Water reforms now in full swing – are you compliant?

Apr 2017

Queensland’s water reforms commenced in full force on 6 December 2016, following some controversial last minute changes made by the current government.

Now that the dust has settled on the changes, we take the opportunity to step through the practical impacts of the changes on proponents and what measures you need to be taking now in order to comply with the new obligations.

An overview of the new regime is given here, particularly highlighting the changes made to the reforms by virtue of the Environmental Protection (Underground Water Management) and Other Legislation Amendment Bill 2016. A detailed overview of the requirements of Underground Water Impact Reports (UWIRs) and Make Good Agreements (MGA’s) was given in our previous two part Water Act series of newsletters.1

Introduction

In 2014 the then Newman government commenced a tranche of reforms to the regime for the management of the state’s water resources, with a particular focus on the management and monitoring of underground water to provide a consistent framework for underground water rights for the resources sector.2

With the change of government in January 2015, changes were made over a series of amending legislation, culminating in a package of reforms which took effect on 6 December 2016.

The regime in place for the management of petroleum tenure holders’ use of underground water has now been extended to the mining industry, with the Water Reform and Other Legislation Amendment Act 2014 (Qld) (WROLA) making the required amendments to both the Water Act 2000 (Qld) (Water Act) and the Mineral Resources Act 1989 (Qld) (MRA).

All mining tenure holders are affected by the new regime to varying degrees and it is important to understand the new obligations as there are, of course, penalties for non-compliance.

The grace period afforded to existing tenure holders in relation to certain of the new obligations expired on 6 March, so proponents need to be ready to discharge any obligations under the new regime as and when they arise.

In addition, the end of the grace period allowed for working towards compliance in terms of water meters is fast approaching, with parties being required to be measuring associated water pumped from dewatering bores with a compliant flow meter by 1 July 2017.

New obligations for all mining tenure holders

WROLA removes the obligation for mining tenure holders to obtain a water licence for their activities.

Instead, the MRA now authorises the take of or interference with underground water (including mine dewatering and evaporation), in exchange for compliance with certain new obligations in relation to that water use.3

The extent of those new obligations will depend upon how progressed the relevant project was (in terms of approvals) at the commencement of the new regime on 6 December 2016.

As a base level requirement, holders of mineral development licences and mining leases are now required to notify the Chief Executive of the Department of Environment and Heritage Protection (being the department responsible for administering Chapter 3 of the Water Act) of the fact that they are taking or interfering with underground water.4 They will also be required to measure volumes taken and report those volumes to the chief executive via the Queensland Digital Exploration Reports System.5

Most mining tenure holders will be taking or interfering with water, particularly in relation to open cut operations. Any circumstances of diversion of an aquifer or watercourse will be interference with underground water for the purposes of the MRA and the Water Act. Taking or interfering are not terms specifically defined in the legislation, however, the following examples are provided in the MRA:6

  1. Mine dewatering of underground water to the extent necessary to achieve safe operating conditions in the mine; and
  2. Taking underground water as a result of evaporation from an open mine pit.

The Mineral Resources Regulation 2013 sets out, in Part 6, the requirements for measuring and reporting the take of associated water. Such reporting is to be done within 20 business days of the end of each financial year. For associated water taken by way of dewatering via bores, the volume must be measured by a meter compliant with Australian Standards. If no meter is installed, any alternative method may be used until 1 July 2017. In addition, if a non-compliant meter was installed prior to 3 February 2017 it can be used until its next major maintenance or until 5 years after its installation.

For water taken as a result of underground water entering a mine, it is to be measured by applying the ‘water balance method’ set out in a specific guideline entitled ‘measuring the volume of take of associated water under a mining lease or mineral development licence’ made available on the department’s website.

Although the guideline is not yet available on the department’s website, it can be provided on request. This delay in publishing essential guidance information presents a difficulty to proponents attempting to discharge their obligations.

