompass, for example, terms and conditions that match, or take account of, additional terms and conditions determined by the Minister for Board members under clause 373.

 

Equivalent provision in the PSL Act: section 150YE

 

Clause 384 - Acting appointments

 

This clause makes provision for the appointment a person to act as the CEO.  Further provisions in relation to acting appointments are contained in section 33A of the Acts Interpretation Act 1901. This section deals with issues such as:

 

-         the fact that the appointment may be expressed to have effect only in the circumstances specified in the instrument of appointment;

-         the appointer’s right to determine the terms and conditions of the appointment, including remuneration and allowances and terminate the appointment at any time; and

-         a limit of 12 months on the length of acting appointments in cases where the appointee is to act in a vacant office.

 

Equivalent provision in the PSL Act: section 150YF

 



Clause 385 - Delegation by CEO

 

This clause establishes provisions for the delegation of the CEO’s functions and powers.

 

The range of persons to whom the CEO may delegate functions or powers (including the power in subclause 376(2) to act in the name of the Safety Authority or on its behalf) reflects the legislative history of the Commonwealth Petroleum (Submerged Lands) Act.  The Safety Authority took over the safety regulatory function in Commonwealth waters from the State and Northern Territory Designated Authority staff who had been administering occupational health and safety in those waters under the Commonwealth PSLA for over 20 years.  The power of delegation in clause 385 will enable the Safety Authority to call on the regulatory experience and expertise that is available among State and Territory employees, when required.

 

Subclause (1) provides that the CEO may delegate any of his or her powers or functions (except the power to appoint OHS inspectors pursuant to clause 390) to a person listed in paragraphs (1)(a) to (c), i.e.:

 

-         a member of staff of the Safety Authority

-         an employee of the Commonwealth or of a Commonwealth authority; o r

-         an employee of a State or the Northern Territory or of an authority of a State or the Northern Territory.

 

Subclause (2) requires that persons exercising powers under a delegation made pursuant to subclause (1) must do so in accordance with any directions of the CEO.

 

Delegations given under this clause will have effect in accordance with section 34AA and section 34A of the Acts Interpretation Act 1901. Section 34AA reads as follows:

 

“Where an Act confers power to delegate a function or power, then, unless the contrary intention appears, the power of delegation shall not be construed as being limited to delegating the function or power to a specified person but shall be construed as including a power to delegate the function or power to any person from time to time holding, occupying, or performing the duties of, a specified office or position, even if the office or position does not come into existence until after the delegation is given.”

 

Section 34A reads as follows:

 

“Where, under any Act, the exercise of a power or function by a person is dependent upon the opinion, belief or state of mind of that person in relation to a matter and that power or function has been delegated in pursuance of that or any other Act, that power or function may be exercised by the delegate upon the opinion, belief or state of mind of the delegate in relation to that matter.”

 

Equivalent provision in the PSL Act: section 150YG

 



Clause 386 - Staff of the Safety Authority

 

This clause provides that the staff of the Authority must be persons engaged under the Public Service Act 1999 .  For the purposes of that Act, the CEO and those employees constitute a Statutory Agency and the CEO is the Head of that Statutory Agency. Among other things, this means that the CEO has, in respect of the Authority’s staff, the rights, duties and powers that are prescribed by the Public Service Regulations (subsection 20(2) of the Public Service Act refers).

 

Equivalent provision in the PSL Act: section 150YH

 

Clause 387 - Consultants and persons seconded to the Safety Authority

 

This clause provides that the CEO of the Safety Authority may, on behalf of the Commonwealth, engage consultants to perform services for the Safety Authority, in connection with the performance of any of its functions or the exercise of any of its powers.  The Safety Authority will determine in writing the terms and conditions of such engagements.

 

This clause also provides that the Safety Authority may be assisted by officers and employees of other Commonwealth “Agencies” (ie Departments or other agencies covered by the Public Service Act) or “authorities” (ie statutory bodies not covered by the Public Service Act), or by officers and employees of State or Northern Territory, or of an authority of a State or Northern Territory. 

 

The purpose of allowing such engagement or secondment is that offshore petroleum activities are diverse in nature, whilst effective regulation of each activity may require highly specific and detailed knowledge of that activity.  The staff of the Safety Authority will be selected so as to provide both breadth and depth of knowledge, but occasions may still arise when there is a need to supplement the knowledge of the available staff members.  These occasions might include periods of absence of Safety Authority staff having a particular area of expertise, or they might include investigations into incidents where highly specialised knowledge is needed.

 

In accordance with current drafting practice, subclause (4) makes clear that any written instrument involved in the engagement of officers or employees under subclause (3) is not a legislative instrument in terms of the Legislative Instruments Act 2003 .

 

Equivalent provision in the PSL Act: section 150YI

 

DIVISION 5 - CORPORATE PLANS

This Division sets out the requirements for the preparation by the CEO of corporate plans and the governance requirements in relation to the approval of those plans, including the role of State and Northern Territory Ministers in that process.  This is a further provision that makes the Safety Authority accountable to Commonwealth, State and Northern Territory Ministers.

 



Clause 388 - Corporate plans

 

Subclause (1) requires that the CEO prepare a corporate plan at least once every three years and provide it to the Commonwealth Minister. Subclause (2) requires that a corporate plan cover a period of at least three years.  Subclause (3) requires that the CEO inform the Commonwealth Minister of any significant changes to a corporate plan or any matters which may arise which would significantly affect the Safety Authority’s capacity to meet the objectives of a corporate plan.

 

Paragraphs (4)(a) to (f) set out those matters which are required to be included in the corporate plan.  Subclause (5) provides that the Commonwealth Minister may require that other matters, or additional details about matters set out in paragraphs (4)(a) to (f), be included in the corporate plan. 

 

Equivalent provision in the PSL Act: section 150YJ

 

Clause 389 - Responsible Commonwealth Minister’s response to corporate plan

 

Subclause (1) requires that on receipt of a corporate plan, the Commonwealth Minister must circulate it to the responsible State and Northern Territory Ministers and consult with them on the contents of the plan. However, except as provided in subclauses (6) and (7), the Commonwealth Minister is not bound by the views of the State or Northern Territory Ministers on whether to approve the plan. Subclause (2) requires the Commonwealth Minister to provide a response to the CEO in respect of a corporate plan as soon as practicable after consultation with the responsible State and Northern Territory Ministers is complete.

 

In responding to a corporate plan, the Commonwealth Minister may provide a written direction to vary the corporate plan pursuant to subclause (3).  However, consistent with the plan’s status as a strategic document, such a direction may not be given in respect of particular offshore petroleum operations. If a direction is given, a revised version of the plan must be provided to the Commonwealth Minister within 30 days.

 

Subclauses (6) and (7) provide that, before approving, or directing the variation of, a part of a corporate plan relating specifically to the operations of the Safety Authority in the designated coastal waters of one or more States or the Northern Territory, the Commonwealth Minister must obtain the approval of each of the affected State or Territory Ministers.

 

Equivalent provision in the PSL Act: section 150YK

 

DIVISION 6 - OHS INSPECTORS

Clause 390 - Appointment of OHS inspectors

 

This clause sets out provisions for the appointment of OHS inspectors, whose powers, functions and duties are dealt with in Part 4 of Schedule 3 to this Bill. The range of persons who can be appointed as OHS inspectors reflects, again, the legislative history of the Commonwealth Petroleum (Submerged Lands) Act and the context in which the Safety Authority took over the regulation of occupational health and safety in Commonwealth and State/Northern Territory coastal waters (the note to clause 385 refers).

 

OHS inspectors appointed under this clause will exercise functions and powers in State and Northern Territory coastal waters under the State and Territory PSLAs, as well as in Commonwealth waters.  It is therefore appropriate that there be the capacity to appoint State and Territory staff as OHS inspectors.  Moreover, State and Territory staff will continue to carry out the day-to-day administration of the proposed new Act in Commonwealth waters, in relation to matters other than safety - for example in relation to resource management and environment protection.

