Offshore Petroleum and Greenhouse Gas Storage (Greenhouse Gas Injection and Storage) Regulations 2023 - New and ongoing matters [2024] AUSStaCSDLM 4 (7 February 2024)

---

Offshore Petroleum and Greenhouse Gas Storage (Greenhouse Gas Injection and Storage) Regulations 2023^[24]

FRL No.	F2023L01551
Purpose	The instrument deals with a number of matters to facilitate and regulate safe and sustainable greenhouse gas injection and storage operations in offshore areas. It remakes the Offshore Petroleum and Greenhouse Gas Storage (Greenhouse Gas Injection and Storage) Regulations 2011 in substantially the same form, with minor amendments to provide consistency with current drafting practices, simplify language, restructure provisions to provide for ease of navigation, and remove duplicative processes.
Authorising legislation	Offshore Petroleum and Greenhouse Gas Storage Act 2006
Portfolio	Industry, Science and Resources
Disallowance	15 sitting days after tabling (tabled in the Senate on 28 November 2023). Notice of motion to disallow must be given by 19 March 2024.

Overview

1.49 This instrument is made under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (the Act). It repeals and remakes the Offshore Petroleum and Greenhouse Gas Storage (Greenhouse Gas Injection and Storage) Regulations 2011, which are due to sunset on 1 April 2024.

1.50 The measures in the instrument facilitate and regulate safe and sustainable greenhouse gas injection and storage operations in offshore areas. This includes by providing for:

• matters relating to a ministerial determination that there is a significant risk that an operation carried on under a title will have a significant adverse impact on operations under another title;

• requirements for applications for parts of geological formations as identified greenhouse gas storage formations; and

• the requirement for an approved site plan to be in force when a licensee carries on operations in relation to a storage formation.

1.51 The committee has identified several significant technical scrutiny concerns in the instrument, detailed below.

Scrutiny concerns

Availability of independent merits review^[25]

1.52 Senate standing order 23(3)(i) requires the committee to consider whether an instrument unduly excludes, limits or fails to provide for the independent review of a decision affecting rights, obligations or interests. Where an instrument empowers a decision-maker to make discretionary decisions which have the capacity to affect rights, obligations or interests, the committee generally expects that those decisions will be subject to independent merits review. Where an instrument provides that such decisions are excluded from merits review, the committee considers that the explanatory statement should comprehensively justify the nature and scope of the relevant exclusions. The committee expects it to do so with reference to the factors in the Administrative Review Council’s Guide: What decisions should be subject to merits review? (the ARC guide).^[26]

1.53 The instrument confers a number of discretionary decisions, which are excluded from independent merits review.^[27] This includes section 25, which provides that the minister must approve or refuse to approve a draft site plan,^[28] if satisfied that it meets the criteria in Division 2 of the instrument. The explanatory statement justifies the exclusion of merits review because these decisions are a preliminary step in the substantive decision under the Act to grant a greenhouse gas injection licence.

1.54 The committee notes the ARC guide recognises that it is appropriate to exclude preliminary decisions from merits review,^[29] where the decisions do not have substantive consequences so that the beneficial effect of merits review is limited. In contrast, the guide contemplates that decisions which may cause hardship or result in a penalty should be merits reviewable.^[30] In this regard, it appears that approval of a site plan under section 25 is not merely a step in the decision to grant a licence but rather a precondition of granting the licence. Specifically, operations cannot be carried on in relation to a greenhouse gas storage formation identified in a licence without an approved site plan being in force. Licensees are subject to both strict liability and civil penalty provisions for breaching this requirement.^[31] Further, the minister must be reasonably satisfied that a draft site plan meets the specified criteria. As some criteria relate to predictions for the behaviour of greenhouse gas substances and geological risks, it appears that site plans may have potentially significant environmental consequences.

1.55 In addition, the explanatory statement provides a second justification for the exclusion of merits review because a decision to approve or refuse a draft site plan involves the evaluation of complex and competing facts, and highly technical matters. However, the committee notes that the ARC guide states that this is insufficient to justify an exclusion of merits review and, accordingly, it is not in line with the committee’s usual expectations.^[32] The explanatory statement adds that a merits review tribunal would be required to possess or obtain relevant expertise and that the costs, difficulty and potential delays in finding expertise may outweigh any impact of a lack of merit on the applicant. However, the ARC guide rejects similar justifications and states:

[5.18] For example, the Council rejected an argument that decisions of the Australian Broadcasting Tribunal were inappropriate for review because of the expertise of the Tribunal. The Council’s reasoning focussed on the need to review or check even the findings of experts. Further, and as a practical matter, the Council also noted the ability to appoint experts to the AAT, the body that would be reviewing the decisions of the Tribunal.