The guideline provides a decision path to assist proponents to identify the required methodology for measuring the take of water. An extract of the flowchart as it appears in the guideline is below:

Figure 1: Decision path for determining and reporting the estimated volume of associated water taken by mining activities - taken from Department of Natural Resources and Mines guideline.7

The guideline details the ‘water balance method’ for calculating take of associated water as follows:

Change in water pit volume = sum of water inflows – sum of water outflows

These terms are explained in the below table. Further details are provided throughout the guideline. 

Table 1: Typical water balance components and estimation methods.8

Existing projects

For tenements in force at the commencement of the new requirements, holders are only required to report information available after commencement of the new regime.9

In terms of the obligations under Chapter 3 of the Water Act, existing tenements have the benefit of a broad exclusion from the most onerous of the reporting requirements.10 Existing tenement holders will, however, be required to comply with certain of the ‘make good’ obligations, by virtue of the general agreement provisions in Part 4 of Chapter 3 of the Water Act.11

Tenure holders should, however, be mindful that the chief executive has a broad discretion to require compliance with Chapter 3 if the impact of the project justifies. Similarly, the exclusion does not apply if the tenure falls within a cumulative management area.12

Tenure holders have an obligation to enter into a general agreement with landholders if the holder reasonably believes a water bore has an impaired capacity. A water bore has an impaired capacity if the exercise of underground water rights has, or has likely, caused or materially contributed to the decline of capacity in question. These general agreements are taken to be a ‘make good agreement’ for the purposes of Chapter 3, Part 5 of the Water Act and may therefore impose various make good obligations on the holder.13

For existing projects that have all required approvals (including a water licence, if one was required under the old regime), these will be the only relevant changes.

Existing projects with partial approval

Given the extensive and lengthy process for approval of new mining projects, including the expansion of existing projects, there will be a number of projects partially through the approval process at the time of commencement of these changes.

These projects will not get the benefit of the exclusion afforded to existing projects, as the exclusion requires the relevant tenement be in existence at the time of commencement of the legislation.

Compliance with Chapter 3

The obligations imposed by Chapter 3 of the Water Act regarding UWIRs and make good obligations will apply in their entirety to projects that are well progressed through the approval process but have not secured tenure.

This presents a significant difficulty for new tenure applied for as an expansion of a current project, which, in many instances will result in a single mine pit as the project progresses. Technically, the old part of the project will be excluded from the operation of Chapter 3, but the new tenure will be subject to the extensive new requirements.

The existing part of the project will likely already have well established monitoring programs in place that may not comply with the requirements of the new Chapter 3 regime. This will mean duality of requirements in many cases where there have been special conditions imposed on licences to deal with water management. Proponents will need to discuss these dual requirements with the relevant departments and negotiate amendments to special conditions accordingly.

In these cases, however, the Chief Executive may well be inclined to exercise the discretion to require compliance with Chapter 3, which would result in the whole of the project being subject to the new requirements.

A further anomaly is presented in respect of Environmental Authority conditions, as for expansions, a new EA is often granted applying to the whole of the project. The UWIR process that will need to be conducted on the new project tenure can result in an amendment to the project EA.14 Any resulting new conditions would then apply across the entire project and effectively provide a way to require pre-existing tenure to comply with the new regime, when technically they may be entitled to an exemption from these processes. Proponents need to be mindful of this ability when negotiating conditions of any EA amendment applied for to support a project expansion.

If an EA application had already been lodged at 6 December 2016, it will proceed as if the changes regarding new EA conditions had not commenced.15

Associated water licences

Controversial amendments were made at the last minute to WROLA to incorporate the concept of an associated water licence for projects where an EA had been granted but the required water licence had not. These changes were heavily protested by a number of large projects concerned at the prospect of further delay and were heavily debated in parliament.

An associated water licence is only granted following a hefty process of public consultation and evaluation by the relevant government department,16 a process many consider unnecessary for those projects that have already been subject to significant consultation during an EIS process.