 

Persons who are not staff of the Safety Authority nor State or Territory employees may be appointed temporarily as OHS inspectors for specific functions.  This power to appoint OHS inspectors is expected to be used only rarely, where specific expertise is required for a particular task or tasks that is not otherwise available to the Safety Authority.

 

Subclause (4) provides that, in addition to the powers, functions and duties conferred or imposed by or under this Act, an OHS inspector has the powers, functions and duties that are conferred or imposed by or under a State PSLA or the Northern Territory PSLA.  This subclause enables the States and Northern Territory to confer powers and functions and to impose duties on an OHS inspector appointed under the Commonwealth Act.

 

Equivalent provision in the PSL Act: section 150YL

 

Clause 391 - Identity cards

 

This clause imposes requirements in relation to identity cards issued to OHS inspectors. Subclause (3) makes it an offence for a person who has been issued with an identity card, and who ceases to be an OHS inspector, to fail to return the identity card as soon as is practicable.  Subclause (4) provides that the person is not guilty of the offence if the card was lost or destroyed.  The evidential burden in relation to loss or destruction of the card is placed upon the defendant, because the circumstances of loss or destruction will be peculiarly within the knowledge of the defendant.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in the PSL Act: section 150YM

 

DIVISION 7 - NATIONAL OFFSHORE PETROLEUM SAFETY ACCOUNT

 

Clause 392 - National Offshore Petroleum Safety Account

 

This clause establishes the National Offshore Petroleum Safety Account.  It is a Special Account for the purposes of the Financial Management and Accountability Act 1997. The significance of this is that, although fees and charges collected by the Safety Authority are received by the Authority on behalf of the Commonwealth and therefore form part of the Commonwealth Consolidated Revenue Fund referred to in section 81 of the Constitution, these moneys are, accounted for separately by means of the Special Account arrangement.

 

Equivalent provision in the PSL Act: section 150YN

 

Clause 393 - Credits to the Account

 

This clause provides that the amounts that must be credited to the Special Account are:

-         any amounts appropriated by the Parliament for the purposes of the Account;

-         amounts equal to the amounts paid for services provided by the Safety Authority levied under clause 395;

-         amounts equal to the amounts paid by way of the safety inspection levy imposed by the Offshore Petroleum (Safety Levies) Act 2003 (and any associated late payment penalty);

-         amounts equal to the amounts paid by way of the safety case levy imposed by the Offshore Petroleum (Safety Levies) Act (and any associated late payment penalty);

-         amounts equal to the amounts paid by way of the pipeline safety management plan levy imposed by the Offshore Petroleum (Safety Levies) Act  (and any associated late payment penalty);

-         amounts equal to the amounts paid by a State or the Northern Territory in respect of the exercise of powers by the Safety Authority under State/Territory onshore petroleum legislation, under clause 360;

-         amounts equal to any other amounts paid to the Authority on behalf of the Commonwealth by a State or the Northern Territory; and

-         amounts equal to any other amounts paid to the Authority on behalf of the Commonwealth, by any other person.

           

Equivalent provision in the PSL Act: section 150YO

 

Clause 394 - Purposes of the Account

 

This clause sets out the purposes of the Special Account.  These are, in effect, the carrying out by the Safety Authority of its functions and the exercise of its powers under the Commonwealth, State and Northern Territory PSLAs and the exercise of any powers conferred on it by State/Northern Territory onshore petroleum legislation.  Subsection 21(1) of the Financial Management and Accountability Act 1997 appropriates money standing to the credit of the Account for expenditure for those purposes, up to the balance of the account for the time being.

 

Equivalent provision in the PSL Act: section 150YP

 

 

 

 

DIVISION 8 - OTHER FINANCIAL MATTERS

 

Clause 395 - Fees and expenses incurred by the Safety Authority

 

This clause provides for the imposition of fees for services, in relation to regulatory services provided by the Safety Authority.  The fees must be set on a cost-recovery basis, and do not constitute taxation.

 

The services for which these fees may be levied are the registration of persons as operators of facilities under subclause 5(1) of Schedule 3, and the issue, variation or transfer of licences granted under paragraph 17(3)(g) of Schedule 3.

 

Equivalent provision in the PSL Act: section 150YQ

Technical change: that, instead of a reference to fees in relation to services provided by the Safety Authority (as in the PSL Act), the clause mentions fees in respect of matters in relation to which expenses are incurred by the Safety Authority under the proposed Act or the regulations, and specifies examples of actions under regulations that attract fees as per paragraphs (1)(a) and (b)

 

Clause 396 - Safety investigation levy

 

This clause provides for the collection of the safety investigation levy imposed by the Offshore Petroleum (Safety Levies) Act 2003 .

 

The amount of levy payable by an operator will be set in the regulations at a level that recovers the cost to the Safety Authority of conducting the investigation.

 

The investigation levy will become payable only once a threshold level of investigatory cost is exceeded.  That threshold will be high.  This reflects the purpose of imposing the investigation levy separately from the annual safety case levy or the annual pipeline safety management plan levy.  This is to avoid an unacceptable level of cross-subsidisation between those operators whose activities require a high level of investigatory activity by the Safety Authority and those whose activities do not.

 

Equivalent provision in the PSL Act: section 150YR

Policy change: change in rate of late payment penalty from 0.33% to 0.333333% per day

 

Clause 397 - Safety case levy

 

This clause provides for the collection of the safety case levy imposed by the Offshore Petroleum (Safety Levies) Act 2003 .  The annual safety case levy will recover the regulatory costs of maintaining the safety case system.

 

Generally, the safety case levy is imposed for the whole period that a safety case is in force in relation to a facility.  However, subclause (1) provides that the regulations may make provision for the remittal of part of an amount of safety case levy if the facility is of a kind declared by the regulations to be a facility that operates on an intermittent basis and the facility in fact operates for only part of the year.  This is intended to deal with the problem that some mobile facilities, such as drilling rigs, are commonly only in operation for periods of the year, and may spend a substantial part of the year out of work.  Under clause 4 of Schedule 3, such a vessel will be a ‘facility’ for only those parts of the year when it is in operation, and during the down time will not be regulated by the Safety Authority.  This clause therefore provides for the remittal of part of the annual fee in these circumstances.

 

Equivalent provision in the PSL Act: section 150YS

Policy change: change in rate of late payment penalty from 0.33% to 0.333333% per day

 

Clause 398 - Pipeline safety management plan levy

 

This clause provides for the collection of the pipeline safety management plan levy imposed by the Offshore Petroleum (Safety Levies) Act 2003 .  The annual pipeline safety management plan levy will recover the regulatory costs of maintaining the safety management plan system in respect of pipelines.

 

Equivalent provision in the PSL Act: section 150YT

Policy change: change in rate of late payment penalty from 0.33% to 0.333333% per day

 

Clause 399 - Liability to taxation

 

This clause exempts the Safety Authority from Commonwealth, State and Territory taxes.  This exemption does not extend to certain Commonwealth taxes, such as GST or FBT, for which an express exemption is necessary.

 

Equivalent provision in the PSL Act: section 150YU

 

DIVISION 9 - MISCELLANEOUS

Clause 400 - Annual reports

 

This clause sets out requirements in relation to annual reports as they apply to the Safety Authority and the Board.

 

Subclause (1) requires that, as soon as practicable after 30 June each year, the CEO must prepare a report in relation to the operations of the Safety Authority during the previous financial year.  The CEO must provide the report to the Commonwealth Minister and a copy of the report to each responsible State and Northern Territory Minister and the Ministerial Council on Mineral and Petroleum Resources (see clause 357).

 

Subclause (3) sets out a similar requirement for the Chair of the Board to report on the operations of the Board.  Section 34C of the Acts Interpretation Act 1901 sets out further requirements in respect of  annual reports, for example that the report must be submitted to the Minister within 6 months of the end of the financial year unless the Minister grants a time extension.

 

Subclause (4) requires the Commonwealth Minister to cause a copy of each report to be tabled in each House of Parliament within 15 sitting days of receiving the report.

