Bills Digest No. 47 2003-04
Petroleum (Submerged Lands) Amendment Bill
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact Officer & Copyright Details
Petroleum (Submerged Lands)
Amendment Bill 2003
17 September 2003
Portfolio: Industry, Tourism and
Sections 1 to 3 and
Schedule 1 Part 1: the day the Act receives the Royal Assent.
Schedule 1 Part 2: 1 January 2005.
Schedule 2: the first day of the
month after the month in which the Act receives the Royal
Schedule 3: a day to be fixed by
Proclamation or, for any provision not commenced within 6 months of
the Royal Assent to this Act, the day after the 6 month
The Bill amends the Petroleum (Submerged
Lands) Act 1967. Its primary purpose is to create a nationally
consistent occupational health and safety regime for the offshore
petroleum industry by the establishment of the National Offshore
Petroleum Safety Authority ( NOPSA ). Provision is also made for
the NOPSA to have jurisdiction over onshore petroleum industry
sites should the relevant State or Territory agree.
Schedule 2 of the Bill corrects a minor
anomaly relating to the GST component of certain fees levied on the
industry while Schedule 3 establishes new industry data management
In 1979 the Commonwealth and the States agreed
to a division of offshore powers and responsibilities known
collectively as the Offshore Constitutional Settlement ( OCS
).(1) A major consequence of the OCS was that, as States
and the Northern Territory retained responsibility for coastal
waters up to three nautical miles from the low water mark, the
Occupational Health and Safety ( OH & S ) legislation of those
States and the Northern Territory applied to activities of the
petroleum industry in those waters. This has resulted in
significant costs and inefficiencies for companies that operate in
more than one State and / or the Northern Territory.
These inefficiencies have been more pronounced
since the industry has adopted the safety case regime for risk
management in the industry. This regime had its origins in the
response to the 1988 Piper Alpha disaster in the North Sea, and
places responsibility for safety on the operators not the
regulator. A safety case regime , once developed, is approved by
the regulator and establishes the basic standard upon which a
facility is assessed for the effectiveness of its safety management
systems. The safety case regime sits alongside the States and
Northern Territory OH & S legislation.
In 1998 the government undertook, in the
Minerals and Petroleum Resources Policy Statement, to look
for further opportunities to improve Australia s offshore safety
record by evaluating all aspects of Australia s safety case regime.
Given that the safety case regime had been in place for six years
it was considered appropriate to undertake a comprehensive review.
The resultant report, Future Arrangements for the Regulation of
Offshore Petroleum Safety, was delivered to the Minister for
Industry, Science and Resources in August 2001.
It was found that there were too many Acts,
directions and regulations regulating offshore petroleum
activities, their boundaries were unclear and application was
inconsistent as between jurisdictions. In addition, State and
Northern Territory safety regulators were found to lack regulatory
skill, capacity and consistency and did not have a clear view of
The formation of a single independent national
agency to regulate and oversee safety in the offshore petroleum
industry is the preferred outcome of the industry peak body, APPEA,
and the International Association of Drilling
As noted in the Regulation Impact Statement,
the ACTU in their written response to the Issues
Paper(4) supports the formation of such an agency as the
best means of giving the workforce confidence that decisions
affecting their health and safety are not unduly impacted by
industry or government perspectives.(5)
Should the Bill not be passed the offshore
petroleum industry will, given the identified deficiencies in the
existing regime, continue to operate at considerably less than
optimal efficiency with respect to OH & S issues. This will
result in the continuation of unnecessary costs for the industry
and, conceivably, contribute to the occurrence of avoidable
accidents with attendant injury or death as well as economic
Items 1 to 4 establish NOPSA.
Item 4 is the most significant in that it
introduces new sections 150XA to 150Z, the
machinery provisions for the NOPSA.
The new section 150XE
reflects the safety case approach already adopted by the industry,
which is subject to policy principles enunciated by the
Commonwealth Minister (new section 150XF). The
NOPSA is subject to direction by the Commonwealth Minister or State
or Northern Territory Minister via a request directed to the
Commonwealth Minister (new section 150YX).
Ministerial directions can be given as to the performance of NOPSA
s functions or the exercise of its powers and must not relate to
the operations of a particular facility (new subsections
150YX(1) and (2)). Although the Commonwealth Minister can
act without consulting the relevant State or Northern Territory
Minister in urgent circumstances, any directions so given lapse
after 30 days unless State or Territory agreement is obtained
(new subsections 150YX(8) and (9)). The NOPSA may
operate in the jurisdiction of a State or the Northern Territory,
but only if provided for by that State or Territory and only where
there is an agreement with the Commonwealth as to the payment of
NOPSA fees (new section 150XI).
