EXPLANATORY STATEMENT
Minute No. 04 of 2011 - Minister for Resources and Energy
Subject Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Act 2011
Proclamation
The Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Act 2011 (the Regulatory Levies Amendment Act) received Royal Assent on 25 May 2011. Item 2 of the table in subsection 2(1) of the Regulatory Levies Amendment Act provides that Schedule 1 to that Act commences on a day to be fixed by Proclamation, or, if any of the provisions of Schedule 1 do not commence within the period of 6 months beginning on the day that the Act received the Royal Assent, they will commence at the end of that 6 month period.
The Proclamation fixes 17 June 2011 as the day on which Schedule 1 to the Regulatory Levies Amendment Act commences.
Schedule 1 contains the operative provisions of the Regulatory Levies Amendment Act, which makes amendments to the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 (Safety Levies Act) to impose cost-recovery levies on holders of offshore petroleum titles in respect of wells and well-related activities in those titleholders’ title areas. The levies recover the costs of the National Offshore Petroleum Safety Authority (NOPSA) in undertaking its regulatory functions in relation to structural integrity and safety of wells and well-related equipment.
The Regulatory Levies Amendment Act also changes the title of the Safety Levies Act to the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003, to reflect the expansion of its content to include levies relating to wells.
The commencement date of 17 June 2011 was chosen to ensure that NOPSA could begin to recover its costs of undertaking regulatory functions in relation to wells and well-related equipment as soon as possible following Royal Assent to the Regulatory Levies Amendment Act. This is important given that NOPSA had already commenced functions under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act) and Part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011 relating to the regulation of structural integrity and safety of wells and well-related equipment, management of well operations, and the titleholder occupational health and safety duty of care in relation to wells and well-related equipment.
NOPSA is funded on a full cost-recovery basis with levies raised from the offshore petroleum industry. Until the commencement of Schedule 1 to the Regulatory Levies Amendment Act, NOPSA was not able to collect well-related levies from titleholders in order to fund its well-related regulatory functions. Industry stakeholders have been informed about the pending imposition of the new well-related levies, and were consulted by NOPSA during development of the Cost Recovery Impact Statement. Previously, public consultation in relation to the transfer of integrity of wells as a function to NOPSA occurred in conjunction with amendments to the OPGGS Act in 2010 through the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Act 2010.
Sections 1 to 3 of the Regulatory Levies Amendment Act commenced on 25 May 2011 (the day the Act received Royal Assent).
The Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Act 2011 (Consequential Amendments Act), which makes amendments to the OPGGS Act consequential to the amendments in the Regulatory Levies Amendment Act, commences at the same time as Schedule 1 to the Regulatory Levies Amendment Act (as per item 2 of the table in subsection 2(1) of the Consequential Amendments Act).
The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Act 2011 was enacted to address a significant gap in the regulatory framework for offshore petroleum activities in Australia. Specifically, it aimed to ensure that the National Offshore Petroleum Safety Authority (NOPSA) could recover costs associated with its regulatory functions concerning the structural integrity and safety of wells and well-related equipment. This was a critical issue because NOPSA had already been performing these functions under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 but lacked the financial mechanism to recover the associated costs. The Act was introduced by the Minister for Resources and Energy, and it received Royal Assent on 25 May 2011, with key provisions commencing on 17 June 2011. The policy objective was to enable NOPSA to operate on a full cost-recovery basis, ensuring sustainable funding from the offshore petroleum industry for its regulatory activities.
Scope and Application
The Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Act 2011 applies to holders of offshore petroleum titles in Australia, imposing cost-recovery levies on these entities in respect of wells and well-related activities within their title areas. The primary objective of the Act is to enable the National Offshore Petroleum Safety Authority (NOPSA) to recover the costs associated with its regulatory functions concerning the structural integrity and safety of wells and related equipment. The Act's geographic reach is limited to offshore petroleum activities within Australia, as it pertains to the regulation of these activities under the broader framework of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulations 2011. The Act commenced on 17 June 2011, ensuring that NOPSA could start collecting the necessary levies to fund its regulatory activities immediately. Consequential amendments made by the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Act 2011 also came into effect on the same date. The Act does not specify exclusions, exemptions, or thresholds, but it is understood that the levies will be based on the specific activities and scale of operations of each titleholder.
Key Provisions
The main operative sections of the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Act 2011 are found in Schedule 1, which commences on 17 June 2011. These sections amend the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 to introduce cost-recovery levies on holders of offshore petroleum titles for wells and well-related activities within their title areas (Schedule 1, item 1). This amendment allows the National Offshore Petroleum Safety Authority (NOPSA) to recover the costs associated with its regulatory functions related to the structural integrity and safety of wells and well-related equipment. The Act also changes the title of the Safety Levies Act to the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 to reflect the expanded scope of the levies to include those relating to wells (Schedule 1, item 2).
The obligations imposed by the Act on titleholders include the requirement to pay the cost-recovery levies as stipulated in the amended Safety Levies Act (now the Regulatory Levies Act). Titleholders must ensure that the levies are paid to NOPSA to cover the costs of regulatory functions pertaining to the structural integrity and safety of wells and well-related equipment. Additionally, titleholders are required to comply with any further regulations or guidelines issued by NOPSA to facilitate the collection and remittance of these levies.
The Act does not explicitly state penalties for non-payment or failure to comply with the levy requirements within its provisions. However, under the general legal framework, non-compliance with statutory obligations can result in legal actions being taken against the defaulting party. This may include fines, penalties, or other enforcement actions as prescribed under the existing legislative framework governing levies and regulatory compliance. The specific penalties would depend on the interpretation and application of the broader regulatory and taxation laws in force at the time of non-compliance.