 

Equivalent provision in the PSL Act: section 150YV

 

Clause 401 - Ministers may require the Safety Authority to prepare reports or give information

 

This clause provides that the Commonwealth Minister or responsible State and Territory Minister may require the Safety Authority, by written notice, to prepare a report or a document setting out information in relation to one or more specified matters arising from the performance of its functions or the exercise of its powers.  Copies of any such report or document are to be provided to the Commonwealth Minister and the responsible State and Northern Territory Ministers. Any such report or document is to be prepared in the time specified in the notice requesting it.

 

In accordance with current drafting practice, subclauses (4) and (5) make clear that reports and documents prepared under this clause are not legislative instruments in terms of the Legislative Instruments Act 2003 .

 

Equivalent provision in the PSL Act: section 150YW

 

Clause 402 - Responsible Commonwealth Minister may give directions to the Safety Authority

 

This clause sets out the powers of the Commonwealth Minister to give directions to the Safety Authority and the role of State and Northern Territory Ministers in the giving of such directions.  This is another of the key provisions that establishes the accountability of the Safety Authority to Commonwealth, State and Northern Territory Ministers.

 

Subclause (1) enables the Commonwealth Minister to give directions in writing to the Safety Authority in respect of the performance of its functions and the exercise of its powers.

 

Subclause (11) provides that, before giving a direction of general application, the Commonwealth Minister must consult State and Northern Territory Ministers about the direction.

 

The Commonwealth Minister’s role being strategic rather than one involving technical issues of day-to-day administration, subclause (2) prevents the Commonwealth Minister from giving directions in respect of a particular facility.  However, subclause (3) provides that nothing in subclause (2) prevents the Commonwealth Minister from directing the Safety Authority to investigate a particular accident or dangerous occurrence at a facility.

 

Subclause (4) gives responsible State and Northern Territory Ministers the ability to request that the Commonwealth Minister give a direction that relates wholly or principally to the Safety Authority’s operations in the designated coastal waters of the State or Territory concerned.  Subclause (5) provides that the Commonwealth Minister must use his or her best endeavours to make a decision in relation to a request within 30 days.  Subclause (6) provides that, if the Commonwealth Minister refuses to give the direction, he or she must give written reasons for the refusal.

 

Subclause (7) provides that, before giving a direction that relates wholly or principally to the Safety Authority’s operations in the designated coastal waters of one or more of the States or the Northern Territory, the Commonwealth Minister must obtain the agreement of each responsible State or Northern Territory Minister concerned. Subclause (4) means that a request from the Minister or all Ministers who is or are affected would be sufficient evidence of agreement if the Commonwealth Minister gave the direction in identical terms to what that request proposed.

 

Subclauses (8) to (10) set out the means by, and circumstances of urgency in which, the Commonwealth Minister may give a direction which relates wholly or principally to the Safety Authority’s operations in the designated coastal waters of one or more States or the Northern Territory without the prior approval of each relevant State and or Northern Territory Minister.  A direction given in these circumstances expires after 30 days unless, in the meantime, the agreement of affected State or Territory Ministers has been obtained.  A direction that expires may be re-issued in the same or similar terms.

 

Subclause (12) provides that the Safety Authority must comply with a direction given under this clause.

 

Subclause (13) provides that the scope of the directions that may be given under this clause is not limited by the terms of clauses 356 (the power to give policy principles) or 401 (the power to require reports and information).

 

In accordance with current drafting practice, subclause (14) makes clear that a direction under this clause is a legislative instrument in terms of the Legislative Instruments Act 2003 .

 

Equivalent provision in the PSL Act: section 150YX

 

Clause 403 - Prosecutions by the Director of Public Prosecutions under mirror provisions

 

This clause enables the States and Northern Territory to confer prosecutorial functions and powers on the Commonwealth Director of Public Prosecutions in relation to offences under State or Northern Territory ‘mirror’ occupational health and safety laws that substantially correspond to the ‘listed OHS laws’.  The Director of Public Prosecutions will have those functions and powers only if the State or Northern Territory PSLA confers them in relation to the designated coastal waters of that State or Territory.

 

Equivalent provision in the PSL Act: section 150YY

 

 

 

 

Clause 404 - Australian Industrial Relations Commission may exercise powers under mirror provisions

 

This clause enables the States and Northern Territory to confer functions on the Australian Industrial Relations Commission in their ‘mirror’ occupational health and safety laws that substantially correspond to the ‘listed OHS laws’.  The functions that may be conferred on the Commission are functions that ‘mirror’ its functions under:

 

-         clause 81 of Schedule 3, which enables a person to appeal against a decision of an inspector; and

-         clause 23 of Schedule 3, which provides for the Commission to resolve disagreements in relation to designated work groups.

 

Equivalent provision in the PSL Act: section 150YZ

 

Clause 405 - Reviews of operations of Safety Authority

 

This clause provides for the Commonwealth Minister to conduct 3-yearly reviews of the operations of the Safety Authority in Commonwealth waters and State/Territory coastal waters.  There is capacity under this clause for the Commonwealth Minister’s review to be carried out in conjunction with reviews by State or Northern Territory Ministers.  It is expected that each of the State and Northern Territory Acts will include a similar requirement for review by the responsible State or Territory Minister of the operations of the Safety Authority in the designated coastal waters of the relevant State or Territory.

 

Subclauses (1) to (5) provide that the Commonwealth Minister is to cause to be conducted reviews of the operations of the Safety Authority relating to each 3-year period after the commencement of operations of the Safety Authority on 1 January 2005.  The Commonwealth Minister’s review is to relate to operations in Safety Authority waters — i.e. both Commonwealth waters and State/Territory designated coastal waters.

 

Subclause (6) provides that a responsible State or Northern Territory Minister may request that a review under this clause be conducted in conjunction with a review of the operations of the Authority in the designated coastal waters of that State or Territory that is being conducted at the same time.

 

Subclause (7) provides that, without limiting the matters to be covered by a review, the review must include an assessment of the effectiveness of the Safety Authority in improving the occupational health and safety of persons engaged in offshore petroleum operations.

 

Subclause (8) requires the tabling of any report of a review in each House of Parliament within 15 sitting days of the report being made available to the Commonwealth Minister.

 

Equivalent provision in the PSL Act: section 150Z

 

Chapter 5 Information

 

Part 5.1 Data management and gathering of information

 

DIVISION 1—INTRODUCTION

 

Clause 406 - Simplified outline

 

This clause sets out a simplified outline of Part 5.1 about data management and information gathering. This outline does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

DIVISION 2—DATA MANAGEMENT

 

Clause 407 - Direction to keep records

 

This clause replicates the provisions of section 122 of the Petroleum (Submerged Lands) Act, which confers on the Designated Authority a power to give directions to titleholders or persons working under them about documenting a petroleum operation, including action to collect cores, cuttings and samples. 

 

Following amendments made to the Petroleum (Submerged Lands) Act in 2003, Data Management Regulations have been promulgated (the provisions of clause 408 refer). However, these Regulations do not empower the Designated Authority to give ad hoc directions of immediate effect to individual titleholders or classes of titleholders to deal with a situation where an unforeseen need arises to require the collection of data or samples that have previously not been collected.

 

The direction-giving power in this clause is therefore proposed for retention. The difference made by the existence of the Data Management Regulations is that, if a direction were issued and the new requirement were to be a long-term one, the Designated Authority would, in most cases, take steps to amend the data management plans of the individual titleholder(s), or the Regulations themselves, to reflect the change. After this process had been completed, the direction would be revoked.

 

While infrastructure and pipeline licences are not directed towards petroleum exploration, data collected under these licences may include seismic reflection site survey data and geological sample data. Such data or samples may be of interest to explorers in the region who may be planning to drill wells. For this reason, persons operating under infrastructure and pipeline licences are covered by this clause and may be directed to hand such data or samples over to the Designated Authority or another party.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

In accordance with current drafting practice, subclause (6) makes clear that a direction given by the Designated Authority under this clause to a particular person is not a legislative instrument in terms of the Legislative Instruments Act 2003 . Likewise, if the Commonwealth Minister, under subclause (4), gives a direction to the Designated Authority about a particular case, such a direction does not meet the criteria for being a legislative instrument. However, if a direction under subclause (4) is of general application, it is a legislative instrument, as the direction can then be regarded as determining the law or altering the content of the law, rather than applying the law in a particular case.

