The New South Wales (NSW) Government has recently introduced the Mining and Petroleum Legislation Amendment Bill 2014 (NSW) (Bill) in the Legislative Assembly. The Bill proposes to amend the Mining Act 1992 (NSW) (Mining Act) and Petroleum (Onshore) Act 1991 (NSW) (Petroleum Act) in several key ways which will significantly alter the criteria to be applied in governmental decisions affecting mining and petroleum titles in NSW.

 If passed, the Bill will:

• remove the 'public interest' test currently used as a ground for certain administrative decisions and replace it with a wide-ranging 'fit and proper person' test

• prevent an application for development consent to mine for coal under the Environmental Planning and Assessment Act 1997 (NSW) (Planning Act) from being made or determined unless the applicant holds a mining authority for coal under the Mining Act

• standardise the provisions of the Mining Act which set out the grounds for administrative decisions with respect to mining and petroleum rights.

The NSW Premier, Barry O'Farrell, commented that this Bill represents the final piece of the NSW Government's legislative response to the 26 recommendations listed in the report of the NSW Independent Commission Against Corruption (ICAC) on Operations Jasper and Acacia published on 18 December 2013.

The ICAC investigation identified multiple instances of corrupt conduct in the management of the state's coal resources. The amendments proposed in this Bill aim to tighten the regulation of mining and petroleum rights, improve the transparency of the ministerial decision making process and reduce opportunities for corruption.[1]

'Public Interest' Test Removed in Favour of 'Fit and Proper Person' Test

The Bill will alter the decision making framework for administrative decisions regarding mining and petroleum titles, removing the existing 'public interest test' as a basis for decision making.[2] The Bill proposes to amend the Mining Act and the Petroleum Act so that decisions concerning mining and petroleum rights can be made on the ground that a party to the relevant conduct being reviewed is not a 'fit and proper person'.  

The Bill contains an extensive and non-exhaustive list of factors that a decision maker may consider to determine whether a person is a 'fit and proper person'. For example, the decision maker may take into account:

• whether the person has, in the opinion of the decision maker, 'compliance or criminal conduct issues' – ie 

  • if the person has contravened any relevant legislation, or whether or not the person has been prosecuted for or convicted of an offence 

  • if the person has been convicted of a serious offence or an offence involving fraud or dishonesty, or 

  • if the person has held a mining or petroleum title that has been cancelled, suspended or revoked. 

• whether the person is not of good repute 

• whether the person is not of good character (with regard to honesty and integrity) 

• whether there is a history of bankruptcy or involvement in the management of insolvent companies 

• whether the person has demonstrated the financial capacity to comply with their obligations under the mining or petroleum right 

• whether the person is associated with such unfit or improper persons.

Where corporations are involved, this assessment would extend to each of the directors of that corporation.

Additionally, the decision maker can base its decision on any number of other unspecified considerations.

This new test will apply to:

• decisions to refuse to grant, transfer or renew a mining or petroleum right 

• decisions to cancel or suspend a mining or petroleum right 

• decisions to restrict operations under a mining or petroleum right by imposing or varying the conditions of a mining or petroleum right.

Development Consent Under the Planning Act

The Bill will amend the Mining Act and the Planning Act to prohibit an application for development consent to mine for coal under the Planning Act, unless a person holds an authority under the Mining Act in respect of the coal and the land where the proposed mining is to occur.

This amendment will close a potential loophole that currently exists whereby a person can apply for planning approval under the Planning Act without having first obtained an exploration licence for the coal. [3]

Grounds for Administrative Decisions

The Bill will make several other amendments throughout the Mining Act and the Petroleum Act to the grounds on which certain decisions affecting mining and petroleum rights and titles can be made.

For example, pursuant to these amendments, a decision maker may refuse an application for a mining lease if 'the decision maker is satisfied' that the applicant has contravened the Mining Act or relevant regulations.[4] Previously, there was no reference to the decision maker's state of mind.

Implications

These amendments represent a significant increase in the powers of the Minister for Resources in the administration of mining and petroleum titles. While such decisions remain reviewable by the Land and Environment Court, the strengthened powers of the Minister will likely increase the uncertainty tenement holders face in managing their portfolio of assets.

We will keep you informed if and when the Bill becomes law.

The authors kindly acknowledge the contributions of Danielle Monti, lawyer, to this Legal Insight.

[1] New South Wales Parliament, Parliamentary Debates, Legislative Assembly, 25 February 2014, 53-56 (Barry O'Farrell).

[2] Mining Act 1992 (NSW) s 380A (2).

[3] New South Wales Parliament, Parliamentary Debates, Legislative Assembly, 25 February 2014, 53-56 (Barry O'Farrell).

[4] Mining and Petroleum Legislation Amendment Bill 2014 (NSW) sch 1 [7].