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Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Bill 2011

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2010-2011

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE REGULATORY LEVIES (CONSEQUENTIAL AMENDMENTS) BILL 2011

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Resources and Energy,

the Honourable Martin Ferguson AM, MP
)



OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE REGULATORY LEVIES (CONSEQUENTIAL AMENDMENTS) BILL 2011

 

 

GENERAL OUTLINE

 

The purpose of the Bill is to make amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (the OPGGS Act) to deal with consequential matters arising from the enactment of the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 (Regulatory Levies Bill).

 

The Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Act 2010 , which received Royal Assent on 16 November 2010, amended the OPGGS Act in a number of ways, including to:

·          Augment NOPSA’s functions to include the functions conferred by the OPGGS Act, and by the regulations, with respect to non-occupational health and safety (non-OHS) structural integrity for facilities, wells and well-related equipment.  This addition to its functions gave NOPSA the capacity to regulate (among other things) the structural integrity of wells and well operations over the life of the well;

·          Clarify that an OHS duty of care applies to titleholders in relation to wells and well-related equipment; and

  • Provide NOPSA with inspection and investigation powers to enable it to investigate suspected breaches of the titleholder duty of care in relation to wells and well-related equipment.

 

To give effect to NOPSA’s augmented functions under the OPGGS Act, Part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations will provide NOPSA with regulatory functions and powers relating to management of well operations.  It is intended that these Regulations will be brought into effect in April 2011.

 

NOPSA is funded on a full cost-recovery basis with levies raised from the offshore petroleum industry.  To ensure NOPSA can fulfil its augmented responsibilities under the OPGGS Act and Part 5 of the RMA Regulations, the Regulatory Levies Bill amends the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 (the Safety Levies Act) impose levies on titleholders to fully recover costs associated with undertaking its functions relating to regulation of wells and well operations.  The Regulatory Levies Bill provides for the imposition of an annual well levy, a well activity levy, and a well investigation levy on petroleum titleholders.

 

Consequential amendments to the OPGGS Act are necessary to ensure the new well levies can be calculated and collected effectively.  This Bill therefore makes the following consequential amendments to the OPGGS Act:

·          Removes references to the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 to refer to its new short title (as amended by the Regulatory Levies Bill), i.e. the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 (the Regulatory Levies Act).

·          Ensures that amounts payable under the Regulatory Levies Act by way of the well investigation levy, annual well levy and well activity levy, and late payment penalties, are credited to the National Offshore Petroleum Safety Account.

·          Provides that the well investigation levy, annual well levy and well activity levy become due and payable at a time specified in the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations 2004 (the Regulatory Levies Regulations).

·          Provides for the imposition of a late payment penalty where a well investigation levy, annual well levy or well activity levy payable by a titleholder under the Regulatory Levies Act remains wholly or partly unpaid after it becomes due and payable.

  • Provides that levies and late payment penalties are payable to NOPSA on behalf of the Commonwealth and are recoverable by NOPSA, on behalf of the Commonwealth, in a court of competent jurisdiction.

 

FINANCIAL IMPACT STATEMENT

 

Nil financial impact on the Australian Government Budget. This Bill will ensure that NOPSA can fully recover its costs from industry associated with undertaking augmented integrity and safety-related functions.

 

REGULATORY IMPACT STATEMENT

 

This bill does not impose any new regulatory burden on the petroleum industry. Public consultation in relation to the transfer of integrity of wells as a function to NOPSA occurred in conjunction with the 2010 legislative amendments.

 



NOTES ON INDIVIDUAL CLAUSES

 

Clause 1 - Short title

 

Clause 1 is a formal provision specifying the short title of the Bill.

 

Clause 2 - Commencement

 

Sections 1 to 3 in the Bill will commence on the day the Act receives Royal Assent.

 

Schedule 1 will commence at the same time as Schedule 1 to the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Act 2011 (Regulatory Levies Act) commences.  This will ensure that the levies imposed under the Regulatory Levies Act can be calculated and collected effectively immediately upon commencement of that Act.  It is intended that both Acts will commence, at the earliest, on the same day as Part 5 of the RMA Regulations will commence.

 

Clause 3 - Schedules

 

This clause gives effect to the provisions in the Schedules to this Act.

 

Schedule 1 - Amendments

 

Offshore Petroleum and Greenhouse Gas Storage Act 2006

 

Items 1 to 3 - Section 643 and subparagraphs 683(b)(i) and (c)(i)

These items update references in the OPGGS Act to the “ Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 ” or the “Safety Levies Act” to refer to the new short title of that Act, as amended by the Regulatory Levies Bill.

 

Item 1 - Section 643

This item defines “Regulatory Levies Act”, for the purposes of Part 6.9 of the OPGGS Act, as the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003

 

Item 2 - Section 643 (definition of Safety Levies Act )

This item repeals the definition of “Safety Levies Act”.

 

Item 3 - Subparagraphs 683(b)(i) and (c)(i)

This item removes the reference to “Safety Levies Act” in subparagraphs 683(b)(i) and (c)(i) of the OPGGS Act, and replaces it with a reference to “Regulatory Levies Act”.

 

Item 4 - After paragraph 683(c)

This item inserts new paragraphs 683(d), (da) and (db) into the OPGGS Act.

 

The new paragraphs provide that the amounts paid to NOPSA by way of the well investigation levy, annual well levy and well activity levy (and any associated late payment penalty) must be credited to the National Offshore Petroleum Safety Account. 

 

Item 5 - Sections 686 and 687

This item removes references to “Safety Levies Act” in sections 686 and 687 of the OPGGS Act, and replaces them with references to “Regulatory Levies Act”.

 

Item 6 - After section 687

This item inserts new sections 688, 688A and 688B into the OPGGS Act.

 

Section 688 provides for the collection of the well investigation levy imposed by the Regulatory Levies Act. 

 

The well investigation levy will become due and payable at a time specified in the Regulatory Levies Regulations.  Each levy amount, and each amount in respect of any late payment penalties, is a debt due to NOPSA on behalf of the Commonwealth.  These amounts are recoverable by NOPSA, on behalf of the Commonwealth, in a court of competent jurisdiction.

 

Section 688A provides for the collection of the annual well levy imposed by the Regulatory Levies Act.  .

 

The annual well levy will become due and payable at a time specified in the Regulatory Levies Regulations.  Each levy amount, and each amount in respect of any late payment penalties, is a debt due to NOPSA on behalf of the Commonwealth.  These amounts are recoverable by NOPSA, on behalf of the Commonwealth, in a court of competent jurisdiction.

 

Section 688B provides for the collection of a well activity levy imposed by the Regulatory Levies Act. 

 

The well activity levy will become due and payable at a time specified in the Regulatory Levies Regulations.  Each levy amount, and each amount in respect of any late payment penalties, is a debt due to NOPSA on behalf of the Commonwealth.  These amounts are recoverable by NOPSA, on behalf of the Commonwealth, in a court of competent jurisdiction.

 

In addition, sections 688, 688A and 688B provide for a late payment penalty to be payable by a titleholder where a well investigation levy, annual well levy or well activity levy imposed on the titleholder remains wholly or partly unpaid after the date it becomes due and payable.  The penalty is not cost recovery or taxation, it is a penalty designed to ensure that levies are paid on time.  Given the importance of NOPSA’s function in regulating safety and integrity matters for the offshore oil and gas industry and the fact it is funded through levies, it is critical that it is adequately resourced through the timely payment of levies by industry.