 

Equivalent provision in the PSL Act: section 122

 

Clause 408 - Regulations about data management

 

This clause enables regulations to be made for data collection, including requirements for a titleholder to submit a data management plan. This is consistent with the move to using objective-based regulations to deal with other detailed issues related to offshore petroleum management. Under the Petroleum (Submerged Lands) Act, Data Management Regulations are in fact in place under the powers set out in section 122A, which this clause replicates. The points made under clause 407 about infrastructure and pipeline licences are equally applicable in relation to what the regulations may provide.

 

As explained under clause 422, much of the information and material collected through the operation of these Regulations will eventually become publicly available and potentially useful to petroleum exploration companies with a future interest in the same area. If such a company began to operate in the area, it would be required to contribute to the database in its turn. 

 

Equivalent provision in the PSL Act: 122A

 

DIVISION 3—INFORMATION-GATHERING POWERS

 

Clause 409 - Designated Authority or project inspector may obtain information and documents

 

Whereas the two preceding clauses deal with what the Designated Authority may require a titleholder to do to document a petroleum operation, this clause empowers the Designated Authority or a project inspector to require any person (not necessarily a titleholder) to provide factual information which is relevant for the proper administration of the legislation. This would include information not documented in writing, in most cases because the company’s procedures or the Data Management Regulations did not require it to be so documented. The powers set out in this clause could be used by the Designated Authority in investigating, for example, an oil spill incident on a production platform.

 

This clause is based on section 115 of the Petroleum (Submerged Lands) Act but the provisions of that section are not as comprehensive as the information requirement provisions inserted in more recently drafted Commonwealth Acts. Accordingly, a number of enhancements have been included in this clause (see “Policy changes” listed below).

 

In paragraphs (1)(d) and (e), the giving of evidence is wider in ambit than the answering of questions provided for in paragraph 115(1)(b) of the Petroleum (Submerged Lands) Act. Evidence could include a written statement. This may extend the ambit of the protection from self-incrimination provided by clause 412.

 

The offence provision in this clause does not specify a fault element. Under section 5.6 of the Criminal Code , if an offence provision does not specify a fault element and if the physical element of the offence consists only of conduct, the fault element is intention. In other words, for a person to be found guilty of contravening this clause, the prosecution would have to prove intention.

 

Equivalent provision in the PSL Act: subsection 115(1)

Policy changes : that the Designated Authority or a project inspector may require a person to make copies of documents and produce those copies to the Designated Authority or the project inspector; that the Designated Authority or a project inspector may require a person to appear before the Designated Authority or the project inspector and give evidence either orally or in writing (as distinct from merely answering questions); in the case of a body corporate, that the Designated Authority or a project inspector may require the body to cause a competent officer of the body to appear before the Designated Authority or the project inspector; that the Designated Authority or a project inspector may require information, documents or copies to be produced within a period no shorter than 14 days after the date of the written notice; that the Designated Authority or a project inspector may require the person to appear before the Designated Authority or the project inspector on a date no earlier than 14 days after the date of the written notice; that the Designated Authority or a project inspector must set out in the notice given to the person or company the penalties that could follow from failure to provide information, evidence or documents as required, or from giving false or misleading information, evidence or documents

 

Clause 410 - Copying documents—reasonable compensation

 

This clause refers to costs involved in copying documents at the Designated Authority’s or project inspector’s direction and giving those copies to the Designated Authority or project inspector. Without this clause, these costs could be deemed an acquisition of property otherwise than on just terms. Accordingly, this clause inserts a safeguard provision to ensure that the requirement to produce copies would not be struck down as contrary to paragraph 51(xxxi) of the Constitution.

 

Equivalent provision in the PSL Act: nil.

Policy change : that a person is entitled to reasonable compensation for the costs of copying documents and providing the copies in compliance with a notice given by the Designated Authority or a project inspector

 

Clause 411 - Power to examine on oath or affirmation

 

This clause replicates a power of the Designated Authority or a project inspector provided for in the Petroleum (Submerged Lands) Act. Examination of a witness on oath or affirmation could be appropriate, for example, in the course of an investigation into damage to a petroleum production facility to ascertain whether charges could be laid against a person (other than the witness) under clause 321.

 

Equivalent provision in the PSL Act: section 116

 

Clause 412 - Self-incrimination

 

This clause sets out a provision that is commonly used to override the usual rule that a person is not bound to incriminate himself or herself. This clause also discharges the person providing information or a document from any threat of civil proceedings on the basis of that information or document.

 

If a person questioned under the powers conferred by clause 409 gives information which, in other circumstances, would amount to a confession of an infringement against the Act or an admission of liability, no effective prosecution or legal action can generally be launched against that person unless other sufficiently strong evidence is found. This partial immunity from legal consequences has the obvious benefit that it increases the likelihood of a successful investigation. Where incidents related to petroleum operations are concerned, it may occasionally be more important to establish the facts than to be able to use the facts in a prosecution or legal action.

 

However, as set out in subparagraphs (2)(e)(i) and (ii), information or a document given under clause 409 could be admissible in criminal proceedings if it provides evidence of less than full compliance with a requirement to give information or a document under that clause. Without this provision, there would be an inconsistency with subclause 409(5), clauses 416 and 417 and sections 137.1 and 137.2 of the Criminal Code, all of which assume it is possible to prosecute a person for failure to properly comply with a requirement to give information or a document under clause 409. In such cases, the offending information or document would have to be an important item of evidence against the defendant.

 

Equivalent provisions in the PSL Act:  subsections 115(2) and (3)

 

Clause 413 - Copies of documents

 

This clause, like clause 409, adds to the proposed Act some items of detail that do not appear in the Petroleum (Submerged Lands) Act but are normal in more recently drafted Commonwealth Acts. Subsection 115(1) of that Act provides that documents are to be produced to the Designated Authority or a project inspector but is silent on what the Designated Authority or a project inspector may then do with the document. This clause clarifies the provision. 

 

Equivalent provision in the PSL Act: nil.

Policy change: that the Designated Authority or a project inspector may make and retain copies or extracts of documents produced

 

 

 

 

Clause 414 - Designated Authority or project inspector may retain documents

 

This clause, like the previous one and clause 409, adds to the proposed Act some provisions related to information-gathering involving documents. These provisions do not appear in the Petroleum (Submerged Lands) Act but are normal in more recently drafted Commonwealth Acts. Subsection 115(1) of the Act is unclear on whether the Designated Authority or the project inspector may hold on to documents produced for any length of time. This clause clarifies that issue.

 

Equivalent provision in the PSL Act: nil.

Policy change: that the Designated Authority or a project inspector may take possession of a produced original document for as long as is reasonably necessary but must provide the person or company to whom it belongs a certified true copy which will have the same status as the original in all courts and tribunals, and, until that copy is provided, must give the person or company reasonable access to the original document

 

Clause 415 - False or misleading information

 

Replicating a provision in the Petroleum (Submerged Lands) Act, this clause makes it an offence against the proposed Act for a person to knowingly give information that is false or misleading in a material particular when under a requirement under subclause 409(2). While the same conduct may be an offence against section 137.1 of the Criminal Code, this provision is included to maintain uniformity with the provisions in State and Northern Territory “mirror” Acts.

 

Section 137.1 of the Criminal Code refers to information given to a Commonwealth entity, given to a person who is exercising powers or performing functions under, or in connection with, a law of the Commonwealth or given in compliance or purported compliance with a law of the Commonwealth. In these situations, a person is guilty of an offence punishable by 12 months imprisonment if the person gives the information knowing that it is false or misleading or knowing that it omits any matter or thing without which the information is misleading.

