MEROLA Bill 2020: Important safety, rehabilitation and regulatory changes in the resources sector

Some of the policy objectives addressed by the Bill include:

1. proposed improvements to health and safety via the extension of industrial manslaughter laws to the mining, quarrying and oil & gas sectors;
2. strengthening the State’s powers to ensure resource project proponents meet their rehabilitation obligations; and
3. the introduction of various measures to improve regulatory efficiency.

The Bill proposes to amend 14 different Acts and other supporting regulations.

Industrial manslaughter

A number of high profile workplace fatalities in 2016 prompted the Queensland Government to commission an independent review of workplace health and safety in Queensland. A product of the review was the introduction of industrial manslaughter provisions in work health and safety legislation.

At the time, the Queensland Government also sought to introduce similar offences in the Coal Mining and Safety Health Act 1999, the Mining and Quarrying Safety and Health Act 1999, the Explosives Act 1999 and the Petroleum and Gas (Production and Safety) Act 2004 (resources safety acts).

While the Government chose not to extend the industrial manslaughter provisions to the resources safety acts at the time, the Government has responded to a number of recent incidents in the sector by reintroducing the provisions as part of the MEROLA Bill.

Generally, an employer or 'senior officer' will commit an industrial manslaughter offence where:

1. a worker dies in the course of undertaking work or is injured and later dies; and
2. the employer or senior officer’s conduct causes the death; and
3. the employer or senior officer is negligent causing the death.

A senior officer is defined as 'a person who is concerned with, or takes part in, its management, whether or not the person is a director or the person’s position is given the name of executive officer'.

The maximum penalties will be 20 years imprisonment for an individual or 100,000 penalty units ($13,345,000 fine) for a body corporate.

Financial Assurance and other regulatory efficiencies

In response to recommendations flowing from the Queensland Treasury Corporation Review of Queensland’s Financial Assurance Framework, which related to better management of risks associated with resource operators defaulting on their rehabilitation responsibilities, the Queensland Government publicly consulted on two separate discussion papers.

The Queensland Government Consultation Report: Abandoned Mines and Associated Risks was subsequently released; the MEROLA Bill proposes to give effect to the results of that consultation report.

In particular, as per the explanatory notes, the changes are intended to address:

1. increased scrutiny around financial capability following a change in control;
2. increased oversite of resource sites that enter care and maintenance; and
3. broader powers for the State for remediating an abandoned mine or operating plant sites.

Change in control

Similar to current requirements under the Mineral and Energy Resources (Financial Provisioning) Act 2018 in relation to risk category allocations and changed holders, new provisions will be inserted in various resources legislation requiring resource authority holders to notify the Minister of a 'changed holder' event.

This is intended to facilitate broader powers for the Minister to manage potential risks associated with the incoming or changed holder.

These changes will capture both indirect (i.e. where an entity starts or stops controlling the holder of a resource authority, or stops being a subsidiary under the Corporations Act 2001 (Cth)) and direct changes of control (i.e. where a resource authority (or share of) is directly transferred to a different entity).

For an indirect change in control, the Minister will have the discretion to assess the changed holder’s financial and technical resources to comply with the resource authority and if there is a significant risk that they won’t, vary or impose new conditions accordingly.

For a direct change in control, the Minister will be able consider whether a proposed transferee has the capacity to fund the estimated rehabilitation cost for a resource authority before the transfer can be registered.

The changes are intended to better allow the State to manage the risks associated with rehabilitation obligations if a change in control results in compromised financial resources to meet those obligations.

Disqualification criteria

The MEROLA Bill also proposes to introduce a new power for the Minister to disqualify an entity from the grant, tender or transfer of an interest in certain resource authorities.

Under the proposed changes, applicants and proposed transferees (and associates of applicants and transferees) for interests in certain resource authorities will be assessed against criteria that may indicate the likelihood or risk of the applicant being unable to manage or comply with the requirements of the resource authority.

Those matters will include the applicant’s:

1. history of non-compliance with prescribed legislation;
2. criminal history;
3. history of mismanagement of a company;
4. association with a person who cannot meet the above requirements.

Further, the decision-maker has a broad power to consider any other matter they consider relevant to making the disqualification decision.

Following the assessment, the applicant may be disqualified from participating in a tender process, or otherwise taking an interest in a relevant resources authority.

Care and maintenance and abandoned mines

State oversight is proposed to be strengthened by the requirement for the holders of larger mineral mining leases to prepare and implement initial and later development plans, allowing the State to better track performance of those operations, and have an increased understanding of those sites that have been, or may soon be, placed in care and maintenance.

Where a later development plan proposes a significant reduction in mining activities, the Minister will consider whether steps have been taken to prevent the shutdown or reduction, and may also require partial surrender of the relevant mining lease (effectively accelerating rehabilitation and other end of mine obligations).

Authorised persons are also proposed to be granted additional powers in relation to undertaking remediation activities for abandoned mines or operating equipment, consistent with the Queensland Government’s Abandoned Mine’s Policy. Further, an authorised person will be able to access land that is outside the original tenure boundary to carry out remediation activities.

Finally, the Bill proposes to introduce a competitive tender process for the direct grant of a mining lease (without the usual precursor exploration or other tenure). The apparent purpose of this new power is to support the ability to repurpose abandoned mine sites.

Moving forward

The MEROLA Bill has been referred to the State Development, Natural Resources and Agricultural Industry Development Committee for review, with the report on the Bill due 27 March 2020.

A significant number of submissions have been made in respect of the proposed reforms, particularly in respect of the proposed extension of the industrial manslaughter provisions and the potential impact on statutory officeholders.

Whilst it may not be passed in its current form, the changes proposed by the MEROLA Bill will impact due diligence processes and resource proponents should be preparing for how this may impact current and future projects.

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