16 November 2018

Significant rehabilitation and security reforms passed by Queensland parliament

This article was written by Matthew Austin and Anna Vella

On 14 November the Queensland parliament passed the Mineral and Energy Resources (Financial Provisioning) Bill 2018 (Qld) (MERFP Bill). The MERFP Bill is a key aspect of the Queensland government’s initiative to improve environmental management and rehabilitation across Queensland and minimise the Government’s exposure to failed rehabilitation. The passage of the MERFP Bill represents a significant legislative reform for the resources sector. KWM previously explored the new financial assurance provisioning and PRC Plan schemes now introduced by the MERFP Bill in late 2017.

Recent Amendments – What are the Key Highlights?

Passage of the MERFP Bill included a number of important amendments made in consultation with industry, being:

  • Public Interest Evaluation Reports (PIER) – A PIER is a new assessment report that will be required after submission of an environmental impact statement (EIS) or site-specific environmental authority (EA) application for a resource project that includes a PRC Plan outlining a non-use management area (NUMA).

    A NUMA is a land classification used for an area of land that cannot be rehabilitated to a stable condition after mining activity on the land has ended. NUMAs are instead managed in accordance with best practice for minimising risks to the environment.

    Land will only be able to be classed as a NUMA if the PIER recommends that the classification is in the public interest. A PIER will be prepared by an expert assessor independent of government with all assessment costs borne by an applicant.
  • Amendment of a PRCP – An amendment to an in-force PRCP will not be required to undergo public notification if the amendment will reduce or cause no change to the environmental values of the activity proposed for amendment.
  • Recognition of Existing Outcomes –The MERFP Bill make it clear that outcomes for areas listed in a “land outcome document” will not be retrospectively subject to rehabilitation requirements introduced in the MERFP Bill, including rehabilitation of existing voids in flood plains. Significant “land outcome documents” include an EA, EIS assessment reports and current agreements between the State and an EA holder.

Timeline for New Framework Implementation

Financial Provisioning Scheme

The new financial provisioning scheme is set to commence in the first half of 2019.

Upon commencement of the MERFP Bill, resource projects will begin transitioning to the new scheme upon an operator’s receipt of a transition notice issued by the new Scheme Manager. These notices are to be issued progressively to each environmental authority (EA) holder operating a resources project in Queensland within three years of scheme commencement. Each notice will state that the Scheme Manager has begun the process of determining a risk category allocation for the EA associated with the resources project.

A draft MERFP Regulation and several draft guidelines for the financial provisioning scheme were released by the Queensland government in June 2018. The guidelines provide clarity about matters the Scheme Manager will consider during risk category allocations and the percentage contribution values used to determine a pooled-scheme fund contribution. You can read our breakdown of the draft MERFP Regulation and guidelines here.

Progressive Rehabilitation and Closure Plan Scheme

The new Progressive Rehabilitation and Closure Plan (PRCP) scheme for mining activities is anticipated to commence on 1 November 2019.

Transition to the new scheme will begin when the Scheme Manager issues a notice to an EA holder requiring submission of a proposed PRCP. Notices are to be issued progressively across the three year period starting on the date of scheme implementation. EA holders will be given between 6 to 12 months to prepare a proposed PRCP, with the timeframe for submission varying on the complexity of the site and the conditions set in the EA.

To better facilitate the transition to the new life-of-mine planning framework, the Queensland government has proposed establishment of a formal transition schedule. This schedule will detail the timing for each EA to transition to the PRCP scheme, including the timing of the Scheme Manager’s notice and the proposed PRCP submission date.

Draft guidelines for the PRCP scheme have been undergoing development across 2018 and are currently in the final stages following recent targeted stakeholder consultations. The guidelines will outline the PRCP assessment process and provide further detail on the planning requirements expected in a PRCP. It is anticipated that these guidelines will be publicly released in the near future.

Impact on Transactional Arrangements

The MERFP Bill introduces a number of new factors to consider for change-of-ownership transactions in the resources industry, including:

  • notification to the Scheme Manager upon the change of an EA holder (including a change in shareholding);
  • applications to review the risk category allocation for EAs under new ownership; and
  • release of existing surety and transitioning into scheme contributions.

Appropriate consideration of the content and timing requirements of these factors will be key to ensuring successful transitions of resource project operation between proponents.

Next Steps

The upcoming guidelines and implementation dates will provide key information for transition to the new financial assurance and planning schemes. KWM will continue to monitor and report the progress of the MERFP Bill rollout across the coming months.

Should you have any questions regarding new provisions and transition process, please do not hesitate to contact us.

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