 

Equivalent provision in the PSL Act: paragraph 117(1)(c)

 

Clause 416 - False or misleading documents

 

Replicating a provision in the Petroleum (Submerged Lands) Act, this clause makes it an offence against the proposed Act for a person to knowingly produce a document that is false or misleading in a material particular when under a requirement under subclause 409(2). While the same conduct may be an offence against section 137.2 of the Criminal Code, this provision is included to maintain uniformity with the provisions in State and Northern Territory “mirror” Acts.

 

Section 137.2 of the Criminal Code refers to documents produced in compliance or purported compliance with a law of the Commonwealth. In this situation, a person is guilty of an offence punishable by 12 months imprisonment if the person produces a document knowing that the document is false or misleading in a material particular.

 

Equivalent provision in the PSL Act: paragraph 117(1)(d)

 

Clause 417 - False or misleading evidence

 

This clause complements one of the new provisions inserted in clause 409, ie that the Designated Authority or a project inspector may require a person to appear before the Designated Authority or the project inspector and give evidence either orally or in writing. Consistent with penalties in the Criminal Code , this clause prescribes the penalty applicable to a person who knowingly gives evidence that is false or misleading in a material particular.

 

Equivalent provision in the PSL Act:  nil.

Policy change: that a 12 month imprisonment penalty applies if a person gives evidence knowing that it is false or misleading in a material particular

 

Part 5.2 Release of regulatory information

 

Clause 418 - Notifiable events— Gazette notice

 

To provide an appropriate level of transparency to the management of petroleum resources in Australia’s offshore marine jurisdiction, this clause sets out a requirement for certain administrative actions under the proposed Act to be publicly notified in the Gazette .  As set out in clause 442, this would be the Gazette of the State or Northern Territory in the offshore area of which the area in question is located, or, in the case of an external territory offshore area, the Commonwealth Gazette .  

 

Equivalent provision in the PSL Act: section 94

 

Clause 419 - Designated Authority to make documents available to responsible Commonwealth Minister

 

This clause implements a provision which originates from the principles set out in the 1967 agreement between the Commonwealth and the States (the note to clause 4 refers). Since the Commonwealth Minister will be answerable to the Australian public through the Australian Parliament for the policies embodied in, and the working of, the proposed Act, the Commonwealth Minister must have access to copies of all documents received or issued by any of the Designated Authorities in connection with the Act.

 

This clause refers primarily to documents of an administrative rather than a technical kind. Documents containing technical information are subject to a similar arrangement which is dealt with under clause 424.

 

Equivalent provision in the PSL Act: section 118A

 

 

 

 

 

 

Part 5.3 Release of technical information

 

DIVISION 1—INTRODUCTION

 

Clause 420 - Simplified outline

 

This clause sets out a simplified outline of Part 5.3 dealing with the release of technical information. This outline does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

Clause 421 - Definitions

 

This clause inserts definitions which apply to the whole of this Part. The reason why an “applicable document” must be a document that was given to the Designated Authority on or after 7 March 2000 is that this is the date of effect of certain amendments made by the Petroleum (Submerged Lands) Legislation Amendment Act (No. 1) 2000 . Any document given to the Designated Authority before this date is to be dealt with under the provisions set out in Schedule 5, which is based on section 118 of the Petroleum (Submerged Lands) Act, which currently continues to have effect only in respect of those documents (clause 431 refers).

 

In June 2004, the Data Management Regulations were promulgated, containing provisions not only about the submission of data and samples to the Designated Authority but also about the conditions under which this material may possibly later be released to the public. Documents submitted during the period of effect of these Regulations are mentioned separately in subparagraph (c)(iv) of the definition of “applicable document”. If this Bill is passed, the Regulations will be remade under subparagraph (c)(ii). Because of the existence of these Regulations, subparagraph (c)(i) would refer primarily to information given to the Designated Authority under a direction given under clause 407 rather than under the Regulations. Subparagraph (c)(iii) refers to documents submitted between 7 March 2000 and 4 June  2004, when the Data Management Regulations came into effect.

 

The definition of “petroleum mining sample” is proposed to be expanded to include samples of fluids other than petroleum. These could be water samples or samples of gases that are not regarded as petroleum. Such samples could, however, have a geoscientific significance for petroleum exploration.

 

Unlike with what applies to documents, the 7 March 2000 date is not relevant in relation to petroleum mining samples. This is because the new system that was introduced with effect from 7 March 2000 for documentary information was not appropriate to be introduced in respect of petroleum mining samples. The difference derives essentially from the fact that documentary information is intellectual property whereas a petroleum mining sample is a physical entity.

 

Equivalent provisions in the PSL Act: section 150

Policy change: that a petroleum mining sample could be a sample of fluid recovered other than fluid petroleum

 

DIVISION 2—PROTECTION OF CONFIDENTIALITY OF INFORMATION AND SAMPLES

 

Subdivision A Information and samples obtained by the Designated Authority

 

Clause 422 - Protection of confidentiality of documentary information obtained by the Designated Authority

 

This clause places a general prohibition on publishing or disclosing documentary information except as specified. This clause specifies or acknowledges the scenarios under which documentary information may be released or disclosed by the Designated Authority.

 

As implied under paragraph (2)(b), the Designated Authority may release any information to any Commonwealth Minister, for example the Minister administering the proposed Act or the Minister administering Commonwealth environment legislation. Equally, the Designated Authority may release information to any State Minister (including a Minister of another State) or a Northern Territory Minister. This is to ensure proper coordination of programs in the various government agencies that are concerned with Australia’s marine jurisdiction.

 

Under paragraph (2)(c), the Designated Authority may release information if it is, and on the terms that it is, allowed by the regulations, viz the Data Management Regulations. It is only by this mechanism that the Designated Authority may grant public access to technical information. 

 

Where the Regulations allow release of the data, they generally impose some period of delay on their public availability. Seismic survey companies, which draw their income from selling survey data to petroleum explorers, are particularly reliant on this period of confidentiality. On the other hand, much of the information and material collected through the operation of these Regulations will eventually become publicly available and potentially useful to petroleum exploration companies with a future interest in the area over which the submitter of the information held a title. If such a company began to operate in the area under a new title, it would be required to contribute to the database in its turn. 

 

Under paragraph (2)(d), the Designated Authority may release any information for the purposes of the administration of the proposed Act or the regulations. An information release under this provision might be made, for example, to Australian Government geoscientists, who will have a role in administering the proposed Act.

 

Equivalent provision in the PSL Act: section 150B

 

Clause 423 - Protection of confidentiality of petroleum mining samples obtained by the Designated Authority

 

This clause sets out provisions analogous to clause 422 about the Designated Authority making details about petroleum mining samples publicly known or permitting persons to inspect samples. The scenarios and grounds for access are identical to the ones set out under clause 422.

 

Equivalent provision in the PSL Act: section 150C

 

Clause 424 - Designated Authority may make information or samples available to a Minister, a State Minister or a Northern Territory Minister

 

This clause makes explicit what is implied by paragraphs 422(2)(b) and 423(2)(b), ie that the Designated Authority may release any information or petroleum mining sample to any Commonwealth Minister, State Minister or Northern Territory Minister.

 

Secondly, this clause provides that the Commonwealth Minister may require the Designated Authority to make available to him or her any item of documentary information or petroleum mining sample. If such a request were made, it would normally be for the purpose of analysis by Australian Government officials or geoscientists involved in administering the Act or for convenience of storage in a central location.

 

Equivalent provision in the PSL Act: section 150D

 

Subdivision B Information and samples obtained by a Minister

 

Clause 425 - Protection of confidentiality of information obtained by a Minister

 

This clause refers to documentary information that the Designated Authority has made available to the Commonwealth Minister administering the proposed Act. This clause places on the Commonwealth Minister the same restrictions regarding the public release of that information as apply under clause 422 to the Designated Authority who passed on the information.