1.56 While the committee considers that some decisions are appropriate for exclusion from merits review if they are preliminary decisions, it notes that the explanation for exclusion of merits review based on expertise is not in accordance with the ARC guide or its usual expectations.

1.57 Decisions under subsection 32(2) which enable the minister to withdraw approval of a site plan, where the licensee has failed to meet the conditions in paragraph 32(1)(b),^[33] are also excluded from merits review. The explanatory statement justifies this exclusion on the basis that these are decisions of a law enforcement nature.

1.58 The guide provides that the exclusion of law enforcement decisions from merits review is appropriate because such review could jeopardise an investigation and enforcement of the law.^[34]

1.59 The committee is of the view that a decision under subsection 32(2) appears to relate to the enforcement of a regulatory scheme and is therefore not a law enforcement decision in the same way that, for example, prosecutorial discretions related to witnesses are. As such, a decision to withdraw a site plan does not appear to be analogous to law enforcement decisions accepted by the ARC guide. Further, such a decision would have a significant impact on the expectations and interests of licensees operating under a previously approved licence.

1.60 The explanatory statement adds that merits review is also inappropriate because it might cause unnecessary delay that could result in the risk of serious harm to the environment or the operations of other affected titleholders. It is unclear to the committee how this applies to decisions under subsection 32(2), noting that subsection 33(2) requires the minister to provide 30 days’ notice of their intention to withdraw approval.

1.61 In light of the above, the committee requests the minister’s advice as to whether further justification can be provided as to why:

• decisions under subsection 25(1) to approve or refuse draft site plans are appropriate for exclusion from merits review, with reference to the Administrative Review Council Guide, What decisions are appropriate for merits review?, noting the potential significant consequences of draft site plans; and

• decisions under subsection 32(2) to withdraw approval of a site plan are appropriate for exclusion from merits review, with reference to the Administrative Review Council guidance and, if known, examples of the kinds of other relevant decisions that would be considered to fall within law enforcement decisions excluded in that guidance; and

• notes that the exclusion of merits review on the basis of decision-makers’ expertise is not in accordance with the Administrative Review Council guidance.

Conferral of discretionary powers;^[35]adequacy of explanatory materials^[36]

1.62 Senate standing order 23(3)(c) requires the committee to scrutinise each instrument as to whether it makes rights, liberties, obligations or interests unduly dependent on insufficiently defined administrative powers. This includes where instruments confer broad discretionary powers on a person. In addition, Senate standing order 23(3)(g) requires the committee to scrutinise each instrument as to whether the accompanying explanatory statement provides sufficient information to gain a clear understanding of the instrument.

1.63 In deciding whether to approve a draft site plan, subsection 25(3) enables the minister to have regard to ‘any other matters’ they consider relevant. Similarly, section 42 enables the minister to approve or refuse a draft variation to an approved plan if reasonably satisfied that it meets the criteria in Division 2 of Part 4 of the instrument (see subsection 25(2)). While subsection 42(2) allows the minister to approve the variation if reasonably satisfied of the specified matters, subsection 42(3) enables them to also have regard to ‘any other matters’ they consider relevant.

1.64 These provisions appear to confer broad discretionary powers on the minister and neither the instrument nor its explanatory statement defines ‘any other matters’ or provides guidance on the types of matters that may be relevant under these provisions.

1.65 In light of the above, the committee requests the minister’s advice as to:

• examples of the types of ‘other matters’ that may be relevant under subsections 25(3) and 42(3); and

• whether there are any safeguards or limitations on these discretionary powers.

Strict liability;^[37] significant penalties in delegated legislation^[38]

1.66 Senate standing order 23(3)(h) requires the committee to scrutinise each legislative instrument as to whether it trespasses unduly on personal rights and liberties. This includes whether the instrument provides for offences of strict liability. Further, Senate standing order 23(3)(j) requires the committee to consider whether an instrument contains matters more appropriate for parliamentary enactment, including whether an instrument imposes significant penalties.

