Commonwealth Numbered Regulations - Explanatory Statements

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OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE (REGULATORY LEVIES) AMENDMENT REGULATIONS 2018 (F2018L01605)

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Resources and Northern Australia,

Senator the Hon Matt Canavan

Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003

Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulations 2018

The Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 (the Levies Act) provides for the imposition of safety case levies, annual well levies, well activity levies and environment plan levies in relation to offshore petroleum and greenhouse gas facilities or titles. The levies are collected by the regulator, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), in order to fund its operations on a cost-recovery basis.

Section 11 of the Levies Act provides that the Governor-General may make regulations for the purposes of a number of sections of the Levies Act, including sections 7 and 8 (safety case levies), 10A and 10B (annual well levies), 10C and 10D (well activity levies), and 10F and 10G (environment plan levies). These sections provide that the amount of the levies imposed by the Levies Act is the amount specified in, or worked out in accordance with, the regulations.

The Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations 2004 provide for the amounts of safety case levies, annual well levies, well activity levies and environment plan levies imposed by the Levies Act.

The mechanism for setting levy amounts is through the preparation of a cost recovery implementation statement (CRIS) that meets the requirements of the Australian Government Cost Recovery Guidelines. NOPSEMA conducts regular reviews of its CRIS to ensure that cost recovery arrangements are adequate and that it can continue to effectively discharge its regulatory functions.

The purpose of the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulations 2018 (the Amendment Regulations) is to implement the outcomes of a recent review of NOPSEMA's CRIS, which proposed increased levy amounts for safety case levies, annual well levies, well activity levies and environment plan levies. The adjusted amounts for safety case levies are also relevant to the calculation of any part of levy imposed on a mobile facility that must be remitted or refunded.

The Amendment Regulations also make minor amendments to the Levies Regulations to make technical corrections and to update them in line with current drafting practice.

The Amendment Regulations commence on 1 January 2019. Details of the Amendment Regulations are set out in Attachment A.

Consultation

NOPSEMA undertook the review of its cost recovery arrangements in 2018, followed by consultation with facility operators and titleholders (levy payers) and the Australian Petroleum Production and Exploration Association (APPEA). NOPSEMA contacted all past and present levy payers advising of the proposed changes and inviting them to attend a stakeholder briefing session. Fourteen stakeholders attended the briefing session. NOPSEMA also provided stakeholders with a period of time after the briefing session to provide further feedback on the proposed changes. No formal written feedback was provided by stakeholders on the proposed changes. Neither the industry representatives nor APPEA raised any concerns.

NOPSEMA also consulted the Department of Finance in relation to the revised CRIS. The revised CRIS is consistent with the Australian Government Charging Framework. The revised CRIS has been approved by the Minister for Resources and Northern Australia.

Regulatory Impact

The department has received a standing Regulatory Impact Statement exemption from the Office of Best Practice Regulation (OBPR) for amendments to the Levies Regulations to revise levy amounts. The OBPR reference is ID 20801.

Statement of Compatibility with Human Rights

Subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 requires the rule-maker of a legislative instrument to which section 42 (disallowance) of the Legislation Act 2003 applies to cause a statement of compatibility to be prepared in respect of that legislative instrument. A Statement of Compatibility with Human Rights has been prepared to meet that requirement and is set out at Attachment B.

ATTACHMENT A

Details of the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulations 2018

Section 1 - Name

This section provides that the name of the Regulations is the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulations 2018 (the Amendment Regulations).

Section 2 - Commencement

This section provides that the Amendment Regulations commence on 1 January 2019. It is necessary to commence on that date as collection of annual well levies and safety case levies is based on a calendar year.

Section 3 - Authority

This section provides that the Amendment Regulations are made under the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 (the Levies Act).

Section 4 - Schedules

This section is a machinery clause that enables the Schedule to the Amendment Regulations to operate according to its terms.

