FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE, MINING AND COMMODITIES TRANSPORT TECHNOLOGY AND INNOVATION PHARMACEUTICALS AND LIFE SCIENCES Coal Seam Gas Legal Frameworks VPELA Seminar 16 April 2013 Damon Jones Senior Associate Norton Rose Australia

2 An evolving regulatory web……. Commonwealth approval (EPBC Act) National harmonisation State regulation

3 Key legal issues Management and extraction of CSG Water Evaporation and aggregation dams Hydraulic fracturing Chemical Use Impact on groundwater and aquifers Well integrity and health and safety Potential conflict with agricultural and strategic cropping uses Landholder rights and land access Overlapping tenements Water management and monitoring

4 The role of the EPBC Act Existing EPBC Act already applies to CSG projects if trigger existing matters of national environmental significance (eg listed threatened species, national heritage places) Establishment of Independent Expert Scientific Committee (IESC) on Coal Seam Gas and Large Coal Mining Development in November 2012 – mandate to consider impact on water resources but not land use ramifications Proposed – ‘water trigger’ Would require ‘large coal mine development’ and ‘coal seam gas development’ which are likely to have a significant impact on ‘water resources’ to be referred to Federal Environment Minister for a determination on whether a ‘controlled action’ If a controlled action, project will require assessment and approval under the EPBC Act Aims to provide direct protection to ‘water resources’ Would allow Minister to impose conditions directly relating to impacts on a water resource Amendment Bill amended and passed by House of Representatives on 21 March 2013 Senate Environment and Communications Legislation Committee required to report on Bill by 15 May

5 EPBC “water trigger” Impact on projects currently being assessed: –projects currently referred for a decision and in approval process, where IESC has not yet given advice –would apply to approximately 40 projects currently being assessed and not yet subject to IESC advice Proposed amendments will not impact on projects which: –have been previously approved under EPBC Act –have already been subject of a determination that not a ‘controlled action’ –are currently being assessed under EPBC Act where advice received from IESC –are currently being assessed under State laws where advice received from IESC –are subject to prior environmental approval and did not require any further environmental approvals

6 National harmonisation of regulatory frameworks National Partnership Agreement on Coal Seam Gas and Large Coal Mine Development (14 February 2012 – 30 June 2014) IESC activities have commenced in 2013 Draft National Harmonised Regulatory Framework for Coal Seam Gas – released 14 December 2012 by Standing Council on Energy and Resources (SCER) Framework aims to provide consistent regulatory approach to managing CSG development: Identifies 18 leading practices across four core areas of: –well integrity –water management and monitoring –hydraulic fracturing –chemical use Designed to be flexible to accommodate the range of geographical, geological, resource, social, regulatory and institutional arrangements in each jurisdiction

7 CSG in Queensland Queensland has most highly developed CSG industry in Australia CSG exploration and production tenure/health and safety –Petroleum and Gas (Production and Safety) Act 2004 (and accompanying Regulation) –Work Health and Safety Act 2011 Environmental management of CSG industry –Environmental Protection Act 1994 (environmental approval, regulation and enforcement of CSG projects) –Environmental authorities, EMPs, CSG Water Management Plans Impacts of water extraction –Water Act 2000 –Seeks to manage cumulative impacts through designation of Cumulative Management Areas and Underground Water Impact Reports for all petroleum tenures

8 CSG in Queensland November 2012: CSG/LNG Compliance Plan 2012/13; Gasfields Commission Bill 2012 (establishes GasFields Commission Qld) December 2012: Coal Seam Gas Water Management Policy 2012 February 2013: Engagement and Compliance Plan (Dept of Natural Resources and Mines) Premier Newman critical of EPBC water trigger on duplication grounds

9 CSG in New South Wales CSG represents small but growing proportion of total gas supplied into NSW gas network – CSG industry expanding rapidly CSG tenures regulated under Petroleum (Onshore) Act 1991 Environmental assessment of projects regulated under Environment Planning and Assessment Act 1979 –‘State significant development’ provisions or Part 5 of the Act will apply Groundwater impacts primarily regulated under Water Management Act 2000 (where water sharing plan in place) or under Water Act 1912 Draft Aquifer Interference Policy – sets out proposed additional requirements relating to regulation of groundwater impacted by CSG activities

10 CSG in New South Wales Draft State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Coal Seam Gas Exclusion Zone) 2013 – released 21 March 2013 for public comment until 12 April 2013 Under the draft SEPP CSG Exclusion Zones: –“2km exclusion zone” around residential areas and critical industry clusters –Aims to prevent new CSG exploration, assessment and production activities within these areas –Includes mechanism by which councils may request that an area of land be removed from an exclusion zone to enable CSG development to occur, subject to obtaining necessary approvals –Would not apply to coal projects that involve CSG production

CSG in Victoria CSG industry in Victoria still in its infancy Regulatory framework is in place for potential CSG production activities under the Mineral Resources (Sustainable Development) Act 1990 Water Act 1989 provides for take and use licences and bore construction licences Halt on CSG exploration licences pending response to National Harmonised Regulatory Framework

A few issues to consider… Environmental baselines Rigour of environmental impact assessments Carrying capacity and cumulative impacts Application of ESD principles to decision making Precautionary principle cf adapative management framework Monitoring and reporting requirements Third party review rights

13 Disclaimer The purpose of this presentation is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Norton Rose Australia on the points of law discussed. No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any constituent part of Norton Rose Group (whether or not such individual is described as a “partner”) accepts or assumes responsibility, or has any liability, to any person in respect of this presentation. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of, as the case may be, Norton Rose LLP or Norton Rose Australia or Norton Rose Canada LLP or Norton Rose South Africa (incorporated as Deneys Reitz Inc) or of one of their respective affiliates