Chapter 2 Consideration
Conduct of the inquiry
Given the close relationship between the OPGGS Amendment (Significant
Incident Directions) Bill 2011 and the bills introduced on 25 May 2011, the
Committee invited submissions from organisations that had contributed to the
inquiries into those bills. The following two submissions were received:
- Submission 1 – The Western Australian Department of Mines and Petroleum (DMP)
- Submission 2 – The Department of Resources, Energy and Tourism (RET)
As the submission from DMP raised some potential issues for
consideration by the Committee, discussed below, the Committee invited RET to
provide an additional submission in response.
Issues raised during the inquiry
Western Australia’s DMP expressed agreement with the need for a ‘clear
and specific power’ to issue significant incident directions, as provided for
by the bill. However, its submission
also noted two issues of concern for consideration by the Committee.
Firstly, DMP raised concerns about the significant incident direction-giving
power being given to NOPSEMA, ‘given that it is a statutory body and not
directly accountable to a minister’. It suggested that it would be more
appropriate for the power, which is expected to be used infrequently, to lie
with the Commonwealth Minister or the Joint Authorities, who DMP suggested would
be able to react to an incident in sufficient time.
In response to this suggestion, RET noted that as the ‘day-to-day
regulator for safety and environmental matters, and also for structural
integrity of facilities and wells’, NOPSEMA would have the expertise required
to understand the potential environmental, health and safety risks involved in
a significant incident and the actions required to mitigate those risks. RET contended
that this expertise makes NOPSEMA the ‘most appropriate body to determine when
a significant incident has occurred and whether a direction is required’.
RET further noted that there are already provisions in the OPGGS Act
that make NOPSEMA accountable to the responsible Commonwealth Minister. In
particular, RET noted that section 692 of the OPGGS Act enables the Minister to
give written directions to NOPSEMA regarding ‘the performance of its functions
or the exercise of its powers’ (although not in relation to operations at
particular facilities), and that section 647 enables the Minister to ‘give
written policy principles to NOPSEMA about the performance of its functions’.
In these ways, the responsible Commonwealth Minister would be able to provide
‘general guidance on NOPSEMA’s exercise of the significant incident directions
powers’, if necessary.
The second issue raised by DMP concerned the required level of
consultation between the direction-giving authority and State Governments. The
submission noted that significant offshore petroleum incidents could have a
large impact on Western Australia’s offshore waters and islands, its coastline,
and its natural gas supply. It also noted that as Western Australia receives 95
per cent of its natural gas supply from Commonwealth Offshore areas, and a
number of new projects are expected to increase this amount, gas produced in
offshore areas under Commonwealth jurisdiction is largely piped into areas
under Western Australia’s jurisdiction. This means that significant incidents,
and resultant directions, may have ‘direct or consequential impacts on the
DMP therefore proposed that the bill be amended to incorporate ‘a
requirement for consultation with Western Australia or at the minimum,
notification in the event that a direction is issued’. It argues that this
should be required for directions of a non-permanent nature, not only those of
a permanent nature as is currently required (via the Joint Authorities).
In response to this proposal, RET argued that it is not necessary to
‘formalise in legislation’ any notification or consultation processes for when
a significant incident direction is issued, particularly due to the need for such
directions to be issued within tight time constraints:
Given that such a direction is likely to be issued in urgent
situations, it would not always be practicable to notify and/or consult prior
to a direction being issued. Formalising a requirement for consultation may
cause unacceptable delays where a direction may need to be issued as soon as
practicable to ensure prompt action by a titleholder.
RET noted that, given the ability of the Commonwealth Minister to issue
directions and policy principles to NOPSEMA, discussed above, the Minister
could, if necessary, ‘require NOPSEMA to notify potentially affected State or
Northern Territory governments’ when a significant incident direction is
issued. However, RET also
expressed its ‘firm view’ that NOPSEMA should ‘not be formally required to
consult with or notify parties in all cases in relation to the proper exercise
of the functions and powers that have appropriately been given to NOPSEMA’
under the OPGGS Act.
The Committee supports the intent of the bill and recognises the need
for a clear and specific power for the national regulator to issue directions
for remedial actions in the event of a significant incident involving offshore
petroleum operations. The Montara incident of 2009 demonstrated the capacity of
incidents involving the escape of petroleum to affect very large areas of
offshore waters and coastlines, and it is therefore important that the
regulator is able to issue directions for actions that extend beyond the
boundaries of a title area.
The Committee accepts RET’s view that the power to issue significant
incident directions should sit with NOPSEMA, rather than a Commonwealth
Minister, noting that the Minister already has a legislated ability to provide
guidance to NOPSEMA on how it should perform its functions.
The Committee agrees with DMP that the relevant State and/or the Northern
Territory should, at a minimum, be notified when a significant incident
direction is issued. However, the Committee also accepts RET’s view that enshrining
such notifications in the OPGGS Act could have unintended consequences,
particularly given the importance of a timely response to significant incidents.
The Committee’s preferred approach would be for NOPSEMA to incorporate into
its standard practices the notification of relevant State or Territory
authorities as soon as practicable after a direction is issued. The Committee
notes that, should this provision not prove adequate, the Minister, without
amending the OPGGS Act, will have the power to require NOPSEMA to adopt
specific notification procedures in the future.
Beyond the issues addressed above, the Committee has been unable to
ascertain that there are any aspects of the bill that are cause for concern. It
therefore recommends passage of the bill.
||That the House of Representatives pass the Offshore
Petroleum and Greenhouse Gas Storage Amendment (Significant Incident
Directions) Bill 2011