Schedule 1 - Amendments

Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations 2004

Items 1 and 2 - Regulation 49; Regulation 52

Section 10A of the Levies Act imposes annual well levies on eligible wells in relation to Commonwealth petroleum titles for a year. Section 10B of the Levies Act imposes annual well levies on eligible wells in relation to State/Territory petroleum titles for a year. An "eligible well" is any well having been drilled within a title area but not abandoned, and that requires ongoing regulation.

Regulations 49 and 52 of the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations 2004 (the Principal Regulations) respectively provide for the amount of annual well levy imposed on eligible wells in relation to Commonwealth petroleum titles and State/Territory petroleum titles for a year, as an amount per eligible well.

These items increase the amount of annual well levy imposed per eligible well from $4,125 to $4,540.

The items also restructure regulations 49 and 52 in line with current drafting practice.

Item 3 - Regulation 55

This item revises the opening words of regulation 55 in line with current drafting practice.

Item 4 - Regulation 55 (table item 1, column headed "Amount")

Section 10C of the Levies Act imposes well activity levies on applications by titleholders, under Part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011 (the Resource Management Regulations), for acceptance of a well operations management plan. The amount of well activity levy is set in regulation 55 of the Principal Regulations as an amount per application.

This item increases the amount of well activity levy imposed on an application for acceptance of a well operations management plan from $35,000 to $38,500.

Item 5 - Regulation 58

This item revises the opening words of regulation 58 in line with current drafting practice.

Item 6 - Regulation 58 (table item 1, column headed "Amount")

Section 10D of the Levies Act imposes well activity levies on applications by State/Territory petroleum titleholders, under regulations of a State or Territory that substantially correspond to Part 5 of the Resource Management Regulations, for acceptance of a well operations management plan. The amount of well activity levy is set in regulation 58 of the Principal Regulations as an amount per application.

This item increases the amount of well activity levy imposed on an application for acceptance of a well operations management plan from $35,000 to $38,500.

Item 7 - Subregulation 59C(1)

This item revises the opening words of subregulation 59C(1) in line with current drafting practice.

Items 8 and 9 - Paragraph 59C(3)(b); Paragraph 59C(4)(b)

Section 10F of the Levies Act imposes environment plan levies on submission of an environment plan or proposed revision of an environment plan in relation to activities authorised by Commonwealth titles. The amount of levy is calculated in accordance with regulation 59C of the Principal Regulations. The Principal Regulations prescribe an "activity rating" and a "compliance rating" for each discrete activity, by reference to which levy is calculated.

Subregulation 59C(3) provides for the calculation of the "activity amount" component of an environment plan levy by multiplying the activity rating for a particular activity by a set amount. Item 8 increases the set amount from $3,600 to $3,960.

Subregulation 59C(4) provides for the calculation of the "compliance amount" component of an environment plan levy by multiplying the compliance rating for a particular activity by a set amount, and multiplying the result by the lesser of (a) the expected duration of the activity (expressed in years, with part years rounded up to the next whole year) and (b) five. Item 9 increases the set amount from $3,600 to $3,690.

Item 10 - Subregulation 59G(1)

This item revises the opening words of subregulation 59G(1) in line with current drafting practice.

Items 11 and 12 - Paragraph 59G(3)(b); Paragraph 59G(4)(b)

Section 10G of the Levies Act imposes environment plan levies on submission of an environment plan or proposed revision of an environment plan in relation to activities authorised by State/Territory titles. The amount of levy is calculated in accordance with regulation 59G of the Principal Regulations. The Principal Regulations prescribe an "activity rating" and a "compliance rating" for each discrete activity, by reference to which levy is calculated.

Subregulation 59G(3) provides for the calculation of the "activity amount" component of an environment plan levy by multiplying the activity rating for a particular activity by a set amount. Item 11 increases the set amount from $3,600 to $3,960.

Subregulation 59G(4) provides for the calculation of the "compliance amount" component of an environment plan levy by multiplying the compliance rating for a particular activity by a set amount, and multiplying the result by the lesser of (a) the expected duration of the activity (expressed in years, with part years rounded up to the next whole year) and (b) five. Item 12 increases the set amount from $3,600 to $3,690.