Some changes were made in the early hours of the morning in parliament before passage of the relevant Bill to exclude a very specific category of advanced coal project. An associated water licence will not be required if the chief executive is satisfied that the impacts on underground water in relation to the mining tenure were assessed as part of an EIS process and have been subject to a land court hearing (involving experts on the issue of underground water impacts), the outcome of which was decided before 13 September 2016.

This exclusion effectively exempts the Adani coal mine from obtaining an associated water licence, but gives no relief to the New Acland Stage 3 expansion.

New projects and expansions

For new projects in respect of which an EA application (or amendment application) has not yet been lodged, in addition to compliance with Chapter 3, these projects will face compliance with a new EA application process.

New EA requirements

The Environmental Protection Act 1994 (Qld) has been amended to allow conditions to be imposed on EAs which relate to the exercise of underground water rights.17 Proponents should be mindful of the new content requirements for EA applications18 and amendment applications19 lodged from now on, which must include an analysis of the movement of underground water to and from affected aquifers and predicted quantities of water to be taken or interfered with.

Any applications lodged before commencement of these changes must be assessed as if the changes had not been made.20

Chapter 3 requirements

The new obligations on mining tenure holders regarding monitoring and management of underground water impacts are extensive. Detail regarding content of UWIRs and make good agreements has been provided in our previous two part Water Act series.21

Affected proponents should now be familiarising themselves with the content requirements for UWIRs as new mining leases are not entitled to exercise underground water rights until they have completed a UWIR.22 Given that the UWIR also needs to be subject to a public consultation process of at least two months before being lodged with the DEHP, this could lead to significant project delays if these timeframes are not factored in to project planning.

Baseline assessment plans must also be approved by the chief executive before operations commence. No minimum timeframes are imposed on the department for giving this approval, giving another potential for significant project delays.

Proponents should also be working towards development of standard make good agreement terms, to ensure they are ready to negotiate commercial terms with landholders impacted by impaired bores if and when these issues arise.

Conclusion

All mining lease holders are now affected by the amended Water Act obligations to varying degrees and need to be aware of and ready to discharge their new obligations in order to avoid unnecessary project delays.

This article provides general information; it should not be relied upon for any specific matter or project. Carter Newell can provide cost effective support to resources companies seeking to understand and comply with your new obligations. Please contact us for more information.

.....

1 Carter Newell Resources Newsletter July 2016 ‘Changes to the Water Act – Can you comply with your new obligations?’ and Carter Newell Resources Newsletter September 2016 ‘A two part series: Make Good Agreements and new obligations under the Water Act’.
2 Explanatory Notes, Water Reform and Other Legislation Amendment Bill 2014, 6.
3 Mineral Resources Act 1989 (Qld) s 334ZP.
4 Ibid s 334ZP(6).
5 Ibid s 334ZP(5) and Mineral Resources Regulation 2013 (Qld) s 31B(4).
6 Ibid s 334ZP(1).
7 Guideline for quantifying the volume of take of associated water under a mining lease or mineral development licence, Department of Natural Resources and Mines, 2017, page 4.
8 Ibid, page 7.
9 Mineral Resources Regulation 2013 s 31B(5).
10 Water Act 2000 (Qld) s 394A.
11 Ibid s 406.
12 A cumulative management area may be declared under the Water Act 2000 if an area contains two or more resource tenures that may have cumulative impacts on groundwater. The only CMA currently declared is the Surat CMA, declared to focus on cumulative impacts of the large number of petroleum leases within its boundaries.
13 Above note 10 s 407.
14 Environmental Protection Act 1994 (Qld) s 215.
15 Ibid s 227AA.
16 Above note 10 s1250D.
17 Above note 14 s 207(1)(g).
18 Above note 14 s 126A.
19 Above note 14 s 227AA.
20 Above note 14 s 748.
21 Carter Newell Resources Newsletter July 2016 ‘Changes to the Water Act – Can you comply with your new obligations?’ and Carter Newell Resources Newsletter September 2016 ‘A two part series: Make Good Agreements and new obligations under the Water Act’.

22 Above note 10 s 370(2)(b).

This article may provide CPD/CLE/CIP points through your relevant industry organisation.