The new Division 3,
new sections 150XL to 150XW, establishes and specifies the
functions and membership of the NOPSA board, while the
new Divisions 4, 5 and 6 (new sections
150XX to 150YM) provide for staffing of and planning by
the NOPSA. Staff must be persons engaged under the Public
Service Act 1999 (Cth) (new section
The new Division 8 (new sections 150YQ
to 150YT) authorises the NOPSA to levy a range of fees
which are designed to meet the Commonwealth s cost recovery
policies. There will be no impact on Commonwealth revenue or
expenditure according to the Financial Impact
Statement.(6) These fees are categorised as: service
fees, safety investigation levy, safety case levy and the pipeline
safety management plan levy.
The Commonwealth Minister must cause a review
of the NOPSA operations for the three year period up to 1 January
2008 and for every subsequent three year period from that date.
Such reviews are to be completed within six months of the end of
the three year period or such other time as the Minister allows
(new section 150Z). This permits the Commonwealth
to synchronise the review with a State or Northern Territory review
(new subsection 150Z(6)). The Commonwealth
Minister must table in each House of Parliament a copy of a section
150Z review within 15 sitting days of the review having been made
available to the Minister (new subsection
Part 2 contains the substantive amendments
relating to OH & S provisions. Items 5 to 10
exclude the operation of State and Northern Territory legislation
to offshore petroleum facilities.
Items 11 to 39 address the
specifics of safety on and around industry facilities, including
the provision of penalties (Item 38, new clauses 2B and
3 of existing Schedule 7) and the duties of
employees/contractors and employers (Item 39, new clauses 4
and 5 of existing Schedule 7). There has
been a significant increase in the penalty amount (to 1000 penalty
units) for breaches of the duties in Items 38 and
Items 40 to 83 provide
amendments to make more effective the machinery provisions of
Schedule 7 to the current Petroleum (Submerged Lands) Act
1967. Schedule 7 contains the existing safety case methods for
the industry. Penalties associated with these amendments are either
200 or 50 penalty units.
Items 84 to 116 contain
substantial amendments to the existing Schedule 7 provisions with
respect to health and safety representatives. These amendments give
effect to the implementation of a national and consistent approach
to OH & S measures, which is complemented by a comprehensive
regime for OH & S inspectors (Items 121 to
Items 1 to 4 clarify when and
how the payment of GST to the States and Northern Territory occurs
with respect to fees collected by the NOSPA.
Item 1, new section 122A
provides for the making of regulations concerning the collection
and use of data by the NOPSA. Items 3 to 13 repeal
previous definitions of particular types of information and
substitute a more workable process by prohibiting the public
release of any information by the NOPSA.
It should be noted that the new
section 150J preserves the operation of the Privacy
Act 1988 (Cth) and most importantly the amendments do not
require or authorise the disclosure of information for the purposes
of the Privacy Act 1988 (Cth). This ensures that
confidential and commercially valuable industry information is
The Bill is supported by the industry as well
as the ACTU. A comprehensive Regulation Impact Statement indicates
that the NOSPA is the best option for achieving best practice in OH
& S measures in the offshore petroleum industry. The amendments
represent the conclusion of an extensive process of consultation
within the industry which has included state and territory
Additionally the Bill provides a structure
within which the NOPSA can operate on a full cost recovery basis
while promoting a significantly higher standard of safety within
the offshore petroleum industry than is currently achieved. The
imposition of the various levies will be via a new Act see the
Offshore Petroleum (Safety Levies) Bill 2003 which is the subject
of a separate Bills Digest.
Petroleum (Submerged Lands) Amendment Bill 2003 Explanatory
Memorandum, p. 3.
Regulation Impact Statement: Formation of a National
Statutory Authority to Regulate Safety in the Offshore Petroleum
Industry, paragraph 11.
ibid., paragraph 99.
Refer to Australian Offshore Petroleum Safety Case Review
Report of the Independent Review Team which can be located at:
ibid., paragraph 102.
Petroleum (Submerged Lands) Amendment Bill 2003 Explanatory
Memorandum, p. 41.
It should be noted that pursuant to the Crimes Act 1914
(Cth) subsection 4B(3) a court may, where it thinks fit,
impose a penalty up to five times greater where a body corporate is
convicted of an offence against these provisions.
8 October 2003
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