Items 13 to 15 - Clause 2.6 of Schedule 1; Clause 3.3 of Schedule 1 (table); Subparagraphs 3.4(a)(i), (b)(i), (c)(i) and (d)(i) of Schedule 1

Sections 7 and 8 of the Levies Act impose safety case levies in relation to facilities located, or proposed to be located, in Commonwealth or designated State/Northern Territory coastal waters. The safety case levy is an annual levy calculated in accordance with the provisions of the Principal Regulations. Among other things, the Principal Regulations set out a "facility amount", a "unit value" and "SMS amount" (where "SMS amount" is a charge for the assessment of the facility's safety management system) by reference to which the safety case levy for a facility other than a pipeline is calculated.

Schedule 1 to the Principal Regulations sets out the manner of working out the "facility amount" and "SMS amount" for a facility other than a pipeline.

The "unit value" set out in clause 2.6 of Schedule 1 is used in calculating the "facility amount". Item 13 increases the "unit value" from $35,000 to $38,500. The item also revises clause 2.6 to make it clearer how the definition of "unit value" is intended to apply.

The "SMS amount" is worked out using the table in clause 3.3 of Schedule 1 and the rules in clause 3.4 of Schedule 1. Item 14 increases the "SMS amount" for facilities other than mobile facilities from $170,000 to $187,000, and increases the "SMS amount" for mobile facilities from $113,000 to $124,300.

Item 14 also revises the table in clause 3.3 of Schedule 1 to insert column numbers, in order to clarify the application of the rules in clause 3.4 of Schedule 1 in relation to the table. Item 15 makes consequential amendments to clause 3.4 of Schedule 1 to correct the cross-references to the applicable column of the table in clause 3.3.

Items 16 and 17 - Clause 1.3 of Schedule 3; Clause 2.2 of Schedule 3

Sections 7 and 8 of the Levies Act impose safety case levies in relation to facilities located, or proposed to be located, in Commonwealth or designated State/Northern Territory coastal waters. The safety case levy is an annual levy calculated in accordance with the provisions of the Principal Regulations. Among other things, the Principal Regulations set out a "pipeline amount", a "unit value" and "SMS amount" (where "SMS amount" is a charge for the assessment of the facility's safety management system) by reference to which the safety case levy for a facility that is a pipeline is calculated.

Schedule 3 to the Principal Regulations sets out the manner of working out the "pipeline amount" and "SMS amount" for a facility that is a pipeline.

The "unit value" set out in clause 1.3 of Schedule 3 is used in calculating the "pipeline amount". Item 16 increases the "unit value" from $14,000 to $15,400. The item also revises clause 1.3 to make it clearer how the definition of "unit value" is intended to apply.

Clause 2.2 of Schedule 3 sets out the "SMS amount". Item 17 increases the "SMS amount" from $56,000 to $61,600.

Attachment B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulations 2018

These Regulations are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulations 2018 (the Amendment Regulations) are a legislative instrument for the purposes of the Legislation Act 2003.

The Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations 2004 provide for amounts of safety case levies, annual well levies, well activity levies and environment plan levies imposed on offshore petroleum and greenhouse gas facilities or titles. The levies are collected by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) in order to fund its operations on a cost-recovery basis.

The Amendment Regulations increase the amounts of safety case levies, annual well levies, well activity levies and environment plan levies. The increases implement a revision of NOPSEMA's cost recovery implementation statement, and ensure that cost recovery arrangements are adequate to enable NOPSEMA to continue to effectively discharge its regulatory functions. 

Human rights implications

The Amendment Regulations do not engage any of the applicable rights or freedoms.

Conclusion

The Amendment Regulations are compatible with human rights, as they do not raise any human rights issues.

Senator the Hon Matt Canavan

Minister for Resources and Northern Australia