 

Equivalent provision in the PSL Act: section 150E

 

Clause 426 - Protection of confidentiality of petroleum mining samples obtained by a Minister

 

This clause refers to petroleum mining samples that the Designated Authority has made available to the Commonwealth Minister administering the proposed Act. This clause places on the Commonwealth Minister the same restrictions regarding public access to that sample, or information about it, as apply under clause 423 to the Designated Authority who made the sample available to the Commonwealth Minister.

 

Equivalent provision in the PSL Act: section 150F

 

 

 

 

 

 

Subdivision C Miscellaneous

 

Clause 427 - Fees

 

This clause refers to a Designated Authority or the Commonwealth Minister making information available to a member of the public or permitting a member of the public to examine a petroleum mining sample in accordance with the regulations. This clause enables the regulations to prescribe a fee to recover from that member of the public expenses incurred by the Designated Authority or Commonwealth Minister in giving this access. This would include expenses such as staff time spent in searching for the document or sample, photocopying and mailing costs.  

 

If the Designated Authority releases the information or sample, the fee is payable to the Designated Authority, who is to remit it to the Commonwealth Consolidated Revenue Fund (clause 346 refers). These moneys are then dealt with as set out in clause 55. If the Commonwealth Minister releases the information or sample, the fee is payable to the Commonwealth. In that case the recipient of the fees would be the Department or one of the Portfolio agencies of the Commonwealth Minister administering the proposed Act. 

 

Equivalent provision in the PSL Act: section 150G

 

Clause 428 - Review by Minister

 

This clause enables the regulations to include provision for a Designated Authority’s decisions in relation to information release or access to a sample to be reviewed by the Commonwealth Minister administering the proposed Act. This allows the maintenance of a policy that has been in force under the Petroleum (Submerged Lands) Act since 1985. The basic principle behind this policy is that if the public release of information would disclose a trade secret or adversely affect a company’s lawful business or financial affairs, that information should not be released, or release should at least be deferred. Decision on issues of this type can occasionally be disputed, and it is therefore desirable for them to come within the ambit of administrative review.

 

Equivalent provision in the PSL Act: section 150H

 

Clause 429 - Privacy Act

 

The Privacy Act 1988 deals with personal information about an individual. Relatively little information of this type would be in the possession of a Designated Authority. To the extent that it is, this clause makes it clear that, under the regulations, the Privacy Act principles, or some stronger prohibition, would apply to its release. For example, particulars about the technical qualifications of an applicant for a title could not be disclosed to third parties in contravention of the Privacy Act.

 

Equivalent provision in the PSL Act: section 150J



DIVISION 3—COPYRIGHT

 

Clause 430 - Publishing or making copies of applicable documents not an infringement of copyright

 

This clause refers to the fact that copyright of material submitted under the Act and releasable under Part 5.3, or regulations made under Part 5.3, resides with the original copyright owner, who would normally be the author or company submitting the information.  This clause is intended to clarify that the Designated Authority or the Commonwealth Minister is able to provide to the public copies of releasable documents without in any way infringing copyright. This section is intended to put beyond doubt the fact that the Designated Authority or the Commonwealth Minister has a non-exclusive right to copy those data.

 

Equivalent provision in the PSL Act: section 150K

 

DIVISION 4—RELEASE OF TECHNICAL INFORMATION GIVEN TO THE DESIGNATED AUTHORITY BEFORE 7 MARCH 2000

 

Clause 431 - Release of technical information given to the Designated Authority before 7 March 2000

 

The date 7 March 2000 marks the coming into effect of certain amendments made by the Petroleum (Submerged Lands) Legislation Amendment Act (No. 1) 2000 . For the reasons explained below, any document given to the Designated Authority before this date is to be dealt with under the provisions set out in Schedule 5. This Schedule is a rewritten version of section 118 of the Petroleum (Submerged Lands) Act, which currently continues to have effect only in respect of documents of the abovementioned category. Section 118 is revoked in respect of documents submitted on or after 7 March 2000 and is revoked in respect of all petroleum mining samples.

 

In summary, the data and release provisions set out in section 118 and replicated in Schedule 5 are premised on the Designated Authority or the Commonwealth Minister making a determination on whether information is a conclusion drawn from, or an opinion based on, other information given to the Designated Authority or made available to the Commonwealth Minister. If the determination is affirmative, then, after 5 years of confidentiality, if there is a request for access to that information, the Designated Authority or the Commonwealth Minister is to publish a Gazette notice setting a 45 day time limit for persons to make objections to the release of the information. Such an objection would have to be on the grounds that the release would disclose a trade secret or adversely affect the lawful business, commercial or financial affairs of the party who submitted it. If such an objection is made and the Designated Authority or the Commonwealth Minister finds it to be valid, the information cannot be released at any time unless the submitter later chooses to make it public or consents to it being made public.

 

These arrangements differ from those that came into effect on 7 March 2000 principally in that the latter arrangements allow the submitter of information to classify the information at the time of submission as “derivative information” or “confidential information”. If the Designated Authority does not object within 30 days, that classification will stand and determine whether and when that information could be released to the public. The system that now appears in the Data Management Regulations is virtually identical to this.

 

Since, during all the years from 1967 to 7 March 2000, submitters of information did not classify information in this way, the arrangements introduced from 7 March 2000 could not be made to work in respect of the holdings of information submitted before that date. Thus, under the Petroleum (Submerged Lands) Act, section 118 has been retained in force for that information but has been rewritten as Schedule 5 for purposes of this Bill. Some small policy changes have also been introduced into it for consistency with the rest of the Bill or to rectify a past oversight. These are detailed in the note about Schedule 5.

 

Equivalent provision in the PSL Act: Table A of Notes to the Act, which cites item 142 of Schedule 1 to the Petroleum (Submerged Lands) Legislation Amendment Act (No. 1) 2000 .

Technical change: that Schedule 5 be included in the Bill setting out the provisions relating to the release of technical information given to the Designated Authority before 7 March 2000

 

Chapter 6 Miscellaneous

 

Part 6.1 Reconsideration and review of decisions

 

Clause 432 - Simplified outline

 

This clause sets out a simplified outline of Part 6.1 about reconsideration and review of decisions. This outline does not form part of the operative text of the proposed Act.

 

Equivalent provision in the PSL Act: nil.

 

Clause 433 - Definitions

 

This clause sets out definitions of certain terms that are used in this Bill in the provisions concerning the reconsideration and review of decisions. Replicating the equivalent provisions in the Petroleum (Submerged Lands) Act, only two categories of decisions are proposed to be subject to reconsideration or review. The first consists of decisions of the Commonwealth Minister or his or her delegate that relate generally to the offshore areas of external territories. The second consists of decisions by the Designated Authority or Commonwealth Minister or his or her delegate relating to access to technical information or petroleum mining samples, sourced in whatever offshore area.

 

This means that the bulk of decisions affecting petroleum operations in Australia’s marine jurisdiction are not reviewable (other than by a court under the Administrative Decisions (Judicial Review) Act 1977 ), as much of the activity occurs in the offshore areas of the States and Northern Territory. Except for the issues related to information and samples referred to above, there is no provision for review of the decisions of the Designated Authority (or Joint Authority) of a State or the Northern Territory. This limitation was enshrined in the Petroleum (Submerged Lands) Act in 1985. It was considered inappropriate to subject State or Northern Territory Ministers to Commonwealth Administrative Appeals Tribunal (AAT) legislation in relation to areas in which they exercise powers in their own right as Designated Authorities.

 

For a decision under the proposed Act to be appealable to the AAT, it must have been made by the responsible Commonwealth Minister as a reviewable Ministerial decision.  Reviewable Ministerial decisions concerning information or samples could take a number of forms. Under sub-paragraph (b)(i), the decision could be a review by the Commonwealth Minister of a State or Northern Territory Minister’s (or that Minister’s delegate’s) Designated Authority decision about access to information or samples held by that Designated Authority. Depending on the regulations, this could include a decision by the Designated Authority on whether to charge a fee for such access.