1.67 It is the committee’s view that significant penalties should ordinarily be included in primary, rather than delegated, legislation to ensure appropriate parliamentary oversight. In this regard, the committee’s view is that delegated legislation should generally not contain penalties exceeding 50 penalty units for individuals and 250 penalty units for bodies corporate. However, where delegated legislation does include significant penalties, the committee expects its explanatory statement to justify the appropriateness of the higher penalty, as well as why it is necessary and appropriate to be included in delegated legislation.

1.68 The instrument contains a number of strict liability and civil penalty provisions. In line with the committee’s expectations, the explanatory statement explains why it is necessary and appropriate to apply strict liability to the relevant offences with reference to the principles set out in part 2.2.6 of the Attorney-General’s Department’s Guide to Framing Commonwealth Offences.^[39]

1.69 However, the instrument also contains a number of strict liability and civil penalty provisions which impose penalty units greatly exceeding the committee’s usual expectations. Subsections 22(3), 37(5), 40(4) and 51(3) are strict liability offences of 100 penalty units for individuals, increased by five times for bodies corporate, due to subsection 4B(3) of the Crimes Act 1914. Subsections 36(6), 39(5), 51(6), 52(5) and 52(6) are civil penalty provisions of 500 penalty units, while subsections 22(4), 37(6), 40(5) and 51(5) are civil penalty provisions of 1000 penalty units.

1.70 While the above penalties vastly exceed the amount of penalty units the committee considers appropriate for inclusion in delegated legislation, the explanatory statement does justify the appropriateness of these penalties and their inclusion in delegated legislation.

1.71 For example, regarding the strict liability offences, the explanatory statement notes that licensees are ‘well-resourced’ and ‘sophisticated’, and a smaller penalty would not be sufficient to appropriately address the conduct. The explanatory statement also notes the potential for severe risks to or impact on the environment, and the operations of other titleholders under the legislation.

1.72 Further, regarding the civil penalty provisions, the explanatory statement also notes that, to be an effective deterrent, the penalty must be sufficiently significant to overcome any sense that a potential fine for non-compliance might otherwise be perceived as a ‘cost of doing business’. The explanatory statement also notes that the inclusion of such significant penalties in delegated legislation is authorised by the Act (section 790) and that setting out all of the provisions (including enforcement provisions) in one instrument provides greater clarity to licensees.

1.73 The committee notes the significant penalties in this instrument are authorised by the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and that their inclusion in delegated legislation appears to be adequately justified in the instrument’s explanatory statement. Accordingly, the committee is not requesting the minister’s advice in relation to this issue.

1.74 However, as the penalties are of such significance, the committee has resolved to draw their inclusion in delegated legislation to the attention of the Senate under standing order 23(4).

---

^[24] This entry can be cited as: Senate Standing Committee for the Scrutiny of Delegated Legislation, Offshore Petroleum and Greenhouse Gas Storage (Greenhouse Gas Injection and Storage) Regulations 2023, Delegated Legislation Monitor 16 of 2023; [2023] AUSStaCSDLM 4.

^[25] Senate standing order 23(3)(i).

^[26] Administrative Review Council , What decisions should be subject to merits review? (1999)

^[27] See sections 12, 25, 32 and 37.

^[28] For operations to be carried on in relation to an identified greenhouse gas storage formation specified in a greenhouse gas injection licence, an approved site plan must be in force in relation to the formation, and the licensee must comply with the plan.

^[29] Administrative Review Council , What decisions should be subject to merits review? (1999), p. 12, paragraphs [4.3]-[4.7].

^[30] Administrative Review Council , What decisions should be subject to merits review? (1999), p. 12, paragraph [4.4].

^[31] See section 22 of the instrument.

^[32] Administrative Review Council , What decisions should be subject to merits review? (1999), p. 28, paragraph [5.16].

^[33] That is, where the licensee has failed to comply with the plan, to review the plan as required by Division 7 of the instrument, to submit a draft variation of the plan to the minister, or to comply with a direction given by the minister under the Act.

^[34] Administrative Review Council (1999), What decisions should be subject to merits review? , p. 18, paragraphs [4.31]-[4.32].

^[35] Senate standing order 23(3)(c).

^[36] Senate standing order 23(3)(g).

^[37] Senate standing order 23(3)(h).

^[38] Senate standing order 23(3)(j).

^[39] Attorney General’s Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers (September 2011).