 

Under sub-paragraph (b)(ii), the reviewable Ministerial decision could be a decision by the Commonwealth Minister about access to information or samples that are in Commonwealth possession, possibly including a decision by the Commonwealth Minister on whether to charge a fee for such access. Under sub-paragraph (b)(iii), the decision could be a decision of the Commonwealth Minister about whether to extend past 30 days the period during which a person affected by a reviewable delegated decision can seek review by the Commonwealth Minister. More notably, the reviewable Ministerial decision could be the actual review decision of the Commonwealth Minister about such a reviewable delegated decision, as referred to in subclause 434(4).

 

Under sub-paragraph (b)(iv), the decision would be a decision under Schedule 5 (the explanation under clause 431 refers) and it could be a decision of any one of the types indicated above, but applicable only to documentary information submitted before 7 March 2000 and not to any petroleum mining samples. It could also be a decision about whether information is a conclusion drawn from, or an opinion based on, other information given or made available to the Designated Authority or Commonwealth Minister. It could equally be a decision about whether to allow an objection to information release on the grounds that the release would disclose a trade secret or adversely affect the lawful business, commercial or financial affairs of the party who submitted it. The reviewable Ministerial decision could be the Commonwealth Minister’s own decision or the Commonwealth Minister’s review decision of a Designated Authority’s decision about a similar matter.

 

Equivalent provision in the PSL Act: subsection 152(1)

Technical change : that the status, as reviewable Ministerial decisions, of the relevant decisions under section 118 of the Petroleum (Submerged Lands) Act is now to be defined by reference to the relevant items of Schedule 5

 

Clause 434 - Reconsideration of reviewable delegated decision

 

This clause sets out the rights of reconsideration available to, and procedures to be followed by, any person who is affected by a decision of the Commonwealth Minister’s delegate in relation to the management of the offshore area of an external territory such as the Territory of Ashmore and Cartier Islands. This could be a decision on any matter under the proposed Act or regulations, for example a decision not to renew an exploration permit. As explained under clause 433, no reconsideration would be possible if the exploration permit had been issued in respect of the offshore area of a State or the Northern Territory.

 

Equivalent provision in the PSL Act: subsections 152(2), (3), (4), (5), (6), (8) and (10)

Policy changes : conversion of “28 days” to “30 days”; reliance on section 27A of the Administrative Appeals Tribunal Act 1975 to ensure notification of review rights to the person affected by the decision

 

Clause 435 - Review of reviewable Ministerial decision

This clause makes reviewable Ministerial decisions, ie decisions by the Commonwealth Minister of the type discussed under clause 433, subject to Administrative Appeals Tribunal review. This places on the Commonwealth Minister the obligation imposed by section 27A of the Administrative Appeals Tribunal Act 1975 . This section provides, in summary, that the Commonwealth Minister must take such steps as are reasonable in the circumstances to give to the person whose interests are affected by the decision notice of that person’s right to have the decision reviewed by the Administrative Appeals Tribunal.  

Equivalent provisions in the PSL Act: subsection 152(7) and (9)

Policy change : reliance on section 27A of the Administrative Appeals Tribunal Act 1975 to ensure notification of review rights to the person affected by the decision

 

Part 6.2 Liability for acts and omissions

   

Clause 436 - Liability for acts and omissions

 

Replicating section140AA of the Petroleum (Submerged Lands) Act, this clause is primarily intended to ensure that persons or companies requesting approval of plans or proposals under the Act or regulations are liable for any deficiencies in those plans or approvals provided the official concerned gives the approval in good faith. Under the Petroleum (Submerged Lands) Act, such plans would include Safety Cases, Environment Management Plans, Pipeline Management Plans, Well Operations Management Plans and Data Management Plans under the Petroleum (Submerged Lands) (Management of Safety on Offshore Facilities) Regulations 1996 , the Petroleum (Submerged Lands) (Management of Environment) Regulations 199 9 , the Petroleum (Submerged Lands) (Pipeline) Regulations 2001, the Petroleum (Submerged Lands)(Management of Well Operations) Regulations 2004 and the Petroleum (Submerged Lands) (Data Management) Regulations 2004 .

 

The existence of these plans illustrates the progressive move by the Commonwealth to objective-based regulation in offshore petroleum management.  This enables petroleum companies to utilise best practice management and implement innovative technologies as continual improvement, as opposed to what would happen under prescriptive regulation, where companies would be held back until the government had changed regulations to reflect changing practices. Accordingly, the cost for companies in complying with regulations is lower. There is also progressively less on-site inspection of physical structures and operations and more emphasis on auditing.

 

Inasmuch as the role of the Designated Authority has moved away from that of a prescriptive regulator, it would be incongruous for an official who gave an approval, or merely some technical advice, to be held personally liable for legal action in respect of some accident or misadventure affecting a petroleum company, assuming the official acted in good faith. Such liability of officials would also tend to weaken the incentive for the company to accept responsibility to ensure best practice in its management systems. Further, if general personal liability did apply, the kind of risks petroleum companies need to deal with would raise a question about the need for officials to carry personal liability insurance.

 

The purpose of subclause (2) is to ensure that paragraphs (1)(h) and (i) are not misunderstood. Otherwise, a titleholder operating in compliance with an approved plan might, on that basis, claim be a person acting under the direction or authority of the Joint Authority or the Designated Authority or a person acting under the direction or authority of the Safety Authority or the Chief Executive Officer of the Safety Authority. If these paragraphs were open to such an interpretation, this clause would confer on the titleholder an unintended level of immunity from liability.

 

This clause proposes no immunity from liability in cases of an official acting in bad faith, nor, as indicated in subclause (4), is there any impediment to a court hearing about an alleged error or irregularity in the Register and a subsequent court order to the Designated Authority to rectify the Register if this is the court’s finding.

 

This clause also preserves rights to administrative review. This means that if, for example, the Designated Authority failed to make a decision about a particular matter, the provisions of this clause would not impact on the rights of the affected party to seek review of that failure under the Administrative Decisions (Judicial Review) Act 1977. Under section 16 of that Act, the Federal Court or the Federal Magistrates Court could make an order about such a case, for example an order to the Designated Authority to come to a decision. However, once such a decision had been formalised, the chances of the affected party succeeding in any litigation against the Designated Authority about its repercussions would be limited by the provisions of this clause.

 

Equivalent provision in the PSL Act: section 140AA

 

Part 6.3 Jurisdiction of courts

   

Clause 437 - Jurisdiction of State courts

 

This clause invests State courts with federal jurisdiction in relation to the offshore petroleum law created by the proposed Act and regulations. Thus, if, for example, an alleged incident of petroleum exploration in contravention of the proposed Act occurred in the offshore area of a particular State, a prosecution would proceed in one of the courts of that State.

 

Subclause (2) refers to the fact that clause 71 separately invests State courts with federal jurisdiction in respect of the applied provisions, ie State law that is by this Bill given an extended geographic coverage in the Commonwealth marine jurisdiction.

 

Subclause (3) refers to the limitations that apply to a State court, for example specifications about the kinds of cases that may be heard by a magistrate’s court compared with those heard by a district court. These limitations will apply despite federal jurisdiction.

 

Equivalent provision in the PSL Act: section 151

 

Clause 438 - Jurisdiction of Territory courts

 

This clause makes similar provisions in respect of Territory courts as does clause 437 in respect of State courts. Territory courts would include Northern Territory courts and a court like the Norfolk Island Supreme Court. As a point of editorial detail, this clause has been made separate from clause 437 because Territory courts already draw their power from the Australian Constitution and therefore need to be conferred only with jurisdiction, not with federal jurisdiction.

 

Equivalent provision in the PSL Act: section 151

 

Part 6.4 Service of documents

 

Clause 439 - Service of documents

 

This clause sets out the various approved methods of serving documents that the proposed Act requires or permits to be given to individuals or corporations or to the Designated Authority. The provisions in this clause would have significance, for example, if a document serving a purpose under the proposed Act went astray because a wrong mailing address had been written on it. This clause sets out the rules by which the consequences of such an action would be determined. 

 

For instance, if the Designated Authority had been given the correct address of an applicant for a title and the Designated Authority issued an offer document to that applicant and the Designated Authority’s office made a typographical error in addressing the document, this clause implies the offer document would be deemed not to have been given. The document would have to be dispatched again, this time to the correct address, and any timeframe conditions on acceptance of the offer would date from the second dispatch. However, if the applicant had made a typographical error in advising the Designated Authority of the applicant’s address and the Designated Authority had correctly copied that address, the document would be deemed to have been validly given and the applicant would be at some risk of missing the opportunity to take up the offer.

 

Equivalent provision in the PSL Act: subsections 138(1), (2), (3) and (4)

Technical changes: r eplacement of “abode” with “residence”, replacement of “inmate” with “resident” and replacement of “service” with “employment”

 

Clause 440 - Service of documents on Joint Authority

 

This clause elaborates on clause 45 to make it clear that, if a member of the public produces a document destined for the Joint Authority and gives it to the Designated Authority or the Designated Authority’s delegate, then, for all purposes of the proposed Act, that member of the public is deemed to have given the document to the Joint Authority.

 

Equivalent provision in the PSL Act: subsection 138A(2A)

Technical change:  explicit mention of the fact that service of a document on the Designated Authority’s delegate is equivalent to service on the Joint Authority

 

Clause 441 - Service of documents on 2 or more registered holders of a title

 

This clause is intended to provide an efficient arrangement for the service of documents to titleholders in cases where a title is held by more than one party. However, the use of this arrangement will be entirely at the behest of the parties holding the title.

 

The fact that subclause (3) mentions that the nomination of the party through whom the service of documents is to occur must be executed “in an approved manner” means that the Designated Authority has power to specify the manner of executing the notice of nomination. In arriving at a position on this, the Designated Authority might need to consider matters such as whether two directors of a company must sign the notice, whether the signature of one director and the company secretary would suffice, whether a person holding a power of attorney for the company could sign it and whether the company seal must be fixed to the document, assuming a seal exists.

 

Equivalent provision in the PSL Act: section 138A

Policy change : that the joint written notice must be executed in an approved manner, ie in a manner approved in writing by the Designated Authority

 

Part 6.5 Publication in Gazette

   

Clause 442 - Publication in Gazette

 

This clause enables most Gazette notices required to be published by the proposed Act to appear in the relevant State or Territory Government Gazette.

 

Normally, Gazette notices under a Commonwealth Act would be published in the Commonwealth Gazette . Under this clause, notices relating to the offshore area of the Territory of Ashmore and Cartier Islands, would, in fact, appear in the Commonwealth Gazette as the Commonwealth Gazette is the one that is used for publishing instruments related to this Territory.

 

However, under the Petroleum (Submerged Lands) Act, where the Designated Authority is a State or Northern Territory Minister, it has always been considered that publication of notices in the relevant State or Northern Territory Gazette facilitates administration. Accordingly, this clause deems notices published in a State or Northern Territory Gazette to have the status of notices published in the Commonwealth Gazette.

 

Equivalent provision in the PSL Act: section 136

 

 

Part 6.6 Regulations

   

Clause 443 - Regulations

 

This clause sets out the general regulation-making power that appears as a standard provision in many Commonwealth Acts.

 

Equivalent provision in the PSL Act: subsection 157(1)

 

Clause 444 - Regulations dealing with specific matters

 

This clause sets out a number of specific headings under which regulations are known to be, or could be, necessary to manage operating practices in offshore petroleum exploration, production, processing and conveyance. This clause does not limit the generality of the power set out under clause 443 but this clause will, overall, reduce the expenditure of Australian Government resources in legal interpretation. For addressing a majority of issues that may arise, this clause ensures that the submission of draft regulations to Executive Council will be a more straightforward process.

 

Equivalent provision in the PSL Act: subsection 157(2)

 

Clause 445 - Regulations may provide for matters by reference to codes of practice or standards

 

This clause enables the regulations to apply, to offshore petroleum activities, codes of practice or technical standards, particularly those related to safety or engineering, without reproducing in the regulations the detailed technical requirements that constitute the code or standard. The clause would allow the adoption of a foreign code or standard, which could have advantages given the international nature of the petroleum industry. On the other hand, if there were a relevant Australian code or standard, it would most probably be selected.

 

This clause provides that, if so desired, any particular code or standard could be adopted only in part. This clause also provides that, if so desired, the regulations could be made so as to automatically adopt any subsequent changes to the code or standard (Australian or foreign) that the authority responsible for devising it might make over time.  

 

Equivalent provision in the PSL Act: subsection 157(2A)

 

Clause 446 - Unconditional or conditional prohibition

 

This clause provides that regulations may be made enabling actions to be taken subject to the consent or approval of a persons specified in the regulations. This will enable specified operational and technical actions to be taken subject to the consent or approval of government officials, allowing the advice of internationally recognised certifying and classifying bodies to be accepted as the basis for consideration of certain specific proposals such as the assessment of the seaworthiness of vessels and the integrity of offshore structures.

 

Equivalent provision in the PSL Act: subsection 157(2B)

 

Clause 447 - Exercise of Australia’s rights under international law—continental shelf

 

This clause enables regulations to be made where there is an identified need to fill a legislative gap in the exercise of Australia’s rights under international law in relation to petroleum exploration and production on the continental shelf, ie areas further seaward than 12 nautical miles from the territorial sea baseline. Such rights could possibly be ones mentioned in the United Nations Convention on the Law of the Sea, but they would more likely be ones secured under a new treaty concluded with another country. Use could be made of this regulation-making power if there were a shift of a seabed boundary so that it was placed further from Australia than the current position of the scheduled area outer boundary.

 

If this were the case and regulations were made under this clause, amendments might later be made to the Act which would make the regulations superfluous and lead to their repeal or replacement.

 

Equivalent provision in the PSL Act: subsection 157(3)

 

Clause 448 - Exercise of Australia’s rights under international law—petroleum within territorial limits

 

This clause enables regulations to be made where there is an identified need to fill a legislative gap in the exercise of Australia’s rights or obligations under international law in relation to petroleum exploration and production in Australia’s territorial sea, ie within 12 nautical miles seaward of the territorial sea baseline. The coverage of the regulations could possibly include the coastal waters of a State or the Northern Territory, where the proposed Act would generally not otherwise apply. This is consistent with the principle that if the Australian Government concludes a treaty with a foreign country, it has power to bind the States and Northern Territory to the terms of that treaty.

 

Regulations under this clause could be made if, for example, a treaty were concluded affecting an area of Australia’s marine jurisdiction where an island forming part of a State lay within close proximity of an international boundary, as in Torres Strait.

 

Equivalent provision in the PSL Act: subsection 157(4)

Policy change: this re-enactment of subsection 157(4) of the Petroleum (Submerged Lands) Act resolves an ambiguity and minor policy approval is required for the approach taken

 

Clause 449 - Offences

 

This clause enables regulations to impose a fine of up to 100 penalty units for offences, and 100 penalty units for each day that the offence continues.  These penalties are higher than the maximum penalties for contravening regulations under some other Commonwealth Acts. However, this Bill, like the Petroleum (Submerged Lands) Act, has at least one unusual characteristic. Specifically, it is designed to create a framework that both minimises the risk of potentially catastrophic accidents and maximises the uptake of benefits from evolving technology. The first consideration points to the reason for penalties under the regulations being as high as 100 units. The second consideration points to the reason why a large number of detailed provisions are to be in the regulations rather than in the Act itself. 

 

Negative impacts on the petroleum industry could be expected if all offence provisions meriting a 100 unit maximum penalty were to be in the Act, for changes to the regulatory regime to dovetail with new technology could then well require amendments to the Act. The lead-time to introducing an Amendment Bill, and the timeframe involved in the Parliamentary consideration of a Bill, make this a slow option which, if adopted, could exert an economically shackling effect on the petroleum industry.

 

If the provisions of this clause become law, and new regulations containing offence provisions are promulgated under the proposed Act, the Parliament will have the ability to use its regulation disallowance power if it finds in the regulations a penalty that it deems excessive.

 

Equivalent provision in the PSL Act: subsection 157(5)